Citi report on bitcoin

[wasserman99]

Accepting BTC is a newsworthy event, and you can lessen the impact for conservative stockholders by implying 100% conversion to fiat:  "At this point bitpay converts all paid BTC to USD at the moment of sale so there is no exchange risk".  However, CHANGING that 100% to 90% then 50% then 0% is easy and can be done without any external difference.

WRT the idea that merchant adoption = short term slide, places like coinbase make it so easy to cash out that this seems unlikely.

The citi report mentioned that if a company does hold some amount of fiat then their overall risk profile would be worse. Also if a company does not have any expenses in terms of bitcoin then they would have nothing they can use their bitcoin for.

Most companies are not in the business of speculating.

[tabnloz]

Accepting BTC is a newsworthy event, and you can lessen the impact for conservative stockholders by implying 100% conversion to fiat:  "At this point bitpay converts all paid BTC to USD at the moment of sale so there is no exchange risk".  However, CHANGING that 100% to 90% then 50% then 0% is easy and can be done without any external difference.

WRT the idea that merchant adoption = short term slide, places like coinbase make it so easy to cash out that this seems unlikely.

The citi report mentioned that if a company does hold some amount of fiat then their overall risk profile would be worse. Also if a company does not have any expenses in terms of bitcoin then they would have nothing they can use their bitcoin for.

Most companies are not in the business of speculating.

Ironically, Citi, JPM and their ilk almost solely are.

[hodap]

Just read the coindesk article re: citi report on bitcoin saying the effect of mining & increased retail adoption is depressing the price.

My possibly naive takeaway from this is that on the retail adoption side this is a necessary evil. upon acceptance a company may initially sell straight away into the market be ause they are basically testing the waters, but as their btc sales stabilise they will (lseeing the successful example of overstock) begin to hold a percentage in btc. this will equal less supply and will encourage b2b usage in the medium term even though it has a price dampening impact initially.

its part of the reason for the stagnating price but will also be part of the reason that it eventually takes off again.

id guess its a 12 month lag between accepting, holding and then paying suppliers in btc.

http://www.coindesk.com/citi-miners-merchants-keeping-bitcoin-prices-check/

The report is somewhat true to some extend.

Bitcoin goes up in the last 4 years mainly because people are hoarding them and not using them. As soon as people spend it, merchant will liquidate the payment as soon as consumer make the payment and hence depressing the price.

[leopard2]

That is true. Short term, more merchants attract more unused coins which are then sold. Yet, with every merchant accepting BTC, it becomes more popular and widespread. This drives up value.

So miners drive price down while growing adoption drives it up. A tug of war.

I am optimistic because the growth of adoption is increasing, while mining rewards are decreasing (difficulty goes up, and block reward will halve again)

Also the amount of fiat currencies on the planet is growing as well.

Unless BTC is replaced by some other coin, it is going to increase in value sooner or later.

[wasserman99]

Accepting BTC is a newsworthy event, and you can lessen the impact for conservative stockholders by implying 100% conversion to fiat:  "At this point bitpay converts all paid BTC to USD at the moment of sale so there is no exchange risk".  However, CHANGING that 100% to 90% then 50% then 0% is easy and can be done without any external difference.

WRT the idea that merchant adoption = short term slide, places like coinbase make it so easy to cash out that this seems unlikely.

The citi report mentioned that if a company does hold some amount of fiat then their overall risk profile would be worse. Also if a company does not have any expenses in terms of bitcoin then they would have nothing they can use their bitcoin for.

Most companies are not in the business of speculating.

Ironically, Citi, JPM and their ilk almost solely are.

Their investment bank divisions are somewhat in the business of speculating. The retail type businesses, and other businesses that are in the business of producing actual goods are not designed to speculate.

[itsAj]

I think it's also reasonable to suspect that many purchases from, say, Overstock or NewEgg, aren't really people who are "selling" BTC, per se.  These folks are likely to re-buy BTC to replenish their supply.

This. Either people are replacing the Bitcoins they already had or they didn't have Bitcoins to start with and are merely buying them to buy with a discount.

I would agree with this. I would also say that these people are also likely buying more bitcoin then they are spending so there is a net effect of people buying a net amount of bitcoin.

[NapoleonBonaparte]

I think it's also reasonable to suspect that many purchases from, say, Overstock or NewEgg, aren't really people who are "selling" BTC, per se.  These folks are likely to re-buy BTC to replenish their supply.

This. Either people are replacing the Bitcoins they already had or they didn't have Bitcoins to start with and are merely buying them to buy with a discount.

I would agree with this. I would also say that these people are also likely buying more bitcoin then they are spending so there is a net effect of people buying a net amount of bitcoin.

Price meets where the supply meets the demand.

Down trending recently implies there is more selling than buying and hence depressing the price.

[minerpumpkin]

Don't know whether I buy the theory of an increasing merchant adoption depressing the price. I mean, it could be true, then again, maybe it isn't... I don't know though, how mining could influence the price at all, doesn't compute in my books.

[jjacob]

I don't know why analysts try so hard to explain something that has happened in the past.
They should work hard and try to predict future price trends. Then maybe they will make some money. 

[ensurance982]

I don't know why analysts try so hard to explain something that has happened in the past.
They should work hard and try to predict future price trends. Then maybe they will make some money. 

Predicting future price movements is a rather hard thing to do. Actually it's more or less impossible. If it was possible and they knew how to do it, they'd be best off just using that knowledge in order to do some traded on their own. Why would they give away their golden tickets to the public?

[jjacob]

I don't know why analysts try so hard to explain something that has happened in the past.
They should work hard and try to predict future price trends. Then maybe they will make some money. 

Predicting future price movements is a rather hard thing to do. Actually it's more or less impossible. If it was possible and they knew how to do it, they'd be best off just using that knowledge in order to do some traded on their own. Why would they give away their golden tickets to the public?

They needn't be 100% accurate... Analysts give out price targets on stocks all the time...