My theory is proving true once again

[Benjig]

Well, looks like the initial short term drop is over? price is creeping up, maybe the retailers are not converting much to fiat now since the initial rush to spend is gone.

i think the actual downtrend to 560 we just had , wasnt for merchants converting bitcoins to fiat, but for the ethereum ipo, those are who are selling good part of the btcs they are receiving.

[kokojie]

I think the other factor to keep in mind is that Bitcoin is still wildly inflationary, much more so than USD.

Each day 3200+ coins are minted, and at $500 price tag, requires $1.6M new money to enter the Bitcoin economy, every single day, just to maintain the $500 price tag.

When less than $1.6M enters, price -> fall. Until a new equilibrium is reached.

On the other hand, if more than $1.6M enters each day, then price will rise.

[knocte]

I think the other factor to keep in mind is that Bitcoin is still wildly inflationary, much more so than USD.

Each day 3200+ coins are minted, and at $500 price tag, requires $1.6M new money to enter the Bitcoin economy, every single day, just to maintain the $500 price tag.

When less than $1.6M enters, price -> fall. Until a new equilibrium is reached.

On the other hand, if more than $1.6M enters each day, then price will rise.

That's a good point.

But there's also 2 things on top of that:
1) If less than 1.6M of bitcoin is bought in a day, it doesn't automatically mean that prices go down. Because all bitcoin miners don't sell their new minted coins right away. Many of them just hold them.
2) When next halving occurs, it will be 0.8M, much less. So this means that the more halving events we have, the quicker the price will start going up in the future.

[spazzdla]

This is why I refuse to buy unless they hold at min 10% of the purchase and even then I tend to want 50% or it's a no buy.

[kokojie]

I think the other factor to keep in mind is that Bitcoin is still wildly inflationary, much more so than USD.

Each day 3200+ coins are minted, and at $500 price tag, requires $1.6M new money to enter the Bitcoin economy, every single day, just to maintain the $500 price tag.

When less than $1.6M enters, price -> fall. Until a new equilibrium is reached.

On the other hand, if more than $1.6M enters each day, then price will rise.

That's a good point.

But there's also 2 things on top of that:
1) If less than 1.6M of bitcoin is bought in a day, it doesn't automatically mean that prices go down. Because all bitcoin miners don't sell their new minted coins right away. Many of them just hold them.
2) When next halving occurs, it will be 0.8M, much less. So this means that the more halving events we have, the quicker the price will start going up in the future.

I have trouble believing vast majority of miners are not selling for fiat immediately, because if a miner is not converting to fiat, then he's just paying facility/electricity/equipment cost out of pocket, then he's essentially buying BTC with fiat. He could have just bought BTC on an exchange if he wanted to buy BTC with fiat.

I agree on the halving speculation. The last halving happened on 2012.11.28, price was at $10, and then price went up very significantly. Price doubled by January, 3x in February, 5x in March, and 20x in April. The price went to over 100x by December.

[knocte]

I have trouble believing vast majority of miners are not selling for fiat immediately, because if a miner is not converting to fiat, then he's just paying facility/electricity/equipment cost out of pocket, then he's essentially buying BTC with fiat. He could have just bought BTC on an exchange if he wanted to buy BTC with fiat.

I think they are selling to cover their costs, sure, but I don't believe they are selling every bitcoin they make.

[dropt]

I have trouble believing vast majority of miners are not selling for fiat immediately, because if a miner is not converting to fiat, then he's just paying facility/electricity/equipment cost out of pocket, then he's essentially buying BTC with fiat. He could have just bought BTC on an exchange if he wanted to buy BTC with fiat.

Vast majority are (IMO) selling, because the vast majority are the corporate mines that aren't interested in BTC as a technology (holding).  They're interested in making millions of fiat dollars.  As for the indies, I keep most every coin I mine and pay my expenses out of pocket.  Why you may ask? Probably because every coin I mine has a cost basis of <$200.  Can't get those on the exchange.