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Author Topic: "Fundamental" reasoning for $4.5 bottom  (Read 2081 times)
ArsenShnurkov
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January 09, 2012, 11:27:52 PM
 #1

We already know that bitcoin price is higher then $2, when miners receive 50 bitcoins per block.
Next year miners should rise prices twice because of 25 bitcoins per block.
That lead us to $4 per bitcoin estimation.
And we can add 0.5 because of some progress in adoption Smiley
That is why I will buy below $4.5 in this year.
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January 09, 2012, 11:30:23 PM
 #2

I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
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January 09, 2012, 11:55:58 PM
 #3

Next year miners should rise prices twice because of 25 bitcoins per block.
Explain your reasoning here. Why would miners minting fewer bitcoins per block (not per effort - that's insulated from price by the Difficulty) drive prices up?

I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
Price floors have their own disadvantages.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the culture of naive fools and conmen, the former convinced that BTC is a magic box that will turn them into millionaires, and the latter arriving by the busload to devour them.
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January 10, 2012, 12:02:12 AM
 #4

Next year miners should rise prices twice because of 25 bitcoins per block.
Explain your reasoning here. Why would miners minting fewer bitcoins per block (not per effort - that's insulated from price by the Difficulty) drive prices up?
It's kind of a risky assumption to make, but given that price is based on supply and demand, a cut in supply will increase the price.  But you're right - the difficulty, and the fact that miners can stop mining whenever they feel it is no longer worthwhile, keeps the price from rising solely due to the cost of mining.
Quote
I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
Price floors have their own disadvantages.
Such as?
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January 10, 2012, 12:05:36 AM
 #5

I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?

I'm sure Arsen has 100M to back up his statement!

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January 10, 2012, 12:22:40 AM
 #6

This is not how markets work. Speculators already knew of the minting cut by last year. The market players use all their knowledge about Bitcoins to determine the price.

If there was a fundamental reason for Bitcoin never to fall below 4.5, its price would always be significantly higher because the possible upside must be factored into price as well. Reality is, Bitcoin might drop close to zero if the speculation mania dies down before commerce can sustain current levels.
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January 10, 2012, 12:36:04 AM
 #7

The profit/reward that miners get has zero to do with any "fundamental value" of Bitcoin.

Mining profitability is a consequence of the bitcoin price, not the other way around (how many times must this be said on the forum before people will get it?) =)

ArsenShnurkov
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January 10, 2012, 12:49:13 AM
 #8

how many times must this be said on the forum before people will get it?

Until you will try to understand the psychology of miners. The price is related to the costs through the miner's expectations.
Qoheleth
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January 10, 2012, 01:26:55 AM
 #9

how many times must this be said on the forum before people will get it?

Until you will try to understand the psychology of miners. The price is related to the costs through the miner's expectations.

Well, yeah. BTC price affects mining cost, so people leave turn on or off their rigs until the difficulty balances.

Or they don't, and someone eats a loss they didn't have to eat.

Either way, that doesn't mean that the reverse is true; the only effect miners have on the sell price is to slightly increase or decrease the sell pressure based on their need to "cash in". Miners "needing to make twice as much" won't have a speck of influence on the bid support - the price people are willing to pay for their BTC - which is where the $2 floor came from.

Quote
I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
Price floors have their own disadvantages.
Such as?
On second thought, I suppose most of the usual side effects are negated by it coming out of the pocket of someone with cash in hand. I suppose the main downsides are to that guy: he's spending a fortune on BTC, and will probably only be able to use a fraction of them without undoing his hard work (or ending up selling them back to himself).

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the culture of naive fools and conmen, the former convinced that BTC is a magic box that will turn them into millionaires, and the latter arriving by the busload to devour them.
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January 10, 2012, 01:42:09 AM
 #10

Next year miners should rise prices twice because of 25 bitcoins per block.
Explain your reasoning here. Why would miners minting fewer bitcoins per block (not per effort - that's insulated from price by the Difficulty) drive prices up?
It's kind of a risky assumption to make, but given that price is based on supply and demand, a cut in supply will increase the price.  But you're right - the difficulty, and the fact that miners can stop mining whenever they feel it is no longer worthwhile, keeps the price from rising solely due to the cost of mining.
Quote
I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
Price floors have their own disadvantages.
Such as?

If the real world utility of bitcoins places their value at something like $3, then a $4.50 floor price supported by one individual is harmful to bitcoin.  No one except the $4.50 supporter would want to buy one.  All new bitcoins end up in one person's hands, who obviously won't be happy to sell them off cheaper to someone else.  It all depends on how the market reacts.  Will it think 'great, someone is supporting at $4.50, so I'm confident to use bitcoin' or 'there's some sucker out there willing to pay a lot more than everyone else.  Sell!'

It's ironic that some people are dreaming of benevolent price manipulation when the whole point of bitcoin was that no one entity can grab control of bitcoin.

This forum is littered with old posts such as 'BTC can't fall below $X because mining cost is $Y', and the market has provided follow up proof that such assertions are always false.

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Crypt_Current
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January 10, 2012, 02:56:34 AM
 #11

how many times must this be said on the forum before people will get it?

Until you will try to understand the psychology of miners. The price is related to the costs through the miner's expectations.


Shows how many miners you actually know :-P  (professional, devoted ones anyway)

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Crypt_Current
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January 10, 2012, 02:57:28 AM
 #12

The profit/reward that miners get has zero to do with any "fundamental value" of Bitcoin.

Mining profitability is a consequence of the bitcoin price, not the other way around (how many times must this be said on the forum before people will get it?) =)



+1
Mr. Voorhees always seems to know what he's talking about...

... Especially in Jason X !!

XD

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evoorhees
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January 10, 2012, 03:50:06 AM
 #13


+1
Mr. Voorhees always seems to know what he's talking about...

... Especially in Jason X !!

XD

Anyone know where I can buy a chainsaw with Bitcoin?
ArsenShnurkov
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January 10, 2012, 03:55:38 AM
 #14

where I can buy a chainsaw with Bitcoin?

I have one in Russia, will sell for 28 BTC on EXF basis ( http://en.wikipedia.org/wiki/Incoterms )
Crypt_Current
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January 10, 2012, 04:37:24 AM
 #15


+1
Mr. Voorhees always seems to know what he's talking about...

... Especially in Jason X !!

XD

Anyone know where I can buy a chainsaw with Bitcoin?


Don't forget the hockey mask  Grin

Jason X is great though... I recommend it if you haven't seen it.  Nanobots are used to make Jason into Super-Jason!

And an android's nipples fall off!

10% off at CampBX for LIFE:  https://campbx.com/main.php?r=C9a5izBQ5vq  ----  Authorized BitVoucher MEGA reseller (& BTC donations appreciated):  https://bitvoucher.co/affl/1HkvK8o8WWDpCTSQGnek7DH9gT1LWeV5s3/
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SgtSpike
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January 10, 2012, 05:56:41 AM
 #16

Next year miners should rise prices twice because of 25 bitcoins per block.
Explain your reasoning here. Why would miners minting fewer bitcoins per block (not per effort - that's insulated from price by the Difficulty) drive prices up?
It's kind of a risky assumption to make, but given that price is based on supply and demand, a cut in supply will increase the price.  But you're right - the difficulty, and the fact that miners can stop mining whenever they feel it is no longer worthwhile, keeps the price from rising solely due to the cost of mining.
Quote
I want to see someone with $100M guarantee to buy Bitcoins at $4.50/each forever.  I wonder what sort of confidence would be given if such a guarantee was in place?
Price floors have their own disadvantages.
Such as?

If the real world utility of bitcoins places their value at something like $3, then a $4.50 floor price supported by one individual is harmful to bitcoin.  No one except the $4.50 supporter would want to buy one.  All new bitcoins end up in one person's hands, who obviously won't be happy to sell them off cheaper to someone else.  It all depends on how the market reacts.  Will it think 'great, someone is supporting at $4.50, so I'm confident to use bitcoin' or 'there's some sucker out there willing to pay a lot more than everyone else.  Sell!'

It's ironic that some people are dreaming of benevolent price manipulation when the whole point of bitcoin was that no one entity can grab control of bitcoin.

This forum is littered with old posts such as 'BTC can't fall below $X because mining cost is $Y', and the market has provided follow up proof that such assertions are always false.
Ok, fair enough.  Wink
pent
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January 10, 2012, 07:48:13 AM
 #17

We already know that bitcoin price is higher then $2, when miners receive 50 bitcoins per block.
Next year miners should rise prices twice because of 25 bitcoins per block.
That lead us to $4 per bitcoin estimation.
And we can add 0.5 because of some progress in adoption Smiley
That is why I will buy below $4.5 in this year.

I don't agree with correlation between miners price expectation and real market price (or its bottom). Miners will always mine (more or less) either it is profitable or not. Many of miners expect the profit in a future.
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