Bitcoin price is overvalued...

[herzmeister]

...and that's a good thing. It's in its nature. And it will always be.

Let's face it, the currently available goods, services and other infrastructure around Bitcoin alone cannot explain an exchange value of currently $11. It also has proven to be so ridiculously volatile because of the low market size in relation. But that doesn't mean it's all just hot air or a bubble or anything like that. Because of Bitcoin's quite unique deflationary concept, conventional approaches of market analysis and prognosis might not work here.

The quite novel additional aspect is that Bitcoin's value at a given time is already largely comprised of people's future expectations, much more so than anything else we've ever seen in traditional markets.

The value now already reflects what people believe Bitcoin and its infrastructure will be worth in about 3-4 years. But the value in 3-4 years then in turn will reflect what people believe it will be worth in around 7-8 years, and so on.

[1714251501]

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[1714251501]

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[1714251501]

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[TraderTimm]

I'm sure the people in the "Speculation" forum would love to discuss this. Perhaps the thread should be moved.

[Ten98]

The change in value over time is the basis of almost every investment ever.

For example buying shares on the stock market. If I'm smart, I buy shares in a company which I think will increase in value over the medium to long term, paying out high dividends and attracting more investors. If it does well, I get more in dividends. if it does very well, it attracts more investors, the price goes up and I can sell at a profit. The price I pay today reflects what I expect to gain over the course of my ownership, not what I think the company is worth.

[piramida]

Bitcoins price, as with any other commodity, reflects its future price expectations, of course. And sudden price spikes reflect changes in that expectations.

But don't try to predict which year current price reflects. No need to overcomplicate, it is much more simple than that - the price now reflects how many people and how strongly believe in bitcoin future. If ten times more people suddenly understand the idea and invest their money to support it and maybe profit from it - price rises tenfold, simple as that. Right now, I would say the total amount of people invested in bitcoins is in thousands, maybe ten thousand tops. It has a lot of room for growth. Once it crosses a million - becomes "mainstream" - the price would become more stable and closer to the smooth deflationary curve.

[ptshamrock]

[/quote]

There is no such thing as "overvalued".

The whole notion is based on the weird idea
that bitcoin has some sort of "intrinsic value".

Nothing has "intrinsic value". All there is is
supply and demand. That dictates the price,
that's all there is to it.


[/quote]


+1

[ElectricMucus]

+2

My best bet the price of bitcoins will stay the same as it is now for a longer period, possibly till transaction fees become more relevant than mining.

[piramida]

Well then you didn't quite read the above thread ElectricMucus Demand will not stay at the same level, and transaction fees have little to nothing to do with it.

[ElectricMucus]

Well then you didn't quite read the above thread ElectricMucus Demand will not stay at the same level, and transaction fees have little to nothing to do with it.

That depends if you value them in goods or fiat currencies

[herzmeister]

Nothing has "intrinsic value". All there is is
supply and demand. That dictates the price,
that's all there is to it.

Of course, but before there can be demand, there must be value. When people don't value product A, they won't create any demand for product A. That value may be purely subjective of course. Where such subjective valuations usually come from, let that be OT for now. But for Bitcoin specifically, the point I'm trying to make is that people build their valuations largely from future expectations.

The change in value over time is the basis of almost every investment ever.

Yes, but in my view this is especially strong with Bitcoin. For example, the price of Apple stocks is pretty much reflected by what they have in "store" right now, all currently available goods and services. For Bitcoin, the price is reflected more by the expectation of applicability and infrastructure that will be around in about 3-4 years. That's because Bitcoin's deflationary concept is surely quite unique and incomparable to anything that existed before.

[evoorhees]

There is no such thing as "overvalued".

The whole notion is based on the weird idea
that bitcoin has some sort of "intrinsic value".

Nothing has "intrinsic value". All there is is
supply and demand. That dictates the price,
that's all there is to it.

Price is not the same thing as value. Something can indeed be overvalued, or undervalued, by the market or by any individual within the market. This does not mean things have "intrinsic" value, but it does mean they have value - and it's different than price. For example, if I discovered that there was a critical flaw in the Bitcoin code - one that would certainly ruin the entire protocol - then I could reasonable assume that the market price of $11 was "overvalued." Or, say that in two years time the Bitcoin will have replaced half of the world's currencies. In such case, it is vastly undervalued right now.

There is not "intrinsic value" in things, but there is very certainly "value" per se. The marketplace is always trying to perceive this value correctly, and from that a price is derived. Prices tend to move toward the value of something, but can be way off.

And personally, I think Bitcoin is unbelievably undervalued

[Fjordbit]

Let's face it, the currently available goods, services and other infrastructure around Bitcoin alone cannot explain an exchange value of currently $11.

I see this attitude a lot, but it doesn't seem to line up with reality. The dollar exchange do anywhere from 20-50k btc trades per day while the actual number of bitcoins sent is about 10x that. Look at Bitcoin Watch to see what I'm saying. Yes, there is still 10% going through the exchanges, but then again people still need to join into the btc economy somehow and mining is not for everyone. With 90% of the economy being transacted in the btc currency, it seems to have some kind of traction.

I don't know what people are buying, but they are buying something.

[Elwar]

With the current need to pump over $70,000 into Bitcoin per day it is difficult for it to sustain its current level.

Those who put money in because of the conference are holding while there are still $70k plus worth of miner money pulling out every day.

It will probably slowly decline up through the conference since it would take a week before anyone hearing good things from the conference and investing in Bitcoin would have to go through the week long steps to invest.

So I see short term low followed by a rise in about two weeks.

[piramida]

So I see short term low followed by a rise in about two weeks.

Unless of course anybody with a little bit of money decides to buy BTC as happened on a recent 9-12 run. And this is one event you can never predict.

[Technomage]

With the current need to pump over $70,000 into Bitcoin per day it is difficult for it to sustain its current level.

Where do people come up with this crap? Continuously. Some of us miners aren't cashing out 100% of our mined coins, some cash out 50% and some 0%. There are a lot of miners who also believe in Bitcoin and do keep some or all of them.

Personally I've followed a 50/50 plan from the start and still do because I think it's a smart move to invest in Bitcoin, however I do want my mining investments to break even at some point (with mining rig hardware value calculated as well).

At this point I've reached a decent amount of Bitcoin savings and am planning to start spending some of my new "savings". So instead of cashing out more because I've invested enough in Bitcoin (as savings from mining) I'm choosing to start spending Bitcoins instead. So far I've basically spent almost none because I wanted to actually have some first, but now I'm starting to have enough to splash around a bit.

I'm seriously getting tired of this, can we have a poll where people answer how much they save (or spend) and how much they cash out of their mining BTC? An average of anything near 100% is absolute bullshit. I'm fairly certain there are a lot of miners like me and even some who cash out less than me or pretty much nil.

[Technomage]

There is certainly many reasons why a certain amount of money needs to enter the Bitcoin-economy to sustain a certain price but I bet that the daily mined BTC actually plays a small role. Of course we would need data on what BTC people are selling and why to actually know something but a poll for miners could at least help in speculation

[proudhon]

With the current need to pump over $70,000 into Bitcoin per day it is difficult for it to sustain its current level.

Where do people come up with this crap? Continuously. Some of us miners aren't cashing out 100% of our mined coins, some cash out 50% and some 0%. There are a lot of miners who also believe in Bitcoin and do keep some or all of them.

Personally I've followed a 50/50 plan from the start and still do because I think it's a smart move to invest in Bitcoin, however I do want my mining investments to break even at some point (with mining rig hardware value calculated as well).

At this point I've reached a decent amount of Bitcoin savings and am planning to start spending some of my new "savings". So instead of cashing out more because I've invested enough in Bitcoin (as savings from mining) I'm choosing to start spending Bitcoins instead. So far I've basically spent almost none because I wanted to actually have some first, but now I'm starting to have enough to splash around a bit.

I'm seriously getting tired of this, can we have a poll where people answer how much they save (or spend) and how much they cash out of their mining BTC? An average of anything near 100% is absolute bullshit. I'm fairly certain there are a lot of miners like me and even some who cash out less than me or pretty much nil.

I know.  It's so annoying to hear it over, and over again.  I've mined a nice sum of bitcoins over the past several months and haven't sold a single one of them.

[Technomage]

I know.  It's so annoying to hear it over, and over again.  I've mined a nice sum of bitcoins over the past several months and haven't sold a single one of them.

+1

[fcmatt]

i have a feeling that most would agree that the majority of miners sell their btc like clock work.
just because they save them for a few weeks to build up enough to make it worth logging into an
exchange does not really count as saving them. my two cents based on a couple months of reading
the mining forum pretty religiously.

as for the OP subject line.. bitcoin does seem overvalued to me personally but i am not complaining about
it. but then again.. a dollar just aint worth what it used to be. a fricking candy bar almost costs a dollar...
and to mine a full btc, today, costs real money to do.

[deuxmill]

i have a feeling that most would agree that the majority of miners sell their btc like clock work.
just because they save them for a few weeks to build up enough to make it worth logging into an
exchange does not really count as saving them. my two cents based on a couple months of reading
the mining forum pretty religiously.

as for the OP subject line.. bitcoin does seem overvalued to me personally but i am not complaining about
it. but then again.. a dollar just aint worth what it used to be. a fricking candy bar almost costs a dollar...
and to mine a full btc, today, costs real money to do.

A candy bar costs as much as people are willing to pay - what companies make profit. I don't believe a candy bar costs almost a dollar because the dollar fell in value but because people became more "stupid" and the majority acquired a somehow better life and are willing to pay more for everything. We left everything gain value and we devalued our currencies because we are stupid. We always buy new cars because they are newer although the technology in the cars stays almost the same or is little upgraded . We accept goods that are programed to fail, we go to McDonald and eat , all this because of credit. Credit set us on a mindset that things value more and more , as we gained access to more and more money through credits we gave them less and less value. Inflation/deflation ain't a natural fenomenon that can't be understood it is US. We give value to gold , to the USD , to JPY , food , electronics , metals , whatever. Nothing out there has "real value" because there is no such thing as real value. A piece of moldy bread has no value to you but for someone on the brink of starvation it might be worth all the gold in the world.