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Author Topic: Is it stabilizing?  (Read 4532 times)
PinkiePie
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September 13, 2011, 04:26:10 PM
 #1

Discuss.

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September 13, 2011, 06:35:03 PM
 #2

the clam b4 the storm...

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September 13, 2011, 08:06:17 PM
 #3

The fundamentals don't support $5/BTC, so the price is supported by speculation.  Speculation is unstable.

So no.

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September 13, 2011, 10:24:49 PM
 #4

Discuss.

1-2 day not mean "stabilizing"

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September 13, 2011, 11:00:51 PM
 #5

When was the last time you would consider it stable?

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September 14, 2011, 01:17:32 AM
 #6

when gox was down, it stayed at 17 for a while  Grin
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September 14, 2011, 07:29:15 AM
 #7

the clam b4 the storm...

Yes, there very often is a clam before a storm. Then it spits in your eye. Smiley
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September 15, 2011, 05:15:27 AM
 #8

It jumps randomly somewhere each day and then stagnates for a day, then repeats.

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September 16, 2011, 05:01:53 PM
 #9

the clam b4 the storm...

^ the clam hehe Cheesy

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September 17, 2011, 02:04:21 AM
 #10

the clam b4 the storm...

^ the clam hehe Cheesy


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September 18, 2011, 08:41:24 PM
 #11

doubt it.
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September 18, 2011, 08:48:34 PM
 #12

Everything GREEN! Cheesy

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September 18, 2011, 09:59:16 PM
 #13




WHY YOU JINX IT WHY!!??

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September 19, 2011, 09:15:42 AM
 #14

YES!

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BitMagic
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September 19, 2011, 04:27:01 PM
 #15

The fundamentals support $5/BTC, so the price is supported by true value.  True value is stable.

So yes.

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Revalin
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September 19, 2011, 07:29:02 PM
 #16

My method puts the fundamental value in the low cents range.  How do you compute fundamental support at $5?

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September 19, 2011, 07:32:48 PM
 #17

My method puts the fundamental value in the $5 range. They rest on the overall state of the economy, interest rates, production, earnings, and management. How do you compute fundamental support at the low cents range?

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September 19, 2011, 08:15:25 PM
 #18

A fundamental value in the low cents range is ridiculous. For me the fundamental value is supported by the size of the economy (transaction count) and the general interest people have in Bitcoin. That's all I need. Those indicators currently support a price at around $5 very well. It's based on the correlation of past value and these indicators, which so far go together fairly closely.

A price higher than where it is now is mostly based on the future expectation people have for Bitcoin and based on that we're heading towards higher prices again, because the general mood of the market is changing. Optimism is winning against pessimism.

As far as OP's question goes, there's no stabilizing in sight. We might see stabilility when the market is 100 times bigger than it is now. Before then we will have small stable periods but other than that it's either going to go up, down or jump all over the place.

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September 19, 2011, 08:32:25 PM
 #19

My fundamental value is a floor based on commerce.  My assumptions:

  • The price is driven by utility (people who use coins to buy things) plus speculation (people who buy coins mainly hoping they will gain value)
  • Utility is based on enthusiasts (people who use coins but do not use an exchange, IE, treating it as an isolated currency) plus practical users (people who use coins as a proxy for their local fiat)
  • 80% of coins do not hit the exchanges, either due to loss, long term hoarding, or enthusiasts
  • The remainder are traded for utility (upon which I base my price floor) and speculation
  • Actual commerce in BTC is around USD$10,000 per day

The practical-utility cycle is: buy coins on an exchange; store them in the wallet for a few days while shopping; buy goods; merchant sells coins on an exchange.  The fundamental value is the minimum required to fulfill this need.  Here's the formula I use:

Utility == ($10,000 commerce per day) * (3 days average time coins are held) / (  (7.2M total coins) * (20% coins in circulation)  ) == ($30,000 stored value) / (1.8M coins) == USD$0.0208 per BTC.

Note that I've already included hoarders in that price.  So, in my opinion, the remainder of the difference between the $0.02 floor and the $5.00 current price is speculation.

My speculation:  I don't think it will ever hit my $0.02 floor.  As the price starts dropping close to that (perhaps $0.20) the floor will start cushioning the fall, and when that happens people will become comfortable holding coins for longer periods.  Unfortunately at those lows it's cheap for speculators to start driving it up again (Yay! the crash is over!  BUY BUY BUY), though the next bubble won't be nearly as big as the first.  The bottoms of the speculative waves will find a practical bottom around $0.20, at least until utility is increased by stability (longer hold times) and greater daily commerce.

So, your turn.  How do you compute fundamental value?

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September 19, 2011, 08:39:21 PM
 #20

I was just giving you a hard time. I don't really trust "fundamentals" any more than I do historic prices projecting future prices. I take my walks random.

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September 19, 2011, 09:09:46 PM
 #21

I don't really care if you're just yanking my chain.  Smiley  I've been slowly refining my "fundamental value" argument for a while, and this let me write another draft.

Like I said, I don't expect my fundamental value to ever really drive the price; I'm guessing that the bottoms will be around 10x what I calculate, but it's hardly a science.  It's more just a useful reference for when people keep asking "oh my god how long can it keep falling": well, it'll stop sometime before there.  Other than that, who knows.

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September 19, 2011, 09:25:17 PM
 #22

The fundamentals support $5/BTC, so the price is supported by true value.  True value is stable.

So yes.

Whenever it seems to be, it moves somewhere else.

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September 19, 2011, 09:37:56 PM
 #23

The fundamentals support $5/BTC, so the price is supported by true value.  True value is stable.

So yes.

Whenever it seems to be, it moves somewhere else.

Yeah, if you read my last post, I was not being serious. Compare the quote above to Revalin's first comment in the thread.

I'm all fine and good if people want to speculate, but I think it's a bit funny to toss around fundamental analysis that nearly always depends on features non-existent in BTC. I was just looking at your calculations, Revalin, and just out of curiosity, how do you know how many coins are in circulation, and where is your estimate for average hoarding time coming from?

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September 19, 2011, 09:55:32 PM
 #24

Total BTC is https://blockexplorer.com/q/totalbc .  The 20% number is just a guess, but based on BTCDD we're seeing decent turnover and the 20% number is probably fair.  I'm still considering how I should formalize this number though.

The three day hold is also an estimate, just based on the fact that loading money/BTC into and out of an exchange takes some time and it's somewhat inconvenient if you're intending to buy something.  Most purchases probably run the cycle in less than a day, but some will hold a week or longer, so I picked three days.  It's very arbitrary, but I think I'm being generous on the whole.

The really flimsy part of my argument is the $10,000 figure.  It's not based on anything other than spending some time looking at bitmunchies, bitspend, etc: we don't have numbers, but they're doing OK, but not exactly giving the impression of huge business.  For better or worse, TSR is probably the best measure of real utility right now.  It's a small but significant niche.

Feel free to contribute better numbers or another technique to compute a value floor if you think you know a better one.

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September 20, 2011, 08:38:26 AM
 #25

EVERYTHING GREEN AGAIN! Smiley

Probably(!!!) buy as long as they are still cheap...

Or wait to sell low and buy high....  Tongue

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September 24, 2011, 02:03:33 PM
 #26

I'm not keen on the idea that the next up will not be as large as the last.

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October 02, 2011, 11:30:04 PM
 #27

STABLE =\= BitCoin

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October 03, 2011, 12:48:22 PM
 #28

Stability is a tricky word that people do not like to use when talking about financial markets. I think the BTC values have found their stable bottom and can only go up from here. I also think that the Bitcoin world in general has gotten into a groove and stabilized it self to a certain extent. You see this especially in the mining world - people are coming down to earth and getting more realistic and this is a good thing. You are also seeing a wider spectrum of investment happening, people are taking the time and energy out of mining and into developing great Bitcoin related products and services - this is also a good thing Smiley

No one can know the future but my speculation is that BTC will continue to rise but at a very slow pace - we are not going to see anymore over night jumps in the double digit range - however if some new technology comes out becomes a game changer - the sky's the limits!

 
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October 18, 2011, 06:02:12 AM
 #29

STABLE =\= BitCoin

The problem is, it never stabilizes, it only stagnates somewhere before a big jump.

Stable would be like if it always will jump back to $10 if you wait.  So then when it goes below you know it's a good time to buy and when it goes above you know it's a good time to sell.

But nope.  Nobody knows where it will go and when it stops moving, it just stagnates and you know it eventually will move somewhere bad--either bad for buyers or bad for sellers.

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October 18, 2011, 09:22:43 AM
 #30


[/quote]
The problem is, it never stabilizes, it only stagnates somewhere before a big jump.
[/quote]

So from that we can surmise that the market likes stability more than speculation.

Crypto supporter!
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October 18, 2011, 03:53:23 PM
 #31

It will!

What's happening is normal. You can make money doing something, then everyone joins, then the bubble burst and after that it will be stable.

See the famous dot-com bubble.

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October 18, 2011, 03:58:45 PM
 #32

Utility == ($10,000 commerce per day) * (3 days average time coins are held) / (  (7.2M total coins) * (20% coins in circulation)  ) == ($30,000 stored value) / (1.8M coins) == USD$0.0208 per BTC.
Excellent. Thanks for sharing your calculation. Mine is much more simple. I've decided that a bitcoin unit has absolutely no inherent value today, but the bitcoin transaction service has an enormous potential value. The market has decided that 0.0005 BTC is a transaction cost. I consider myself a fairly average consumer in the potential bitcoin-space (albeit more 'international' than most). I have calculate that all of my international bank transfers and credit card transaction fees over the year come to about 5 USD per transaction. IFF BTC replaced all credit card and international bank transactions I would expect a $1000 exchange price from that fact alone.

However (and here it gets flaky), I also consider myself a moderately to highly active bitcoin consumer/producer. I try to use BTC over USD, EUR, DKK, as much as possible. Despite my best attempts, my BTC flow accounts for less than 1% of my fiat flow. Now, there's money supply and other users which I've failed to calculate in, but to this single enthusiast, bitcoin is currently 1% as useful as a single dollar and represents about 1% of my total monetary transactions. So I buy your penny fundamental exchange rate.

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