Will Bitcoin ever drop down below 2 USD?

[fabianhjr]

Now that is interesting, thanks for the graph.
A think you must consider, does the thash/sec affects the exchange or does the exchange affect the thash/sec?

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[Enky1974]

Now that is interesting, thanks for the graph.
A think you must consider, does the thash/sec affects the exchange or does the exchange affect the thash/sec?

I dont know:) probably it's a self referential system with a mutual interaction beetween these 2 aspects (speed and price) ; speed influence prices that then influence network speed and so on trying to find an equilibrium, in the meanwhile they oscillate.

[Third Way]

Who's buying all these BitCoins?

[Enky1974]

Who's buying all these BitCoins?

Maybe long term investors.

[bitcoinBull]

This might help:

I found, playing with statistica 7 by statsoft, a nice relation using instead of difficulty the network speed in terahash/sec to price btc/usd ratio.
The formula is:
btc/usd ratio=-.4621+exp(-.56571+(1.50987)*networkspeed)
where networkspeed it's intended in terahash/sec.
Example; actual speed it's 1.385 (from http://bitcoinwatch.com/)

so

fair price = -.4621+exp(-.56571+(1.50987)*1.385) = 4.13 $/BTC
the tolerance of the exponential fitness it's around +/- 1 btc

EDIT: btc/usd ratio=-.25882+exp(-.80633+(1.65207)*networkspeed) this formula is better and use last 150 days or "bitcoin GPU-era"
if network speed will drop to 1 TH we will have 2.07 $/BTC as fair price.


this is the regression fit chart
observe vs regression

Very nice! 

I'd like to put a copy of this in my difficulty vs. price thread, if you don't mind.

[Enky1974]

Very nice! 

I'd like to put a copy of this in my difficulty vs. price thread, if you don't mind.

Sure, maybe try to replicate my results to see if they are the same.

[Enky1974]

I've noticed that the networkspeed increased above 1.8 Th/sec

from http://bitcoinwatch.com/
Network Hashrate Gigahashs/s 1827.41

using the formula i discovered few days ago:
btc/usd ratio=-.25882+exp(-.80633+(1.65207)*networkspeed in terahash/sec)
btc/usd ratio=-.25882+exp(-.80633+(1.65207)*1.82741) =~8.88$ in line with actual mtgox quote of 8.72

i still have to compute the formula for upper and lower 95% confidence level
cheers

[iya]

i still have to compute the formula for upper and lower 95% confidence level

Lol, remember this depends entirely on your argument being sound. Think of the recent CDO pricing disaster.

Here's my 2 bitcents:
The influx of new users drives the exchange rate.
The exchange rate drives the mining power, with some delay.
For 2 Th/sec we currently need about 1MW electricity. With these costs, the system cannot grow on speculation alone, for very long.
When the user growth slows, current miners will slowly bring down the prices, even if no early adopters cash out.
From the demand side, there's still lots of growth potential.
$10/BTC is psychological resistance and we'll probably retest the lower single digits. If $20 is breached, we could see $100 at the end of the year.
Maybe Bitcoin really does become as big as PayPal, then these prices are justified, but imho the chances are overestimated.

[Enky1974]

i still have to compute the formula for upper and lower 95% confidence level

Lol, remember this depends entirely on your argument being sound. Think of the recent CDO pricing disaster.

Here's my 2 bitcents:
The influx of new users drives the exchange rate.
The exchange rate drives the mining power, with some delay.
For 2 Th/sec we currently need about 1MW electricity. With these costs, the system cannot grow on speculation alone, for very long.
When the user growth slows, current miners will slowly bring down the prices, even if no early adopters cash out.
From the demand side, there's still lots of growth potential.
$10/BTC is psychological resistance and we'll probably retest the lower single digits. If $20 is breached, we could see $100 at the end of the year.
Maybe Bitcoin really does become as big as PayPal, then these prices are justified, but imho the chances are overestimated.

Good analysis  , indeed if a real economy based on btc doesnt grow the entire toy can collapse very fast.
Users stop to grow, miners then slowly push prices down, other miners stop to mine because prices go down, with less miners difficulty goes down, with lower difficulty miners earn more bitcoins and then dump the market, and so on....