Is bitcoin too volatile?

[Q7]

The problem is the small market cap. Every sale of a Bitcoin whale (I mean four digit amounts of Bitcoins) ends in a dicrease of the price + panic sales etc. If we'd have a stable fundament we wouldn't have such a high variability and volatility...

As of now, I would like to treat it as an alternative currency where you can save on the fees, plus it is also readily available online. Although the usage might be limited on what you can do or purchase using it but certainly things are improving. On the question whether it will fully replace dollar someday remains a big question mark and seriously the volatility issue need to be sorted out first as this will be the major factor that pose a huddle or barrier towards mass bitcoin adoption.

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[sidhujag]

Once it hits $5 trillion a day volume it will be stable

[panju1]

Once it hits $5 trillion a day volume it will be stable

Isn't $5 trillion too much?

I tried searching for the USD money supply. According to this article on howstuffworks.com, the money supply (M0) in the US last year was $1.2 trillion.
I guess the money supply today won't be too different.
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm


Do we need Bitcoin's market to be 4 times the US money supply before stability is attained?

[sidhujag]

Once it hits $5 trillion a day volume it will be stable

Isn't $5 trillion too much?

I tried searching for the USD money supply. According to this article on howstuffworks.com, the money supply (M0) in the US last year was $1.2 trillion.
I guess the money supply today won't be too different.
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm


Do we need Bitcoin's market to be 4 times the US money supply before stability is attained?

The size of forex

[Amph]

need more adoption, and more bitcoin spread away, less enormous amount on the hands of a few early adopters, less manipulation

until then yes it is too volatile

[bitbunnny]

Do users actually want BTC to be stable?

[master5]

Do users actually want BTC to be stable?

I don't think so. I think that many users make money on the BTC price fluctuations and stability of BTC price deprive them of this opportunity

[Clegg]

Do users actually want BTC to be stable?

Yes. As a currency it's not very good currently. Sure I'd like it to rise a bit at first but I'd rather it remain stable more than anything.

[dinofelis]

Isn't $5 trillion too much?

I tried searching for the USD money supply. According to this article on howstuffworks.com, the money supply (M0) in the US last year was $1.2 trillion.
I guess the money supply today won't be too different.
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm


Do we need Bitcoin's market to be 4 times the US money supply before stability is attained?

I think you should compare bitcoin more to M2 than to M0.  The reason is that bitcoin is already "bank accounts" and "saving accounts", and that there won't be fractional banking with bitcoin (there will always be a difference between 'true' bitcoins - those on the blockchain - and any stuff that looks like bitcoins but are just debt expressed in bitcoin.  Only a fiat system, or a system where "real" money is stored and "certificates of money" are circulating allow for a confusion of both, and allow for fractional banking.
As you cannot loan out bitcoins, and keep them nevertheless simultaneously on your wallet, there can be no double-counting of coins (as it is with fiat money on bank accounts).

Which means that what we use as M2 money, will have to be supported by all of bitcoin if bitcoin is to replace fiat.

World-wide (all fiat money included, not just dollars), this is estimated to be equivalent to something like $ 55 trillion I thought.

[JJB]

Do users actually want BTC to be stable?

I don't think so. I think that many users make money on the BTC price fluctuations and stability of BTC price deprive them of this opportunity

Bitcoin fluctuating is very good for speculators and investors but at some point I think it will need to slow down to be seen as a viable or respectable currency.

[feverpitch]

Currencies are pretty far along these days.
The "next" cryptocurrency will also be seen as volatile as it climbs from $0 - $x.  Volatility is unconditional moving forward with cryptocurrencies.
Considering BTC has not even reached mainstream adoption, you cannot call it any MORE or LESS volatile than any other currency out of fruition.

[1Referee]

The problem is the small market cap. Every sale of a Bitcoin whale (I mean four digit amounts of Bitcoins) ends in a dicrease of the price + panic sales etc. If we'd have a stable fundament we wouldn't have such a high variability and volatility...

Even if Bitcoin had a market cap of 20 billion right now, which would make 1 Bitcoin worth around $1400.

That will most likely result in very small buy orders that just arent able to handle a massive +1000 Bitcoin dump.

There are, and always will be whales with a huge load of coins that can make the price drop significantly.

[AJinNYC]

Once it hits $5 trillion a day volume it will be stable

Isn't $5 trillion too much?

I tried searching for the USD money supply. According to this article on howstuffworks.com, the money supply (M0) in the US last year was $1.2 trillion.
I guess the money supply today won't be too different.
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm


Do we need Bitcoin's market to be 4 times the US money supply before stability is attained?

That really doesn't seem right to me... The federal US annual budget is 4 Trillion a year. And the government pulls in about 2.6 - 3 Trillion a year in taxes.

[botany]

I think this time bitcoin very volatile compared with the beginning of 2014, I do not whether this is due to the celebration of Christmas is almost near, plus New Year celebrations, maybe now people in desperate need of fiat money to fulfill the needs of christmas and new year, I hope bitcoin prices will return to normal as the beginning of 2014, hopefully ... 

Volatility is actually much lower now.
$400 seems to be a tough resistance to break.
$350-$400 seems to be a range where bitcoin will trade in the near future.

[bigadam0101]

I think this time bitcoin very volatile compared with the beginning of 2014, I do not whether this is due to the celebration of Christmas is almost near, plus New Year celebrations, maybe now people in desperate need of fiat money to fulfill the needs of christmas and new year, I hope bitcoin prices will return to normal as the beginning of 2014, hopefully ... 

Volatility is actually much lower now.
$400 seems to be a tough resistance to break.
$350-$400 seems to be a range where bitcoin will trade in the near future.

I think it's very likely that bitcoin falls below $ 300 and then stabilizes

[panju1]

Isn't $5 trillion too much?

I tried searching for the USD money supply. According to this article on howstuffworks.com, the money supply (M0) in the US last year was $1.2 trillion.
I guess the money supply today won't be too different.
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm


Do we need Bitcoin's market to be 4 times the US money supply before stability is attained?

I think you should compare bitcoin more to M2 than to M0.  The reason is that bitcoin is already "bank accounts" and "saving accounts", and that there won't be fractional banking with bitcoin (there will always be a difference between 'true' bitcoins - those on the blockchain - and any stuff that looks like bitcoins but are just debt expressed in bitcoin.  Only a fiat system, or a system where "real" money is stored and "certificates of money" are circulating allow for a confusion of both, and allow for fractional banking.
As you cannot loan out bitcoins, and keep them nevertheless simultaneously on your wallet, there can be no double-counting of coins (as it is with fiat money on bank accounts).

Which means that what we use as M2 money, will have to be supported by all of bitcoin if bitcoin is to replace fiat.

World-wide (all fiat money included, not just dollars), this is estimated to be equivalent to something like $ 55 trillion I thought.

I guess it is too early to conclude that we will not have fractional reserve banking with Bitcoin. Right now, due to the high volatility and regulatory uncertainty associated with Bitcoin, there are no 'Bitcoin banks' which are being set up. As the bitcoin economy expands, I am sure some entrepreneurs will take up the opportunity to set up Bitcoin banks.

Who wouldn't love to earn money on their bitcoin deposits. Another point - when you are providing liquidity to bitcoin exchanges and people short bitcoins by borrowing them from you, it has an effect similar to fractional reserve banking.

While bitcoin may become the dominant currency of the world, I don't see it replacing it all fiat currency. So comparing it with world-wide fiat (and not USD) might give a misleading picture.

[Amph]

Do users actually want BTC to be stable?

yes, but not at current price

[trex]

Price of btc is not important. Only important parts of btc are volume of trade, number of transactions and businesses accepting it as payment. I personally dont have BTC to profit from capital gain, there are better options for that, less risky. Why I decided so? If BTC will someday replace US dollar and other fiats, the value of BTC wont be measured in fiat anymore, because it will be replaced by BTC... When that happens all ''value'' from fiats will be converted in BTC, so you will end up with capital loss not profit. Thinking about how it will be worth a lot of money is just like... in which money, btc is new money remember? 

[bitbunnny]

I don't think that BTC will completeley replace fiats. It can become equal to them but not totaly replace them.

[panju1]

Price of btc is not important. Only important parts of btc are volume of trade, number of transactions and businesses accepting it as payment. I personally dont have BTC to profit from capital gain, there are better options for that, less risky. Why I decided so? If BTC will someday replace US dollar and other fiats, the value of BTC wont be measured in fiat anymore, because it will be replaced by BTC... When that happens all ''value'' from fiats will be converted in BTC, so you will end up with capital loss not profit. Thinking about how it will be worth a lot of money is just like... in which money, btc is new money remember? 

That is a very interesting argument, but will we live to see the day when value is measured in BTC and not fiat? It is a fantastic idea that when BTC is the prevalent currency, we would have no capital gains. But how would we have capital losses? Assuming I earned/purchased USD many years ago, I will not have capital losses today because of the depreciation of the value of the USD.