$3.20 is the new $3.68

[grod]

I know it's probably been priced in, but with the recent difficulty drop if your cost basis for mining a coin was $1.80 it is now less than $1.60.  From the pricing action on mtgox it sure looks like lots of people have just factored that into their decision of mine-and-hold vs pay for power and hardware.

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[proudhon]

Sorry everyone, put a fork in it.  This thing is done.  A few months ago I said we wouldn't see $20 again in 2011.  More recently I said we wouldn't see $10 again in 2011.  I'm losing confidence that we'll sustain a price over $5 again in 2011, and with no compelling reason to hold bitcoins, and no compelling reasons apparent down the road, I think for all practical purposes this experiment will have run its course in 2012.  I can't remember what podcast it was, but somebody interviewed an economist about bitcoin and asked where he thought it'd be in 5 years and he quickly responded "Oh, it won't exist".  I believe him.  It's been fun.

[grod]

Pfft. Pessimist.  I can still extract a few more hundred $ out of this pyramid before it catches fire and implodes.   There are *PLENTY* of bulls left.

[panerai]

Sad to admit, but BTC is not going anywhere while Silk Road is running. Too much money there to just let it go.

[Cluster2k]

I don't know what the price of bitcoins will be by 2012, but I do know one thing:  there will be no shortage people who have invested large sums of money on the way down, trying to talk it back up. 

'Thank you for selling your bitcoins to me, I'm feasting on your panic and buying up!'

'The bears are just trying to talk it down so they can buy it cheaply!'

'New uses for bitcoins are just around the corner.  It will boom very soon'

[Serge]

If you don't believe in usefulness of this technology, what are you doing here? Oh, I forgot, it's speculation forum, sorry, carry on .

[Cluster2k]

If you don't believe in usefulness of this technology, what are you doing here? Oh, I forgot, it's speculation forum, sorry, carry on .

It's useful, just not as an investment vehicle.  If only people who loved bitcoin and were heavily invested in it were interested in participating in the forums, the forums would quickly descend into groupthink.  I don't think anyone wants to see a cult of bitcoin.

[Technomage]

If you don't believe in usefulness of this technology, what are you doing here? Oh, I forgot, it's speculation forum, sorry, carry on .

+1

I'm finding I spend too much time on the speculation forum. My thoughts on Bitcoin is that it will really rocket next year. This thought has not much to do with price speculation other than the long term being very positive. For the mid term we might still see the price going down which is supported by the fact that the transaction count is still declining from the peak (new low a few days ago).

The development of the real economy is slow, mostly because it takes time to plan and start companies. Some people have been really quick in my opinion and that's why we've already seen steady merchant growth and a lot of new btc/usd trading sites in a very short period of time.

Fact is a lot of companies haven't started yet and are just going to be starting soon. I for one am in the process of starting my own BTC-related company (it's going to be a merchant service similar to bit-pay, community site provider, web of trust provider, Bitcoin-merchandise seller etc. and it'll be mostly for the Finnish market, but also for global markets as an online merchant service).

I'm currently aiming to start the company in January or February, these things take time. I'm quite sure a lot of other enthusiasts are in a similar position. If Bitcoin is to really succeed it'll happen in 2012. The most potential markets are porn and sex toy merchants and all gambling. Just need a few big merchants to start accepting it and then it'll spread really fast. Also any type of micropayments are a massive market for Bitcoin.

I will make a bigger post about this in the general forum later. I'm starting to feel this forum is more and more useless.

[Technomage]

I am not so sure about that, as long as the technology continues to function.

Rather, I think we will see a more-or-less complete changing of hands... From those who abandoned Bitcoin for one purpose, to those who adopt it for another...

+10

[N12]

What about that?

It's important to note the difference between a stable price and an unstable one. For example, I have stated that if the price stays below $5 for a significant period of time, which is at least a week, it's a sign of the long-term switching to "neutral". A price below $4 for more than a week, then I'd say down. Price below $4 for a month would mean abandon ship.

This is how I've seen it for the past weeks and so far none of those scenarios have happened so the long-term is clearly up. Instead of new lows we've actually had a couple of rallies which is a sign that we are getting closer to a bigger break-out.

[S3052]

Thats how I see it as well...
+1 to Blitzboom

[grod]

There's no doubt in my mind bitcoin will have another 300% rally, possibly this year.  Just not from $3.  As pointed out, the technology has potential to be quite useful.

But that has nothing to do with price levels 75% of the current bitcoin ecosystem invested at.  We're still very much in the "denial" phase of post-bubble deflation.  I'm still bullish about current bitcoin prospects, just not at prices current bulls are willing to pay.

[Technomage]

What about that?

I don't actually see it like that anymore. There is the theory that a total price crash and long term trend collapse could actually hurt Bitcoin enough to "kill it" but I don't see it that way. It will kill it as an investment vehicle for the time being at least, but that's not the end of Bitcoin. Bitcoin works regardless of the price. Actual trade and usage as a store of value will bring it up regardless of the investment value.

The price will be held above a certain level because of actual usage and I don't know what this level is exactly, but my common sense and looking at the number of actual merchants says that it has to be above $1, actually I think it's safe to say there's at least 10 million dollars worth of activity in the economy so the price is going to be a good amount above $1, at least.

But now we're at $3.9, there is actually quite a bit of room for the price to drop. If we speculate and say the actual value the economy can currently hold from real usage is around $1.5 - $2, then the price can still drop 50%. I think this is very much possible and that will not kill Bitcoin. There is one problem this does cause, which is a much less powerful mining network. Will it be too small to be secure enough? I hope the answer is no, but I don't know.

[Bigpiggy01]

The price will be held above a certain level because of actual usage and I don't know what this level is exactly, but my common sense and looking at the number of actual merchants says that it has to be above $1, actually I think it's safe to say there's at least 10 million dollars worth of activity in the economy so the price is going to be a good amount above $1, at least.

This might brighten your view slightly 

http://baltic-review.com/2011/10/alternative-currency-coming-to-stores-near-you/

[grod]

But now we're at $3.9, there is actually quite a bit of room for the price to drop. If we speculate and say the actual value the economy can currently hold from real usage is around $1.5 - $2, then the price can still drop 50%. I think this is very much possible and that will not kill Bitcoin. There is one problem this does cause, which is a much less powerful mining network. Will it be too small to be secure enough? I hope the answer is no, but I don't know.

Now you see the light.  If bitcoin is trading significantly under average production cost long enough then miners WILL shut down.  Eventually.  They may even sell their existing stash out of disgust and psychological need to distance themselves from being wrong, pushing the prices even lower than they "should" be assuming rational actors.  Remember the lower the hash rate the longer difficulty takes to adjust down, and less feasible it is to mine at current as opposed to expected future difficulty.  If everyone flees at once bitcoin becomes more vulnerable to 51% attacks while transaction rate becomes stupid slow, decreasing the overall value of the network and driving the spiral further down.

Right now it'll take somewhere between 500k and 2 million dollars to destroy the bitcoin ecosystem.  If that drops to 50-200k the goal will be within reach of quite a few traders.  The question will become "Is there enough money left in bitcoin to attack it?" as opposed to "Is it feasible to attack bitcoin?"

[Technomage]

There's no doubt in my mind bitcoin will have another 300% rally, possibly this year.  Just not from $3.  As pointed out, the technology has potential to be quite useful.

But that has nothing to do with price levels 75% of the current bitcoin ecosystem invested at.  We're still very much in the "denial" phase of post-bubble deflation.  I'm still bullish about current bitcoin prospects, just not at prices current bulls are willing to pay.

I have to say that I agree 100%. I currently see a crash and further decline as more likely than a recovery. The scenario of a 6-12 month recovery is for me the most likely outcome. This is something S3052 mentioned as well, as a possibility.

Within a year we will see Bitcoin adoption rise again significantly because then it can actually be used in more ways. The hype bubble burst and there will not be another one until Bitcoin can actually deliver. We need news on real developments.

On a positive note I must say that these developments can happen very fast. All it needs are more merchants accepting Bitcoin. And I don't mean new merchants that only accept Bitcoin, what it needs is known merchants adding Bitcoin as a payment option. Once one or two companies in the same market do this, all the competitors will be interested and might add Bitcoin as well. Then it'll explode, at least in the markets where consumers find it useful.

[Technomage]

This might brighten your view slightly  

http://baltic-review.com/2011/10/alternative-currency-coming-to-stores-near-you/

My view is that Bitcoin will have a very bright future as long as the network is secure and it stays legal. But my view on the short and mid term price development is not very bright, actually it's getting more dim every day. And when people like me start to think a recovery is unlikely at this point, then I just wonder what will happen to the price...

[pennytrader]

Tired of the discussion of "bears" & "bulls". I don't think there's any so called "bears". There're only "insiders" who mine the coins and sell them to "believers" who believe this thing is going to rock.

[Edward50]

Like I have been saying all along the problem with bitcoins are that there is just not enough money it it to support all these miners who want to make cash for just running their video cards.

I used to deal in antiques and I see bitcoins in a similar way. There is pratically no use for antiques or bitcions. People just hold them for value. When too many of either antiques or bitcoins hit the markets, the price drops hugely. Everybody has bitcoins, can't do anything with them. Scarcity is the only thing to bring up value, but guess what, thousands of new bitcoins are mined every single day. With antiques, maybe 1 or 2 of the only product are worth 10,000, you bring 10 to the market, that price just dropped to $500.

The market is so tiny for people who will actually pay cash for these useless coins.

What the market really needs is a stable bitcoin, maybe tied into the cost of living. This way it will have some practical use as you could store your money into it without the wild price swings.

[tvbcof]

Sorry everyone, put a fork in it.  This thing is done.  A few months ago I said we wouldn't see $20 again in 2011.  More recently I said we wouldn't see $10 again in 2011.  I'm losing confidence that we'll sustain a price over $5 again in 2011, and with no compelling reason to hold bitcoins, and no compelling reasons apparent down the road, I think for all practical purposes this experiment will have run its course in 2012.  I can't remember what podcast it was, but somebody interviewed an economist about bitcoin and asked where he thought it'd be in 5 years and he quickly responded "Oh, it won't exist".  I believe him.  It's been fun.

I am not so sure about that, as long as the technology continues to function.

Rather, I think we will see a more-or-less complete changing of hands... From those who abandoned Bitcoin for one purpose, to those who adopt it for another...

I suspect as much.  It's a big world, and Bitcoin has certain usefulness regardless of the price as long as the exchanges remain viable (which is, to me, a big question mark.)  Bitcoin is great for funding out-of-favor efforts which mainstream financial institutions have cut off (like efforts to change the financial institutions, for instance.)  It also seems to me that it has some usefulness to 'ratchet in' a large trades between non-trusting parties though I'm not aware of that being done in a systematic way.  And, of course, good old fashioned money laundering could be helped by some of Bitcoin's properties.

I expect that these uses will eventually set a floor on the BTC price, and if such use grows (faster than inflation), so to will the floor.  The rapid re-cycle would put that floor pretty low, though.

Although I keep a position in cold storage on the long-shot bet that a disruption of some sort will cause a spike, and some slightly more complex but wholesome longer-shot hopes as well, I've kissed goodbye the actual USD's I've put in as well as the remainder that I have earmarked for BTC purchase when the price falls some more.

I do tend to snap up some BTC on the exchanges when I want to donate right away to some effort.