Why is bitcoin now so absurdly stable when priced in USD?

[cytokine]

I think Bitcoin would be increasing in value right now if there wasn't so much inflation.

I don't just mean via mining new coins, I mean the amount of lending that is going on creating a large amount of BTC denominated bonds. This is a very healthy sign though, as long as it doesn't get out of control.

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[bulanula]

One word : market manipulation.

With Bitconica supposedly buying 18K BTC I would think price would rise.

Not so because some HEAVY players like pirateat40 don't like price going up

[TobyGoodwin]

Obviously anyone interested in this question understands the MtGox Live graph: http://mtgoxlive.com/

If not, play with it till you do! It's a graphical representation of their order book. So, for example, there are a lot of orders to buy at $5.10. For the price to drop that low, just under 1900 bitcoins would need to be sold. But then another 1200 would need to be sold before the price dropped any lower. There's an even larger shoulder at $5.01.

Toby.

[repentance]

One word : market manipulation.

With Bitconica supposedly buying 18K BTC I would think price would rise.

Not so because some HEAVY players like pirateat40 don't like price going up

Someone calculated the impact this would have in another thread.  It wouldn't move the price much at all and certainly not long-term.

[bitcool]

One word : market manipulation.

With Bitconica supposedly buying 18K BTC I would think price would rise.

Not so because some HEAVY players like pirateat40 don't like price going up

Someone calculated the impact this would have in another thread.  It wouldn't move the price much at all and certainly not long-term.

Of course not -- unless you are Satoshi. My hyperactive conspiracy theory cortex tells me BTC "founding fathers" want it this way:
  1. Stable exchange rate promotes commerce
  2. Discourage hoarders
  3. Wear speculators out
Probably they can afford doing it now because they have equal amount coins denominated in BTC and USD.

[Vladimir]

This is all CIA#s fault, I am telling you. In 50 years time they will declassify how Satoshi is a codename of one of their departments.
 

[Lord F(r)og]

One word : market manipulation.

With Bitconica supposedly buying 18K BTC I would think price would rise.

Not so because some HEAVY players like pirateat40 don't like price going up

Someone calculated the impact this would have in another thread.  It wouldn't move the price much at all and certainly not long-term.

Of course not -- unless you are Satoshi. My hyperactive conspiracy theory cortex tells me BTC "founding fathers" want it this way:
  1. Stable exchange rate promotes commerce
  2. Discourage hoarders
  3. Wear speculators out
Probably they can afford doing it now because they have equal amount coins denominated in BTC and USD.

righty right!

[Vladimir]

I would think that this unnatural stability is caused by either:

1. One or more parties accumulating BTC and ready to buy large quantities slightly below 5$
2. One or more "early adopters" are slowly converting their BTC fortune into fiat by selling large quantities slightly above 5$
3. One or more parties are "stabilizing" Bitcoin by doing both 1. and 2.
4. Some or all of the above

Simple really. The one thing is certain, this will end sooner or later and this status quo is highly unlikely to persist beyond Jan 2013.
Once this "trade" runs out volatility will return with vengeance, probably on the upside (based on fundamentals).

Want this to happen quicker, buy yourself 50x bundle of Bitcoin Magazine and distribute everywhere around you. Or go for 10x bundle that's only 60$ and free shipping, btw.

[Explodicle]

Offer and demand of bitcoins is mainly speculation (gambling) instead of a real use of the currency. This way the behavior of the price is uncertain (some periods of high volatility, others of high stability).

In order to fix this problem we need more entrepreneurs, engineers and developers (real work), and less economists, speculators and gamblers (zero-sum game).

I respectfully disagree. Speculation may be near zero-sum for the professionals, but for the rest of us they're adding liquidity. From liquidity comes stability. Remember that every time you sell something for bitcoin you're gambling on bitcoin's future value (minimum 10 minute bets).

Economists are positive-sum. They contribute valuable ideas while asking little (if anything) in return.

There are millions of ideas, projects and systems that were infeasible before Bitcoin (due to transaction costs) but now are fully feasible. The success of Bitcoin is our responsibility.

Now THAT I can get behind 100%! Coasian solutions spring to mind. Once we use cryptocurrency to efficiently handle externalities, it will be an enormous boon to humankind.

[justusranvier]

In order to fix this problem we need more entrepreneurs, engineers and developers (real work), and less economists, speculators and gamblers (zero-sum game).

Bit-Pay says that the transaction volume they are processing has tripled each month for the last three months. They wouldn't be able to grow like that if the problem you mention wasn't already being fixed.

[Toby]

But, is it a good thing, this stability? However the dollar and the euro more so, are inflating. Up to that, national inflation (not sure how that scales up to the rest of the EU) is near 2%, still BTC to USD remains stable, accually BTC is inflating as much as USD.

[Clipse]

So everyday over the last 6months+ people moaned that BTC isnt stable enough for realworld usage and then it is stable for months and people moan its too stable.

Im starting to think the bitcoin community is psychotic.

[DeathAndTaxes]

But, is it a good thing, this stability? However the dollar and the euro more so, are inflating. Up to that, national inflation (not sure how that scales up to the rest of the EU) is near 2%, still BTC to USD remains stable, accually BTC is inflating as much as USD.

Given BTC money supply is growing by almost 30% having only 2% price inflation is pretty impressive.  Still there is an obvious upward trend.

It is possible for day to day (and hour to hour volatility) to be reduced without affecting the long term trend.  For example imagine you think BTC will apreciate 35% over the next year.  That is <0.1% daily.  It is possible for BTC to grow 0.1% daily having 20% daily volatility or having 2% daily volatility.  At the end of the year it will still be 35% higher but I think you can see why the "smoother road" of the later is superior for those using BTC as a medium of exchange.

[DeathAndTaxes]

So everyday over the last 6months+ people moaned that BTC isnt stable enough for realworld usage and then it is stable for months and people moan its too stable.

Personally I love the "new BTC" stability.  I have been selling wireless refills on the forum and the exchange rate for my last  10 orders has been: 5.11
5.13
5.12
5.14
5.14
5.13
5.12
5.14
5.15
5.14

Hell if I had just used one value and stuck with it pretty much would have been a wash.  A "five spot" per coin is a nice psychological round number.  I love it, although I can see why the speculators hate it.  They make money (or at least have the potential to make/lose money) on volatility.  The loss of leverage combined with a fall in volatility is a 1-2 punch.

[Tuxavant]

Stability ends the closer we get to December.

[sadpandatech]

Stability ends the closer we get to December.

I'm still not so sure how unstable it may become. I can see however that the price will continue to creep upwards the closer we get as less newly created bitcoins make their way to market. The closer we get to that magic date the more BTC holders will speculate about the things to come. Many may become more tight fisted the closer we get.

[bitlizard]

Lots of buyers vs. sellers on mt gox as I type this, and the price is creeping upwards.

http://bitcoincharts.com/markets/mtgoxUSD.html

[ARapalo]

Stability ends the closer we get to December.

What's in December again? Is it that decrease to 25BTC per block as opposed to 50BTC?

[giszmo]

hagnahh … and Gox got me again. My cash is in limbo and I sent it when the rate was around 5.10 every other hour. Somehow I bet they will report my cash incoming when we see a 6.
Last time I sent money to them the price was at 2$ and they finally charged it when we were back at 4$. I want a fast track.

[Jan]

hagnahh … and Gox got me again. My cash is in limbo and I sent it when the rate was around 5.10 every other hour. Somehow I bet they will report my cash incoming when we see a 6.
Last time I sent money to them the price was at 2$ and they finally charged it when we were back at 4$. I want a fast track.

Simple.... BitInstant