Why the Bitcoin Markets Didn’t Rally on the Microsoft News

[MicroGuy]

There’s a perfectly good reason why the markets didn’t “take off” this week when Microsoft revealed that it would begin allowing customers to fund their accounts using bitcoin. The massive tech giant’s integration is sure to bring new and substantial selling pressure to the digital currency.

Seasoned bitcoin traders treated the news like a frozen Windows machine displaying a giant blue screen of death. In the moments following the announcement, traders went into buying mode, but it didn’t take long for the experienced speculators to understand the enormous auto-selling that the integration would bring.



Microsoft has no intention of speculating on bitcoin’s long-term value. Instead, they will be using Bitpay to systematically exchange their bitcoin revenue for US Dollars. This means an increasing number of bitcoins will be dumped onto the markets in the coming weeks, creating a downward selling pressure spiral.

And Microsoft’s new bitcoin customers are unlikely to turn around and buy more bitcoins to replace those spent on digital purchases. After all, it make no sense to run out and buy more bitcoins to facilitate purchases that can be made with traditional fiat. There is little reason to take the additional, and often awkward step, other than perhaps for novelty or speculation.

What the community must realize is that for every Microsoft adding bitcoin as a payment option, they need an Exxon or a General Electric announcing that their employees will now have the option of receiving wages in bitcoin. Better yet, anytime a company adds bitcoin as a payment option, why not offer employees the same option for compensation. This would allow the company to funnel some of their new bitcoin revenue back into payroll, rather than auto selling for US Dollars.
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We need more focus now on the wage side of integration. Otherwise, this current one-way trend will become impracticable and unsustainable. And it won’t be long before these types of major announcements become a reason to short the market, rather than a reason to celebrate.

Full Story: http://altcoinpress.com/2014/12/why-the-bitcoin-markets-didnt-rally-on-the-microsoft-news/

[hyphymikey]

Not everyone has fiat at exchanges to buy coins at the drop of a hat when news like this hits. It will take time for people who have never bought before to learn through this new medium and actually set up an account and buy coins.

[MicroGuy]

Not everyone has fiat at exchanges to buy coins at the drop of a hat when news like this hits. It will take time for people who have never bought before to learn through this new medium and actually set up an account and buy coins.

True. But as long as people are forced to buy bitcoins in order to spend bitcoins the system will remain broken.

We need to reduce the need for this type of exchange. And the payroll side of the equation offers the solution.

[MemoryShock]

I think that there might be something more fundamental at play here.  The market learns very quickly and the Paypal announcement a few months ago, which many were expecting/hoping for months prior, resulted in a very short rise that was quickly sold into.  The excitement lasted for a day.

I think the disappointment in the activity resulting from the Paypal announcement carried over into the Microsoft so nobody really cared.  Or maybe that is only part of it...suffice to say, I didn't care save for the fact that I viewed it as another stone on the pathway...

[franky1]

microsoft receive millions of dollars a week, if you were above average intelligence you would realise that microsoft does actually invest some of its funds in different things. and as such i think microsoft's small percentage of current bitcoin transactions, they wold be more likely to hoard the coins for investments. after all microsoft points costs nothing to make and so there are no costs to recover to truly require exchanging bitcoin into dollar.

if i was receiving $10mill a week in dollar purchases of microsoft points, and then maybe $20k in bitcoin.. id hold onto that $20k a week in bitcoin and treat it as a 0.2% cashflow loss and a 0.2% investment gain.

as for the market hype.. well that was just a spasm reaction to news (speculation). untill we start to see microsoft advertise it, where by non-bitcoin fanboys are then intreged by bitcoin and jump on the bitcoin band wagon (which takes weeks) we wont see true movements that are based on market reactions to demand, as oppose to sheeple emotions (which last only about an hour)

[MicroGuy]

.. if you were above average intelligence you would realise that microsoft does actually invest some of its funds in different things. and as such i think microsoft's small percentage of current bitcoin transactions, they wold be more likely to hoard the coins for investments.

If Microsoft intended to keep the bitcoins, they would have no need for Bitpay.

Bitpay is the mechanism by which they (and the vast majority of its other customers) dump their freshly received BTC.

[maurya78]

the next halving cannot come soon enough for me....

[franky1]

.. if you were above average intelligence you would realise that microsoft does actually invest some of its funds in different things. and as such i think microsoft's small percentage of current bitcoin transactions, they wold be more likely to hoard the coins for investments.

If Microsoft intended to keep the bitcoins, they would have no need for Bitpay.

Bitpay is the mechanism by which they (and the vast majority of its other customers) dump their freshly received BTC.

overstock use coinbase......................................

yet overstock hoards coins..........

need i say more?

[MicroGuy]

overstock use coinbase......................................

yet overstock hoards coins..........

need i say more?

If Microsoft decides to begin hoarding Bitcoin, I will post a picture of myself here, in the buff, with your username painted across my chest.

[knight22]

overstock use coinbase......................................

yet overstock hoards coins..........

need i say more?

If Microsoft decides to begin hoarding Bitcoin, I will post a picture of myself here, in the buff, with your username painted across my chest.

Microsoft will start playing with bitcoin one way or the other. It's just a question of time.

[mercistheman]

Pretty sure Microsoft will sink a substantial amount of funds promoting btc and educating the public.

[Morecoin Freeman]

OP logic is flawed since the bitcoins that are sold need to be bought first.

What will happen:
More people get to learn about bitcoin and possibly an increase in volume and market cap, which is something good!

Also, people can no longer see bitcoin as a scam these days since the most legitimate businesses in the world are starting to support the bitcoin technology.

This is all good.

From speculative purposes all I can say is people on here seem to make the worst decisions. Better quit trading and investing if you have no idea what you are doing.

[Q7]

Not everyone has fiat at exchanges to buy coins at the drop of a hat when news like this hits. It will take time for people who have never bought before to learn through this new medium and actually set up an account and buy coins.

True. But as long as people are forced to buy bitcoins in order to spend bitcoins the system will remain broken.

We need to reduce the need for this type of exchange. And the payroll side of the equation offers the solution.

Unless there is a store that specifically sells certain product that can only be bought with bitcoin, it won't matter much in the end. People are not going to pay using btc when they can do the same with fiat. Also price rally could be shortlived because microsoft have already stated their approach is more towards testing the water.

[Willisius]

Pretty sure Microsoft will sink a substantial amount of funds promoting btc and educating the public.

They probably will not do this. People that have bitcoin that wish to spend it on MSFT games likely follow bitcoin related news and know that MSFT accepts bitcoin.

IMO this is really just a way for Microsoft to increase their overall revenue

[SirChiko]

Hah nice explaination on the picture, OP.
But well it wasn't caused by that and it's really weird that we didn't skyrocket, maybe all the traders dump on news and newbies bought so it came out as almost no rise.

[cyberpinoy]

Way to go Bitcoin we attracted another dumper, and I had expected so much more from Microsoft too.

So what is it going to take to get the Bitcoin developers to step in and do something more productive then the unbroken protocol. Theres nothing like sitting back and watching your dream die because you cant get past your stubbornness and pride long enough to create a real demand for your coin. Nothing like cutting your nose and all of our noses off to spite your face.

[BitCoinNutJob]

More people are likely to get into bitcoin as a result, the trend searches show bitcoin up 40% in last week on google.  Eventually companies could consider removing payment processors like bitpay and buy or pay wages to suppliers/employees direct.

Bitpay/Coinbase are going to want to keep the USD exchange rate as high as possible to keep the miners providing a secure network.  If the USD price drops their business is over.

[aztecminer]

Pretty sure Microsoft will sink a substantial amount of funds promoting btc and educating the public.

maybe they are thinking and intending to implement bitcoin into some future apps in their os.
it seems unlikey they did this just to have another way of accepting fiat.
my thinking is there is something else that is not readily apparent to their sudden adoption of bitcoin.

[RodeoX]

I wonder if the speculators have just determined a fair price of about $350? Speculation is trying to guess future value and generally it rallies past the best price then crashes down to a sensible valuation.  Maybe $350 is about right for the scale and use cases that are part of the present BTC economy.
As far as MS not hoarding their coins, well I hope not. They would be exposing MS investors to the volatility of the naked BTC market and would be acting in a financially irresponsible way. Bitcoin is the best currency and payment network, but a very risky speculative instrument. MS did not get rich placing casino bets, they got rich cashing your checks and BTC is just another extension of that model.

[ChuckBuck]

This is only the first step, acceptance by Microsoft.  This isn't the end of their dealings with Bitcoin.

Once they roll out internationally, I'm sure they'll figure out other uses besides the inexpensive app or game in their marketplace.

From Sonny Singh of Bitpay:

"Microsoft has a long-term vision for bitcoin, BitPay and the blockchain. Starting with digital goods in the US is the logical first step, however, they want to expand to Europe and globally and add support for other products as part of that rollout."

Phase 1 will not include hoarding obviously.

Once we get global, and have Bitcoin as a payment option for other MS goods or services(enterprises? server and OS licenses? integrated into Skype or Office365?), you can expect them to hoard like a muThF3ker!