At the end of the month, everybody sells their coins to pay for their rent & etc

[Minsc]

I've seen this several times.  The miners and the small merchants who sell in bitcoin will wait till the end of the month when lots of expenses come due.  Then they all sell.  Then the price drops.  Then when this happens, the many speculators and tradebots sell their coins and it spirals down.

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[spruce]

I've seen this several times.  The miners and the small merchants who sell in bitcoin will wait till the end of the month when lots of expenses come due.  Then they all sell.  Then the price drops.  Then when this happens, the many speculators and tradebots sell their coins and it spirals down.

I just looked at a 6 month chart from Mt Gox. If my link works, it is http://bitcoincharts.com/charts/mtgoxUSD#rg180ztgCzm1g10zm2g25.

End April/1st week of May: Slight dip then gradual uptrend
End May/1st week of June: Steep uptrend then steeper uptrend
End June/1st week of July: Steep dip, then slight dip
End Julyl/1st week of August: Slight dip, then steep dip
End August/1st week of September: Not quite there yet

Form your own conclusion.

[joulesbeef]

If you take bitcoins in exchange for goods or services you would want to change them to USD right away and remove yourself from the risk of taking a loss by speculating on bitcoin exchange

I see this as a huge roadblock we have to overcome. Corps like newegg dont want to dump there weekly bitcoin earnings on the exchange, plsu that takes work if you want to do it right and not have too much effect on the price itself. They want to deposit in the banks and just be done with it. I'm aware that regular currencies still trade, but you can also use them for bills in those respective counties. WE need banks that will convert your currency no matter how fast the market is moving(within reason of course)

I'm not sure how we break down that wall and get into the major stores, besides all the other little walls like trust and security.. some of those bitcoin weaknesses listed in the wiki might throw a few of them off as well.

[Minsc]

Maybe not everyone lives in a country where they can use dwolla and some have to use a wire transfer or some other means that costs a bunch and so they do it less often.  It would likely be in a country where the wages and cost of living are both very low and mining pays 10x better than a typical job.  What baffles me though is why it starts after the start of the month instead of a week before.

[btcoiner]

Wrong.. just wrong...

If people had to sell their btc holdings to be able to pay their rent, they wouldn't own any bitcoins in the first place...

I'll give you that a rare couple of people might be in that situation, but not everybody and not even most or even a few.

Market's going down today because that's the sentiment.. Nothing substantial on the horizon, a major support was broken, so you are going to see it fall over the next week or two.. buy in when you think it's at the bottom of a dip and wait for the bounce.

[Big Time Coin]

I see this all the time... Someone makes an off-the-wall observation with no basis in fact, and feel obligated to take 5 minutes out of my day to refute it with mspaint.



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[Jack of Diamonds]

If people had to sell their btc holdings to be able to pay their rent, they wouldn't own any bitcoins in the first place...

I'll give you that a rare couple of people might be in that situation, but not everybody and not even most or even a few.

I can live without selling bitcoins, but can't keep a mining operation running without fiat money.
My electricity bill peaked at almost $2,500 for a bit above 20ghash/s in June.

You can't just keep everything as a profit or long term investment/giving it 'back to the community'  because electricity or datacenter rents cannot be yet paid with bitcoins.

I'd gladly pay for mining expenses in bitcoins if that was possible. But that's a pipe dream for now.
Without cheap FPGA or ASIC mining boards, electricity costs of creating bitcoins will force miners to sell a portion of their mining proceeds.

[Hotdog453]

can live without selling bitcoins, but can't keep a mining operation running without fiat money.
My electricity bill peaked at almost $2,500 for a bit above 20ghash/s in June.

Where do you live that you're paying that much for power? I'm churning out ~10ghash/s, and my power bill wasn't anywhere near that.

At 2500$, you're hardly making anything per month on mining. You're looking at a net, what, like 600-700$? Damn dude, that blows hard.

[btcoiner]

I can live without selling bitcoins, but can't keep a mining operation running without fiat money.
My electricity bill peaked at almost $2,500 for a bit above 20ghash/s in June.

You can't just keep everything as a profit or long term investment/giving it 'back to the community'  because electricity or datacenter rents cannot be yet paid with bitcoins.

I'd gladly pay for mining expenses in bitcoins if that was possible. But that's a pipe dream for now.
Without cheap FPGA or ASIC mining boards, electricity costs of creating bitcoins will force miners to sell a portion of their mining proceeds.

I don't dispute that at all... However my take is that the majority of people that mine for profit don't just stockpile their bitcoins till the end of the month and then everyone sells them all.  I would argue that the vast majority that do this sell them as they come in or when the price makes the most sense. 

[Jack of Diamonds]

Where do you live that you're paying that much for power? I'm churning out ~10ghash/s, and my power bill wasn't anywhere near that.

It peaked out due to excess consumption during the hottest days (people running maxed AC's etc) causing a lot of extra transfer charges,
though at $20-$30 per coin it was definitely not a problem.

With a $7 bitcoin and ~2m difficulty? Yes... You could say it's a problem.

Economies of scale would work (expanding your mining power further & further until even small profit margins means $10k+ per month)
if it wasn't for the fact difficulty is rising, electricity costs are rising and bitcoin price is going down.

[Minsc]

The drop has happened earlier than I predicted.  I wonder what the price will be in a week's time?  Will it continue to fall or will it rebound back to its original $10?

[proudhon]

The drop has happened earlier than I predicted.  I wonder what the price will be in a week's time?  Will it continue to fall or will it rebound back to its original $10?

Here's my prediction.  At some point in the coming days/weeks we'll "rally" back to around $10.  This will seem very positive and will be accompanied by predictions of further upwards movement.  The price will then begin to lag into the 9s where it will stabilize for several days.  We'll then see some drops that test 9, followed by stabilization right around 9.  Sentiment will then begin to trend toward negativity again, and not long after that the price will turn sharply down again and reach new lows for the past couple months.  To get an idea of what will happen after that, just re-read this paragraph but replace all the numbers with lower numbers.  Repeat.

[helloworld]

Repeat.

Repeat until around August 2012 when the upcoming reward drop to 25 btc will start feeling more real.

[Enky1974]

Here's my prediction.  At some point in the coming days/weeks we'll "rally" back to around $10.  This will seem very positive and will be accompanied by predictions of further upwards movement.  The price will then begin to lag into the 9s where it will stabilize for several days.  We'll then see some drops that test 9, followed by stabilization right around 9.  Sentiment will then begin to trend toward negativity again, and not long after that the price will turn sharply down again and reach new lows for the past couple months.  To get an idea of what will happen after that, just re-read this paragraph but replace all the numbers with lower numbers.  Repeat.

It sounds reasonable, typical behaviour of a bear market; we need new investors otherwise this bear market will never end, eventually it will slow down (repeating the pattern you described) and it will gradually approach 3-4$. At that point even long term investors and early adopters will be very worried and if nothing happen they will probably lose interest pushing the  prices under 4$, down to 1$ or so.

[istar]

Here's my prediction.  At some point in the coming days/weeks we'll "rally" back to around $10.  This will seem very positive and will be accompanied by predictions of further upwards movement.  The price will then begin to lag into the 9s where it will stabilize for several days.  We'll then see some drops that test 9, followed by stabilization right around 9.  Sentiment will then begin to trend toward negativity again, and not long after that the price will turn sharply down again and reach new lows for the past couple months.  To get an idea of what will happen after that, just re-read this paragraph but replace all the numbers with lower numbers.  Repeat.

It sounds reasonable, typical behaviour of a bear market; we need new investors otherwise this bear market will never end, eventually it will slow down (repeating the pattern you described) and it will gradually approach 3-4$. At that point even long term investors and early adopters will be very worried and if nothing happen they will probably lose interest pushing the  prices under 4$, down to 1$ or so.

Not many would sell at $1 since they know price can go up to $30 and it would be to big loss for many new investors and even miners.

For each platform, the time for the next fall will get longer and longer.
And it will probably stabilize at around $3-4 It depends on if there is a slow slide or there is a major panic. But I would think that at those prices and below its a great investment and so will probably many causing the price to start go back up.

[Cluster2k]

Not many would sell at $1 since they know price can go up to $30 and it would be to big loss for many new investors and even miners.

For each platform, the time for the next fall will get longer and longer.
And it will probably stabilize at around $3-4 It depends on if there is a slow slide or there is a major panic. But I would think that at those prices and below its a great investment and so will probably many causing the price to start go back up.

The $30 price was completely irrational.  It wasn't supported by any fundamentals and coincided with publication of positive news in Daily Reckoning and other media outlets.  Some people believed bitcoin could sustain an exponential growth curve.  We would be buying cars with one bitcoin by the end of 2011.  Fortunately most people didn't buy into the madness.

People would be happy to unload bitcoins for $1 if they believed the whole thing had become worthless.  Imagine those early adopters sitting on tens of thousands of bitcoins.  They wouldn't be too pleased to see their paper fortunes vanish in a selling frenzy.  Better to take a bit of something than a whole bunch of nothing.  I don't think we're even close to that point however.  But the most dangerous thinking in investing circles is 'it can only go up' followed by 'it's fallen as far as it can go'.

[ercolinux]

The $30 price was completely irrational.  It wasn't supported by any fundamentals and coincided with publication of positive news in Daily Reckoning and other media outlets.  Some people believed bitcoin could sustain an exponential growth curve.  We would be buying cars with one bitcoin by the end of 2011.  Fortunately most people didn't buy into the madness.

If you talk of the past 30$ top reached yes, it was irrational. But in future is not a number so irrational: I don't say that we could reach that point in 6 months or 1 year but in a couple of years yes is possible to do or even double it. All what we need is more shops and services based on BTC (and for what I see there are new shops every week).
30$ is a 30Milion/year market -> 85.000$ day of BTC spent not a so big number to reach (yes I know I oversimplificate the calculation and probably we need  3-4 times that figure to sustain a 30$ value but are still numbers reachable)

[Minsc]

I was correct.  If I helped anyone with investing, drop me some bitcoins please.  1DcXvfJdeJch9uptKopte5XQarTtj5ZjpL

[Minsc]

I figured out why it drops more after the end of the month.  People who are buying bitcoins maybe don't sell that much off, but they have lots of expenses and so for the first week after they pay their end of month expenses, they are in a cash crunch for a week and so don't have the free money available to buy up all the coins that others are selling off at a gradual rate.

[Nagle]

I just dont see merchants as investors.  they make their money on the sales, not the speculating.  Personally I would have my website setup to offer people whatever the current "instant sale price is on the exchange" and immediately convert it to the local currency.

Right. The volatility is so high that merchants operating on normal merchant-sized margins can't afford to hold Bitcoins for more than a few hours, if that. Especially since the long term trend is down by $4 a month.