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Author Topic: I hear all this technical analysis and all I can think is...  (Read 2210 times)
michaelmclees
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September 09, 2011, 12:56:47 PM
 #1



Seriously.  If ever there was a time to look at bitcoin fundamentals, it is now.  We all know the merits of bitcoin, which is why I'm a long term bull.  But in the short term, the reality is, all the press is bad.  Few people understand how it works.  Few people have even heard of it.

This will change.

But for right now, Bitcoins are just not all that useful for the average person.

This will change.

And while we're at it, this drop is great for Bitcoin.  It allows new investors to hop in and motivates the people holding 100,000 coins to sell off a few.  While I would in no way advocate a forced "spreading of the wealth", it's difficult to trust a currency where a large percentage might be held on a CD by its inventor or a super early adopter.

These are fundamental growing pains.  And in 10 years, when BTC is well understood and widely used, we'll look back and chuckle.

At some point, there will be blood in the streets (we're not anywhere close to that yet), panic, and fear.  The forum will be about "the end of Bitcoin".  And that's when I'm a buyer again.
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September 09, 2011, 12:58:12 PM
 #2

It's not often that someone articulates my thoughts so precisely. Agreed 100%.
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September 09, 2011, 12:59:08 PM
 #3



We all know the merits of bitcoin,

Yet very few seem to (want to) see all the issues it has.

Quote
in 10 years, when BTC is just another internet meme, we'll look back and chuckle.

Fixed for ya.


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September 09, 2011, 01:02:06 PM
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You lose, you laugh!
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September 09, 2011, 01:02:59 PM
 #5

The problem is that if you look at the fundamentals you see that the bitcoin system as a whole is losing about $500K a month on electricity without producing much (beside providing another betting game - which might be a nice and addictive past time - but it is zero sum).
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September 09, 2011, 01:06:14 PM
 #6

Seriously.  If ever there was a time to look at bitcoin fundamentals, it is now.  We all know the merits of bitcoin, which is why I'm a long term bull.  But in the short term, the reality is, all the press is bad.  Few people understand how it works.  Few people have even heard of it.

This will change.

But for right now, Bitcoins are just not all that useful for the average person.

This will change.

And while we're at it, this drop is great for Bitcoin.  It allows new investors to hop in and motivates the people holding 100,000 coins to sell off a few.  While I would in no way advocate a forced "spreading of the wealth", it's difficult to trust a currency where a large percentage might be held on a CD by its inventor or a super early adopter.

These are fundamental growing pains.  And in 10 years, when BTC is well understood and widely used, we'll look back and chuckle.

At some point, there will be blood in the streets (we're not anywhere close to that yet), panic, and fear.  The forum will be about "the end of Bitcoin".  And that's when I'm a buyer again.

I was about to post something very similar but you beat me to it.  I agree - if you don't believe in Bitcoin for the long-term, sell off your coins, get this over with, and let's carry-on to the next, inevitable phase in what will no doubt be an amazing run for Bitcoin.

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September 09, 2011, 03:07:33 PM
 #7

I agree with the OP as well. Same thoughts. In fact if the price drops a little bit more for a "total crash", I just might increase my investment on Bitcoins. So tempting. Smiley

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September 09, 2011, 03:11:09 PM
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I am optimistic about the falling price.  I hope a lot of miners quit, mining becomes easier for me .. i am able to mass a good sum of coins and then when the value starts going up I can sell off for a nice profit.
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September 09, 2011, 03:32:33 PM
 #9

Shared sentiment.

In June/July, Bitcoin picked up a lot of people just looking to profit off it, and don't care at all about the prospect of decentralized money (and all its implications). What BTC needs is a slow, steady growth amongst people who BELIEVE in its potential... people who won't sell off at $30 just to make a "few" bucks. Sure, taking profits here and there at the price fluctuates is fine, but I'm pretty sure most people are here because they BELIEVE that Bitcoin will play a much bigger role in the future of currency.

-Jix
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September 09, 2011, 03:35:16 PM
 #10

+1 OP

I especially agree with the legacy of large long standing account holders as a security risk to the value.... any1 who disagrees must be a..... :-)

Though those account holders are a necessary evil to how bitcoin had to grow from a very slow and obscure start
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September 09, 2011, 03:35:34 PM
 #11

I agree with the OP as well. Same thoughts. In fact if the price drops a little bit more for a "total crash", I just might increase my investment on Bitcoins. So tempting. Smiley

+1
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September 09, 2011, 04:06:03 PM
 #12

I'll be buying plenty if they hit $1.

so will everybody else

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September 09, 2011, 04:27:05 PM
 #13

That is exactly why it will never go back down to $1. If everyone knows that everyone is buying at that point, then we can safely say that a range of $2-3 is the lowest it can possibly go. The only exception is the death of Bitcoin and that can only happen if some major technical flaw is found in Bitcoin itself or governments start banning the trade of Bitcoin to Fiat currencies. Only a mega event of that sort can make the price go below the $2-3 range.

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michaelmclees
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September 09, 2011, 04:33:01 PM
 #14

That is exactly why it will never go back down to $1. If everyone knows that everyone is buying at that point, then we can safely say that a range of $2-3 is the lowest it can possibly go. The only exception is the death of Bitcoin and that can only happen if some major technical flaw is found in Bitcoin itself or governments start banning the trade of Bitcoin to Fiat currencies. Only a mega event of that sort can make the price go below the $2-3 range.

The question is then, at what price will everyone buy at?  If you're saying 2-3, I think you need to give a reason why.  And did you think the same thing from 7-6?  Every will buy when it's the end of the bitcoin world.  I think more like 1 cent, which is why I have a huge order at .01001.  That is when there will be blood in the streets.
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September 09, 2011, 04:35:40 PM
 #15

That is exactly why it will never go back down to $1. If everyone knows that everyone is buying at that point, then we can safely say that a range of $2-3 is the lowest it can possibly go. The only exception is the death of Bitcoin and that can only happen if some major technical flaw is found in Bitcoin itself or governments start banning the trade of Bitcoin to Fiat currencies. Only a mega event of that sort can make the price go below the $2-3 range.

You forget two things. Everyone says they will buy at X when the price is 2X - doesn't meant they will.
Bitcoins are ultra-inflationary right now. Incredible amounts of money need to come into bitcoin every single day just to keep the price stable.
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September 09, 2011, 04:36:48 PM
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That is exactly why it will never go back down to $1. If everyone knows that everyone is buying at that point, then we can safely say that a range of $2-3 is the lowest it can possibly go. The only exception is the death of Bitcoin and that can only happen if some major technical flaw is found in Bitcoin itself or governments start banning the trade of Bitcoin to Fiat currencies. Only a mega event of that sort can make the price go below the $2-3 range.

Also from savant Technomage
Indeed. Everything about Bitcoin fundamentals is going fairly well right now. No bad news, some good news. Trends are doing okay such as google trends and forum memberships. I seriously doubt a new low of below $5.

We might see a new low below the last one but I think $4.xx is almost impossible, there is simply no fundamental reason for it to go that low. The demand at $5.xx will be absolutely massive, those are truly cheap coins.

In fact I'm very surprised if the price breaks below the resistance levels at $6.xx, but I guess we'll see.

Well holding makes sense right now. Or buying, if you still have something to buy with. It's very, very unlikely that price will bottom at below $5. In fact I'd be willing to bet on this if someone wants to Smiley

Now I'm interested in seeing if the price will even break $6 which I think is unlikely but possible. Regardless, now we're at a range where buying is a good move and holding is a really good move.

Only a total doomsday-bear would sell at around $6.50 or less, there are no real indicators to show a major price drop from that point unless you're only seeing the very pessimistic scenarios. Anything is possible, but it's really pessimistic thinking.

Just lingering at 5 or 6 for a month before it jumps to some random price.

From what I've seen, the price jumps somewhere and then just lingers and lingers.
Well this is a good question. One thing that's important to note is that a change of one dollar in price is relatively a MUCH bigger deal when we close in on the smaller single digits. There is a huge difference between $5 and $6 and I think this will prove fairly critical in the near future.

We will probably see a major correction when the price bottoms out, whatever the bottom might be. To at least $7+, possibly $8+. Then it's a good question what will happen, there is a possibility of a trend changing rally and there's also a possibility of continuing decline.

But contrary to the doomsday-trolls I feel that a stable price lower than $5 is pretty much not happening, at all. I don't even think of that situation because it's simply so unlikely, the demand for cheap coins just rises exponentially going down from $7 to $4 so with the current fundamentals I can't see a price below $5. I can only see a spike below $5 but even that is very unlikely.

This might of course change and I might think differently in a few weeks but my current estimate for this month in general is positive and quite bullish. It's entirely possible that this is the last crash we're going to see in a while. But time will tell.

It's very hard to say if the price has bottomed or not. I still see a possibility of a small decline within the next 2 months, but it will be a much slower one with the price maybe bottoming at $5.xx. This is the worst case scenario. In a good scenario we get good boost this month in form of announcements of new services and good media coverage which will start an uptrend sooner.

Regardless, looking at the transaction count chart (http://pi.uk.com/bitcoin/charts/n-transactions) it will take at the most 3 months for the economic decline to run its course and after that it's entirely up to the Bitcoin community and the media to decide where it will go. From there we have basically two options, a further decline and possible true death of Bitcoin and what I think is far more likely, the flourishing of Bitcoin's potential.

Bitcoin is still fundamentally just as magnificent as it ever was. I can't see how the doomsday-bears have ever contributed anything to Bitcoin itself, they have simply been here to make easy money and now that the option of making that money from a soaring bubble price is not available they have turned to whining. Pathetic.

The price of Bitcoins fluctuates a lot because there are speculators and traders playing the market. The size of the market is still so small that only a handful of decent bankroll traders can cause big shifts in the price. Price will stabilize if and when the Bitcoin market gets bigger.

But when we talk about going down from $20 to $7, well, that's the bursting of the biggest bubble in Bitcoin history. A speculation bubble. Actually it's from the peak of $32 but anyway.

At the same time we have seen the size of the economy contract a little, as can be seen clearly from this chart: http://pi.uk.com/bitcoin/charts/n-transactions

Now we are reaching the point of a "bottom price" right now, with the amount of transactions leveling off as well within a few months for sure, possibly earlier. Then the price will start going up, probably in an unstable fashion again because there are big speculators on board. But eventually, I hope, the size of the market will increase and it'll be more difficult for people to just "play the market".

One thing is clear, if you think Bitcoin is still doing good for the long term (years), then don't worry about the current price too much. Personally I still think Bitcoin is doing really good and has so much potential which is slowly being realized. It has been a slow process with some growing pains on the way but that's natural.

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September 12, 2011, 12:41:37 PM
 #17

To Surawit I already answered here, a nice troll move to post the same thing in two threads: https://bitcointalk.org/index.php?topic=42514.msg520702#msg520702

My answer here will be to lemonginger. I view the whole issue of miners causing "massive inflation" very differently. The amounts miners produce cause inflation, that's true, but it's far from massive. Especially now that the volumes are back up the amounts that miners produce have little effect. In a period of any kind of decent growth the effects of added coins are pretty much irrelevant.

Now the thing is, due to anticipated Bitcoin growth and its long term deflationary model it is likely that there are a significant amount of miners who do not sell 100% of their mined coins or even close. I will use the plan I personally use as a template and do some calculations. I sell 50% and save 50%. If we assume a 50% sell rate is average, which is most likely at least closer to the truth than 100%, we come up with 3600 mined coins per day.

Now compare that 3600 to the recent volumes of all exchanges combined and you will start to understand that it's not that big of a deal. Even in fiat money it's not a lot, with current price it's around $22000. For the big players in the market that is candy money.

People in these forums tend to talk about tens of thousands like that is a lot of money, give me a break.


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September 12, 2011, 12:49:44 PM
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To Surawit I already answered here, a nice troll move to post the same thing in two threads: https://bitcointalk.org/index.php?topic=42514.msg520702#msg520702

My answer here will be to lemonginger. I view the whole issue of miners causing "massive inflation" very differently. The amounts miners produce cause inflation, that's true, but it's far from massive. Especially now that the volumes are back up the amounts that miners produce have little effect. In a period of any kind of decent growth the effects of added coins are pretty much irrelevant.

Now the thing is, due to anticipated Bitcoin growth and its long term deflationary model it is likely that there are a significant amount of miners who do not sell 100% of their mined coins or even close. I will use the plan I personally use as a template and do some calculations. I sell 50% and save 50%. If we assume a 50% sell rate is average, which is most likely at least closer to the truth than 100%, we come up with 3600 mined coins per day.

Now compare that 3600 to the recent volumes of all exchanges combined and you will start to understand that it's not that big of a deal. Even in fiat money it's not a lot, with current price it's around $22000. For the big players in the market that is candy money.

People in these forums tend to talk about tens of thousands like that is a lot of money, give me a break.



With a track record like yours, I wouldn't base anything on your assumptions. 

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September 12, 2011, 01:05:26 PM
 #19

With a track record like yours, I wouldn't base anything on your assumptions. 
If you have something tangible to base that number on, please do enlighten us, instead of simply wasting space with a useless comment. I'm very interested in the actual number of mined coins miners regularly sell for fiat money.

As far as I know it's impossible to know the number but the point is that the number is between 0 and 7200 regardless and when the volumes are up, like now, the effects of such amounts are negligible. On low volumes the effect is much higher and in that case I accept the fact that the current inflation of Bitcoin causes significant pressure for a lowering price. It's all dependent on the growth and activity of the Bitcoin market.

So far inflation has not been an issue in the long term. Bitcoin has experienced constant periods of growth, with the next one likely just behind the corner. These growth periods will negate the effects of inflation. And it's less than a year before we see the reward from a block halved to 25 BTC. When that happens the economy requires significantly less growth to have a stable price, which is good.

In fact I'm surprised how good the timing is, the largest periods of growth coming during the time of highest inflation. After the rewards go down we do not need the kind of growth we saw a few months ago, which is fine, because percentage wise it's very difficult to produce that kind of growth continuously.


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September 12, 2011, 01:46:40 PM
 #20

Why don't you make a poll in the mining forum? 

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