With all the good news this week (below) I'm surprised we are at $850... I'm planning to buy some more right now but I'm wondering if we are falling into another dip for some reason?
Any thoughts?
Good new form this week:
I think this entire week was full of good news, the 5 main ones that come to mind in no particular order:
1. Switzerland voting to make BTC a foreign currency
2. Baidu (china's yahoo) adding a section for bitcoin in their main page
3.
http://www.usatoday.com/ adding a bitcoin logo on their main page (their high traffic, along with baidu's will definitely help increase awareness)
4. News about WallStreet and hedge funds getting into bitcoins in 2014
5. Fidelity allowing customers put bitcoins in IRAs
I wouldn't use any of your listed items. I think the most positive news so far is Andreessen investing $25 million in Coinbase. Anyone who is shouting "Ponzi/Pyramid scheme" will have a hard time explaining that. The other positive news I've seen is that the number of merchants accepting bitcoin is skyrocketing, so it is very likely that bitcoin will see its real mainstream breakthrough in 2014, but it requires the wallet functionality to be a little bit more user-friendly (even though blockchain.info is a great start).
So why is the price going down? Here are some reasons I speculate on:
1) The Chinese are still hesitant as the PBoC gave a clear statement that bitcoin is very risky and financial institutions in China should not invest in them. This warning spills over to regular individuals, so the buying pressure from East is greatly reduced and if the selling pressure is the same the price goes down.
2) Early adopters may cash some bitcoins out for X-mas. The volume is quite low, and selling 1k of coins (which is nothing for an early adopter) can cause the price go down quite a bit because the buying power is low. Long-term this is a good thing. The more bitcoins that come into circulation, the better.
3) Europe banking authority said it was going to issue a warning against bitcoin (and now it has done so publicly). This will reduce the number of investors going into the field. For them is a sane thing to do, because I believe that most politicians don't understand exactly how Bitcoin works, and anything that you don't understand it is just common sense to be skeptical. I still think they are wrong, but bitcoin requires maturity. Many were skeptical to Internet when Internet was young as well.
4) Then it could also be speculators/price manipulators selling bitcoin en masse to create panic and then vacuum all the cheap bitcoins.
Nevertheless, the future of bitcoin long-term looks extremely bright. Having VCs like Andreessen pumping into bitcoin businesses, and seeing new merchants accepting it every day, and all the incredible not yet invented ideas based on bitcoin (e.g. who thought about Facebook when Internet was young?). Just look at the underpinning technology in bitcoin with the scripting language to setup transactions; it's light years ahead of the traditional banking system. When you look at bitcoin it makes so much sense to have an open platform for transferring value.
Just think what Microsoft tried to do; they were planning to build their own computer network (MSN) which miserably failed. Once they realized this, they jumped on the Internet bandwagon. The same will happen for banks and bitcoin. Today banks the use their proprietary networks to transfer value which is extremely slow (and banks take fees among themselves in the process). Yet, banks don't make much money on money transfers, but more on issuing loans, so I believe banks don't care if their old technology of value transfer is replaced with something that is much more modern.
I know this for a fact as I have some insider bank connections. The reason why banks are scared of bitcoin is not what you first think. They are not threatened by the bitcoin technology, as it is just another currency for them (who cares?). They could (and will) just buying bitcoins with their tons of fiat if they think it is valuable for them. The reason why banks are hesitant is because of all the regulations on money laundering. They fear that they can lose their bank license if the government thinks that banks don't prevent money laundering, and it is unclear what precautions a bank needs to take for bitcoin to be on the safe side. Therefore, the safest option is not to deal with bitcoin at all, until governments have some firm rules.
My guess is that some nation will take the lead. I don't know if it is going to be Switzerland or some other nation, but once we have at least one nation that goes all bitcoin friendly, it is likely that other nations will follow. We're still waiting on that first nation, and whatever nation that will be, will get an incredibly head start on bitcoin adoption. If that nation plays their cards well, it will become one of the wealthiest nations on Earth. It will basically get the same financial status as London has today.
