Vast expansion of BTC utility/reputation - but no rise in BTC price? Why?

[Dr Bloggood]

link to the 1 year chart:  http://bitcoincharts.com/charts/mtgoxUSD#rg360zigDailyztgWza1gSMAzm1g50za2gSMAzm2g200zi2gVolzvzlzp

March-April -> Cyprus ramp
Oct-Dec -> China ramp.

---> next ramp will have an external booster same as the 2 before.  Periods of "stagnation" are the points where future vendors/today's hoarders are accumulating the commodity at a steady clip while overall supply-demand equation remains stable.

The external booster will be monetary/financial in nature, hard to predict but most likely Eurozone, although i wouldn't discount a chinese solvency/liquidity dislacation as possible source of monetary shock. i discount USD trouble this year... i might be wrong.  The end result in any case is that when fiat money (no matter which government issues) shows valuation and/or liquidity troubles, BTC demand  shoots up, therefore price corrects to a new supply demand equilibrium.

Good post! So you think it's more due to external factors than cycles, time frames, etc...

I was thinking about cycles too, for example the stock market does have very applicable cycles. Eg when you only hold during the strong part of the year every year, and are out of the market during the other time, you would have made a multiple of gains during the last years and decades (this is just to explain a cycle, BTC is strongly expanding so would follow its own patterns).

[ArticMine]

Be patient, OP.  

Finally - somebody who has held his account since May 2011... and that's all you have to say?

Pretty much. The price has gone up hundreds of dollars in just 3 months. If any security on the stock market went from $150 to $850 in 3 months, people would be going nuts. In Bitcoinworld, people feel its not happening fast enough.

As far as being here from 2011 - I got super stoked watching the price go up to $30, and watched and read countless stories and vids about how bitcoin was going to zero in the months that followed. It spent the remainder of the year and much of 2012 languishing in single digit prices before finally cracking $10 again- and that was huge news at the time.

So yeah, just be patient. Buying crypto at todays prices will make you look like a genius in a year or two - count on it. Just be patient.

+1

[zerk89]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago. They have begun hoarding when it is mathematically impossible to get a ROI. Less coins on exchanges over peroid of 1stJAN-March31st creates artificial scarcity. Around this point or after you will see a huge price hike, to a price where people who got in the game past 3-4 months are able to receive their ROI, which is at least 2x current price. The subsequent increase in price will attract a wave of media attention and more pyramid blocks will come to buy-in. Greed is the self regulating factor from mining manufacturers who are mining with the hardware as it comes off the production line. The pyramid will continue folks!

[smooth]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago.

This isn't even true. You can still buy miners which will very likely have a positive ROI, you just have to be very, very careful and selective about it. High difficulty can never preclude a ROI, only an imbalance between difficulty and costs.

I have no no idea if miners will increase their hoarding, but if they do it will be positive for the price, that is true.

[zerk89]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago.

This isn't even true. You can still buy miners which will very likely have a positive ROI, you just have to be very, very careful and selective about it. High difficulty can never preclude a ROI, only an imbalance between difficulty and costs.

I have no no idea if miners will increase their hoarding, but if they do it will be positive for the price, that is true.

The hardware they purchased is vaporware, they can't resell it, maybe 1% of them can to retards on ebay. But the main reason is they could be lucky to pay off the hardware cost, and/or electricity. After that the difficulty makes sure that you won't be making anything of reasonable value, any coins generated from then onwards are hoarded.

[mestar]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago. They have begun hoarding when it is mathematically impossible to get a ROI. Less coins on exchanges over peroid of 1stJAN-March31st creates artificial scarcity. Around this point or after you will see a huge price hike, to a price where people who got in the game past 3-4 months are able to receive their ROI, which is at least 2x current price.

So, most of the miners got scammed and sold hardware that is too expensive, and they will lose money.

Tough, they made a gamble and lost.

Then you say that this means that the price should go up so that they do not lose?  Yeah right, keep living in your dream world.  

That's not how markets work.  Cost does not determine price.  If miners don't want to sell for less than 6k or whatever, there will be others that do want to sell, perhaps because they bought for $15 a year ago.

If all the BTC holders want to cash out at this point, it would simply be impossible at current prices.  The depth is not there.  Until you sell, it's all paper profits.

[smooth]

The hardware they purchased is vaporware

Not all of it no.

After that the difficulty makes sure that you won't be making anything of reasonable value

False in general. True in some cases.

any coins generated from then onwards are hoarded.

I guess we'll see. If there is a lot of hoarding, the price will go up.

[zerk89]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago. They have begun hoarding when it is mathematically impossible to get a ROI. Less coins on exchanges over peroid of 1stJAN-March31st creates artificial scarcity. Around this point or after you will see a huge price hike, to a price where people who got in the game past 3-4 months are able to receive their ROI, which is at least 2x current price.

mining manufacturers are likely holding their mined coins aswell that they got from using the hardware before they shipped it onto the consumer, that also artificially bumps the price up for the next wave of sales.

So, most of the miners got scammed and sold hardware that is too expensive, and they will lose money.

Tough, they made a gamble and lost.

Then you say that this means that the price should go up so that they do not lose?  Yeah right, keep living in your dream world.  

That's not how markets work.  Cost does not determine price.  If miners don't want to sell for less than 6k or whatever, there will be others that do want to sell, perhaps because they bought for $15 a year ago.

If all the BTC holders want to cash out at this point, it would simply be impossible at current prices.  The depth is not there.  Until you sell, it's all paper profits.

[mestar]

So, in your dream world:

-speculators are hodling
-miners are hodling
-hardware manufactures are hodling

So, everybody is hodling.  Yet, we saw 10k BTC sold in the last 24 hours.  So, somebody is selling, we know that for sure.   

[Dr Bloggood]

Just wait until the bitcoin miners reach the point where they realise they won't get a ROI on their mining hardware with the increasing difficulty, which came to realisation a few weeks ago. They have begun hoarding when it is mathematically impossible to get a ROI. Less coins on exchanges over peroid of 1stJAN-March31st creates artificial scarcity. Around this point or after you will see a huge price hike, to a price where people who got in the game past 3-4 months are able to receive their ROI, which is at least 2x current price. The subsequent increase in price will attract a wave of media attention and more pyramid blocks will come to buy-in. Greed is the self regulating factor from mining manufacturers who are mining with the hardware as it comes off the production line. The pyramid will continue folks!

That's a very interesting thought, and even if it isn't the entire reason for rising price, it still could be a (big?) part of it. I guess we will se if you are right in March/April.

Let's do some maths - how many BTC will be held by the miners at the end of March (I know nothing about mining)?

Also, how do you get to the date of March 31st? And are you saying it hasn't been profitable to sell since Jan 1st, so that's why miners have been hoarding from then on?

[Dr Bloggood]

That's not how markets work.  Cost does not determine price.  

Production costs might determine price, or it might be the other way around. That's a complicated topic and should be looked at on a case-by-case basis.

I think the more common thing is something will cost as much as the costs of its production, transport, etc., plus an additional amount for gains of the producer.

I wrote a longer post about this in the thread about gold.

[xDan]

It's the calm before the storm

we just had a big rise, and probably got ahead of ourselves. Now we've got to wait until people are used to thinking ~$800 is a reasonable price.

[BitTrade]

Yet, we saw 10k BTC sold in the last 24 hours.  So, somebody is selling, we know that for sure.  

No we don't.  We don't know if that was just the same 100 coins that were sold 100x each.  You need to factor in "Bitcoin days destroyed"

[mestar]

Yet, we saw 10k BTC sold in the last 24 hours.  So, somebody is selling, we know that for sure.  

No we don't.  We don't know if that was just the same 100 coins that were sold 100x each.  You need to factor in "Bitcoin days destroyed"

You are right.  Let me reformulate.  We can see a couple of thousands BTC siting in the order books of various exchanges.  So, somebody is at least trying to sell.

[bnrrpayments]

The real sector of the Bitcoin economy (use of bitcoins to pay for goods and services) remains very small. The prevalent part is speculative trading and holding. Besides Bitcoin potentially becoming obsolete in the future due to further technological progress, it poses another major risk: once all bitcoins are mined out and Bitcoin is still far from the mainstream, the speculators might start liquidating their holdings which will lead to its immense value drop. The suit will then be followed by companies and individuals accepting it as means of payment for their goods and services (who would like to find their revenue halved over a short time in the USD equivalent?), bringing the final Bitcoin value to zero. Unlike with gold, the only value of Bitcoin is in its usage as means of exchange; if no longer used that way, it will have no value whatsoever.

Right now, there's no proper modern payment infrastructure in place to trade goods and services in bitcoins. Very few rudimentary Bitcoin POS-terminals offline, the use in online commerce is hindered by the irreversible payments and a high risk of fraud thereof, unreliable amateurish exchanges (even the major ones) etc.

What can secure Bitcoin a future is an utter collapse of major fiat alternatives - a global-scale economic disaster. Will it happen in our lifetime though? I wouldn't be so sure.

[smooth]

once all bitcoins are mined out

In 2140?

[bnrrpayments]

once all bitcoins are mined out

In 2140?

Might not have to take all of them, actually. I should have said instead "once enough bitcoins are mined out to make further mining too troublesome for most existing miners".

[smooth]

once all bitcoins are mined out

In 2140?

Might not have to take all of them, actually. I should have said instead "once enough bitcoins are mined out to make further mining too troublesome for most existing miners".

Even at that, its going to be a while.  Two more years just for the next reward halving, and 12.5 BTC is nothing to sneeze at. And four more years each time thereafter. We should be pretty safe for the next decade or two.

Many of the altcoins with their ridiculous instamine schedules are in much worse shape.

[pleiotropik]

In Reply to Dr Bloggood:

There is a global tightening of capital flows going on reminiscent of what was happening exactly 100 years ago. Capital controls, reporting requirements, etc.

Bank secrecy (at least for US citizens) is a distant memory as they live under the omniscient Eye R.S. and the FATCA that has made US citizens lepers in the world financial markets since the reporting requirements make every bank in the world a deputy of the Eye R.S. regarding US citizens ... All of those factors plus the fact that the Euro still looks like a badly constructed accord plus the instability in South America.... Etc... those are the background datapoints that make criptocoins enticing... Yes, every financial/monetary shock (and they are coming) will push more people towards criptos: not because they love them but because people with some wealth and not part of THE CLUB will try anything to salvage their $$$.

[aminorex]

Until you sell, it's all paper profits.

Correction:  When you sell, it's all paper profits.