Oh it's far from over...

[twiifm]

they would find it hard to buy up the entire supply. Impossible. But they could easilly create absolute chaos in the marketplace and exchanges. The market cap of Bitcoin is so small. I mean, hey Zuckerberg is personally worth what 5 times the value of all Bitcoins... It's really not that big of a currency pool. These banks could simply buy up as retailers dump - which they will - they have to... and then flash crash... rinse repeat.

To them the losses would be nothing, chump change so to speak. And this tactic would make the bitcoin markets toxic to any sane investor. People would flock.

It is prudent to consider what you are saying. But, how do you respond to this counterargument: Sure, fluctuating prices will scare away investors; but fluctuating prices won't kill bitcoin. Merchants are shielded from price fluctuations by converting straight to USD. Merchants will continue to adopt bitcoin because 1) it's easy 2) they get their USD faster 3) they save on credit card fees. Once they have 1-2 years experience and feel more comfy with bitcoin, they will begin to provide consumer incentives in one form or another. That's when consumer adoption will occur. And consumers can be protected from price fluctuations by converting their USD to BTC at the time of purchase.

Summary: Price fluctuations may be scary as shit to an investor, but price fluctuations won't kill bitcoin as a payment system.

And why would any consumers use Bitcoin as a currency if the price is so volatile?

[Stratobitz]

they would find it hard to buy up the entire supply. Impossible. But they could easilly create absolute chaos in the marketplace and exchanges. The market cap of Bitcoin is so small. I mean, hey Zuckerberg is personally worth what 5 times the value of all Bitcoins... It's really not that big of a currency pool. These banks could simply buy up as retailers dump - which they will - they have to... and then flash crash... rinse repeat.

To them the losses would be nothing, chump change so to speak. And this tactic would make the bitcoin markets toxic to any sane investor. People would flock.

It is prudent to consider what you are saying. But, how do you respond to this counterargument: Sure, fluctuating prices will scare away investors; but fluctuating prices won't kill bitcoin. Merchants are shielded from price fluctuations by converting straight to USD. Merchants will continue to adopt bitcoin because 1) it's easy 2) they get their USD faster 3) they save on credit card fees. Once they have 1-2 years experience and feel more comfy with bitcoin, they will begin to provide consumer incentives in one form or another. That's when consumer adoption will occur. And consumers can be protected from price fluctuations by converting their USD to BTC at the time of purchase.

Summary: Price fluctuations may be scary as shit to an investor, but price fluctuations won't kill bitcoin as a payment system.

In order for the retailers to accept Bitcoin, there needs to be a stable exchange network where that retailer can then turn the bitcoins received into fiat currency. Chaos in the marketplace could kill bitcoin because if investors are scared to buy in at any price there will not be enough buy support for the retailers who accept bitcoin to liquidate their position at the rate in which they sold their products for.

While this has yet to happen, and perhaps the retailers (or at least large ones) already have safeguards in place to prevent this, but take this for example:

I take my 5,000 BTC (hypothetical here) over to Dell. I place a large order for a number of very expensive servers, etc, to upgrade my business infrastructure.

Now using a strike price of $300 USD/BTC that means Ive got $1,500,000 to spend. Im sure a company like Dell sees orders like this with large companies on a regular basis.

Now provided Dell allows this transaction to happen, I make the purchase, and send the 5,000 BTC to Dell. Now Dell is stuck with 5,000 coins they will never be able to liquidate at the price for which they sold their products.

Just look at today and how much the market can drop on a sell order of a few thousand BTC.

While this may be an extreme and perhaps over the top example, its worth thinking about. It's also worth considering how this exact tactic could be used as an exploit to game the system... Especially from large retailers like Amazon.

Retailers will not continue to accept, and more importantly, new retailers will not adopt Bitcoin as a payment method unless a stable, fast, and highly liquid exchange system exists to back up their transactions. And a market filled with fear is typically thin on the buys, and heavy on the sells.

There are many times on any given day where a single buy, or sell order of BTC in the amount of $20,000 can move BTC 1 or 2 percentage points in either direction. Thats a dangerous place for the retailer to be, as $20,000 is really nothing in terms of sales.

Strato

[BTCtrader71]

they would find it hard to buy up the entire supply. Impossible. But they could easilly create absolute chaos in the marketplace and exchanges. The market cap of Bitcoin is so small. I mean, hey Zuckerberg is personally worth what 5 times the value of all Bitcoins... It's really not that big of a currency pool. These banks could simply buy up as retailers dump - which they will - they have to... and then flash crash... rinse repeat.

To them the losses would be nothing, chump change so to speak. And this tactic would make the bitcoin markets toxic to any sane investor. People would flock.

It is prudent to consider what you are saying. But, how do you respond to this counterargument: Sure, fluctuating prices will scare away investors; but fluctuating prices won't kill bitcoin. Merchants are shielded from price fluctuations by converting straight to USD. Merchants will continue to adopt bitcoin because 1) it's easy 2) they get their USD faster 3) they save on credit card fees. Once they have 1-2 years experience and feel more comfy with bitcoin, they will begin to provide consumer incentives in one form or another. That's when consumer adoption will occur. And consumers can be protected from price fluctuations by converting their USD to BTC at the time of purchase.

Summary: Price fluctuations may be scary as shit to an investor, but price fluctuations won't kill bitcoin as a payment system.

In order for the retailers to accept Bitcoin, there needs to be a stable exchange network where that retailer can then turn the bitcoins received into fiat currency. Chaos in the marketplace could kill bitcoin because if investors are scared to buy in at any price there will not be enough buy support for the retailers who accept bitcoin to liquidate their position at the rate in which they sold their products for.

While this has yet to happen, and perhaps the retailers (or at least large ones) already have safeguards in place to prevent this, but take this for example:

I take my 5,000 BTC (hypothetical here) over to Dell. I place a large order for a number of very expensive servers, etc, to upgrade my business infrastructure.

Now using a strike price of $300 USD/BTC that means Ive got $1,500,000 to spend. Im sure a company like Dell sees orders like this with large companies on a regular basis.

Now provided Dell allows this transaction to happen, I make the purchase, and send the 5,000 BTC to Dell. Now Dell is stuck with 5,000 coins they will never be able to liquidate at the price for which they sold their products.

Just look at today and how much the market can drop on a sell order of a few thousand BTC.

While this may be an extreme and perhaps over the top example, its worth thinking about. It's also worth considering how this exact tactic could be used as an exploit to game the system... Especially from large retailers like Amazon.

Retailers will not continue to accept, and more importantly, new retailers will not adopt Bitcoin as a payment method unless a stable, fast, and highly liquid exchange system exists to back up their transactions. And a market filled with fear is typically thin on the buys, and heavy on the sells.

There are many times on any given day where a single buy, or sell order of BTC in the amount of $20,000 can move BTC 1 or 2 percentage points in either direction. Thats a dangerous place for the retailer to be, as $20,000 is really nothing in terms of sales.

Strato

This is a good point, ie that market depth may not be sufficient when it comes to large value transfers. Again, my counterarguments:
1) The risk that you talk about is assumed by payment processors like Coinbase and BitPay, not by the merchant. I presume that Coinbase and Bitpay set some sort of a limit to the volume that they will process from a given merchant over a given period of time.
2) bitcoin the payment system will bootstrap. In the beginning, it will be useful to process small payments but problematic due to insufficient market liquidity for large ones. Let's say the cutoff is roughly X. That means merchants will continue to adopt bitcoin for purchases below $X. Adoption will cause X to rise, and a rising X will result in increased adoption. Positive feedback loop. This will almost certainly be a bumpy ride with ups and downs, but still a rise over the long haul.

[panju1]

Double bottom at 275.  There she is.

Everytime I see bitcoins' price, I think this will be the bottom.
I have been proved wrong again and again during the last 4-5 months.

[Stratobitz]

they would find it hard to buy up the entire supply. Impossible. But they could easilly create absolute chaos in the marketplace and exchanges. The market cap of Bitcoin is so small. I mean, hey Zuckerberg is personally worth what 5 times the value of all Bitcoins... It's really not that big of a currency pool. These banks could simply buy up as retailers dump - which they will - they have to... and then flash crash... rinse repeat.

To them the losses would be nothing, chump change so to speak. And this tactic would make the bitcoin markets toxic to any sane investor. People would flock.

It is prudent to consider what you are saying. But, how do you respond to this counterargument: Sure, fluctuating prices will scare away investors; but fluctuating prices won't kill bitcoin. Merchants are shielded from price fluctuations by converting straight to USD. Merchants will continue to adopt bitcoin because 1) it's easy 2) they get their USD faster 3) they save on credit card fees. Once they have 1-2 years experience and feel more comfy with bitcoin, they will begin to provide consumer incentives in one form or another. That's when consumer adoption will occur. And consumers can be protected from price fluctuations by converting their USD to BTC at the time of purchase.

Summary: Price fluctuations may be scary as shit to an investor, but price fluctuations won't kill bitcoin as a payment system.

In order for the retailers to accept Bitcoin, there needs to be a stable exchange network where that retailer can then turn the bitcoins received into fiat currency. Chaos in the marketplace could kill bitcoin because if investors are scared to buy in at any price there will not be enough buy support for the retailers who accept bitcoin to liquidate their position at the rate in which they sold their products for.

While this has yet to happen, and perhaps the retailers (or at least large ones) already have safeguards in place to prevent this, but take this for example:

I take my 5,000 BTC (hypothetical here) over to Dell. I place a large order for a number of very expensive servers, etc, to upgrade my business infrastructure.

Now using a strike price of $300 USD/BTC that means Ive got $1,500,000 to spend. Im sure a company like Dell sees orders like this with large companies on a regular basis.

Now provided Dell allows this transaction to happen, I make the purchase, and send the 5,000 BTC to Dell. Now Dell is stuck with 5,000 coins they will never be able to liquidate at the price for which they sold their products.

Just look at today and how much the market can drop on a sell order of a few thousand BTC.

While this may be an extreme and perhaps over the top example, its worth thinking about. It's also worth considering how this exact tactic could be used as an exploit to game the system... Especially from large retailers like Amazon.

Retailers will not continue to accept, and more importantly, new retailers will not adopt Bitcoin as a payment method unless a stable, fast, and highly liquid exchange system exists to back up their transactions. And a market filled with fear is typically thin on the buys, and heavy on the sells.

There are many times on any given day where a single buy, or sell order of BTC in the amount of $20,000 can move BTC 1 or 2 percentage points in either direction. Thats a dangerous place for the retailer to be, as $20,000 is really nothing in terms of sales.

Strato

This is a good point, ie that market depth may not be sufficient when it comes to large value transfers. Again, my counterarguments:
1) The risk that you talk about is assumed by payment processors like Coinbase and BitPay, not by the merchant. I presume that Coinbase and Bitpay set some sort of a limit to the volume that they will process from a given merchant over a given period of time.
2) bitcoin the payment system will bootstrap. In the beginning, it will be useful to process small payments but problematic due to insufficient market liquidity for large ones. Let's say the cutoff is roughly X. That means merchants will continue to adopt bitcoin for purchases below $X. Adoption will cause X to rise, and a rising X will result in increased adoption. Positive feedback loop. This will almost certainly be a bumpy ride with ups and downs, but still a rise over the long haul.

On 1:  Well the retailer (accepting BTC as payment) would bear the risk in terms of whether or not the liquidity exists to exit the position. But yes, good point, Coinbase/BitPay of course quite possibly does, or will, put into place safeguards to prevent this. Its also possible that prior to a transaction being approved or even "quoted" by the retailer, factors such as depth penetration and liquidity across the exchanges would be checked.

On 2:  Ive often said that Bitcoin's most becoming feature is the fact that it allows for micro-payments. Bill Gates was recently quoted as saying how Bitcoin trumps fiat currency because it makes transferring money so inexpensive. While yes this is true, its only so to a point... getting back to the liquidity required for large transactions.

This may sound terrible, but I believe that in many ways Bitcoin stands the best chance of both mass adoption as well as utilization in third world economies.

America, in terms of 95% of Americans, (guessing here on that figure), don't need Bitcoin. They like Visa. Its everywhere you want to be. They love their MasterCards, after all the cards are "priceless". And the financially savvy and Top 3% love their American Express, they don't leave home without it.

Jokes aside, thats the truth. I love my American Express Platinum Card, and the fact that I get airport lounge access when I travel. I love the fact the card insures all of my purchases up to $10,000 per item for a full 90 days, if lets say I buy a 80" LED TV and tip it over accidentally setting it up. Fully covered. I love the fact that they refund automatically $200 in baggage fees per year.  And no joke here, someone used my card number last year to buy a $1000 limo ride and $4000 concert tickets. I wasn't liable. I also love my Membership Reward Points, which I accrue faster than I can spend.  First class tickets on the Air France A-380.... Points!

Bitcoin lacks all of these things we've come to love. So where does it make up then?  Well back to the third world. While Im too tired to go hunting for actual facts and figures, we can all agree that the majority of the worlds population lives in absolute poverty. If you're living in any other place than the US, EU, Canada, Australia, or major cities in other nations... Good luck using a credit card for anything. Those societies are still cash based... Entirely.  Bitcoin fills a niche there that the credit card companies cant or have no reason to provide.

Cell Phones, which are highly utilized in these economically disadvantaged nations will become the way people send and receive money in the future, and Bitcoin is a perfect fit for that. The people who live in those countries wont miss their Amex Points or their buyer protection, or even their lounge access. Because they are, to this day, living in a cash based economy.

So while I went off on a bit of a tangent here... The micro tipping aspect has huge possibilities in places where people are already accustomed to living without all the features of plastic.

In a sense, Bitcoin could very well be the instrument that digitizes cash, especially in places where money is hard to come by, and plastic is unheard of.

Strato

[BTCtrader71]

This may sound terrible, but I believe that in many ways Bitcoin stands the best chance of both mass adoption as well as utilization in third world economies.

Doesn't sound terrible at all. You may very well be right. In fact, none other than Andreas Antonopolous himself said virtually the same thing:

Bitcoins future lies in the billions of underbanked, not in US retail

[Stratobitz]

This may sound terrible, but I believe that in many ways Bitcoin stands the best chance of both mass adoption as well as utilization in third world economies.

Doesn't sound terrible at all. You may very well be right. In fact, none other than Andreas Antonopolous himself said virtually the same thing:

Bitcoins future lies in the billions of underbanked, not in US retail

Interesting will check that out.  Thanks for the link. It also makes sense as to why Bill Gates is backing it. Hes nearly a full time philanthropist now, Im sure he sees the potential Bitcoin could serve in those underbanked regions of the world.

But then, if this is the case... What is the true value of BTC?  If the value of Bitcoin lies not in retail in the worlds richest nations, rather in micro-payments of the poorest and most isolated populations, where will the value fall?  Most people in the world live on under $2.00 per day.

Need someone with expertise in this area... But if 5 Billion People have X net worth, and changed over to BTC, what would the BTC price be set at market cap wise.

Strato

[piramida]

Today, those involved in the crypto-community have once again been met with a flurry of news and speculation over the current and future price potential of Bitcoin in 2015 and beyond. We've been here before, and more than once. Where is Bitcoin headed? Where is the floor? Has it bottomed?

Welcome to your first bitcoin bubble. I know, many emotions and thoughts go through your head right now But trust me, it will be funny to re-read later on.

I agree with one point though. That for many more years, buying something with bitcoin equals to selling it on exchange. That's why I (and many others) always buy back after spending. As for other things, short-term price is easily manipulated, you should not care much about current prices if only to pick good buy / sell opportunities. You are in a project with year 2140 maturity goal , so what difference does several years of depressed prices make? When old-school businesses will start fighting it for real, when it becomes an issue of survival for them - it could get *much* grimmer than it is now, and not only price-wise. Right now, it is a no-brainer, bitcoin is several times stronger than it was in Jan 2014. The fact that the price does not reflect it does not say anything about bitcoin - but does say alot about people, unfortunately.

[malaimult]

Insightful post Stratobitz. You raise some very good points. Nice to see some thoughtful content being posted. There's no doubt that 2015 will prove itself to be yet another wild ride for Bitcoin community- which ever way she rolls.

Checking Bitfinex, looks like we've already seen a low in the mid 250s, back now above 260. This could very well end up far worse than originally speculated.

Time will tell.

[BitCoinNutJob]

If Bitcoin can go from $1200 to $293... there is no reason to think that it can't also go from $293 to $75.

The 2 price moves mean different things, the first is just a return to approximately the mining value.  The 2nd price move you mention would mean a change in fundamentals of bitcoin economy.

[strungoutbtc]

Suicide watch initiated.

[indiemax]

Great post,you say it could go to $100 and that roughly matches the Winki Coin start price

sound about right to me

buy into an asset going up not down

[bananaControl]

Can't decide if I should put another 2000 USD in bitcoin now, or wait and see if it goes even lower

[romneymoney]

Just one point, Amazon can do whatever they want.  They are in the enviable position of being loaded with cash.

https://hbr.org/2014/10/at-amazon-its-all-about-cash-flow/

But all that cash flowing in and sticking around a while before it has to go back out again makes it possible for the company to undertake experiments, learn from mistakes, and keep plowing ahead regardless of what those on the outside (such as shareholders) think. So an apparent failure like the Amazon Fire phone can be treated as a learning experience rather than a crisis.

[premium_domainer]

Can't decide if I should put another 2000 USD in bitcoin now, or wait and see if it goes even lower

i believe, this is right time to Buy (you can wait few more hours). panic sellers through it away,so possible down is $250...

sorry for the above post.

[damiano]

This is indeed going to be a wild year.  With 2 ETf's coming I'm sure we will see drastic swings. 

[cryptopaddles]

I have a feeling there are some really disappointed miners right about now

[bananaControl]

Can't decide if I should put another 2000 USD in bitcoin now, or wait and see if it goes even lower

i believe, this is right time to Buy (you can wait few more hours). panic sellers through it away,so possible down is $250...

sorry for the above post.

Already starting to go up a bit, though maybe just a dead cat. I'll take the plunge now and put it in cold storage. Here's for a fantastic 2015! Btw, you can just edit your posts.

This is indeed going to be a wild year.  With 2 ETf's coming I'm sure we will see drastic swings.  

Yeah, really wild, either way. If nothing really interesting happens soon I believe things will turn quite ugly.

[neurotypical]

Bitcoin is meant to be valued at around 10K in a couple years once celebrities start making it trendy as a motherfuck via social networks. Watch it happen.

[malaimult]

Can't decide if I should put another 2000 USD in bitcoin now, or wait and see if it goes even lower

Bitcoin could just as easily drop another $25, $50 or even $100. I would play careful. Only risk what you truly can afford to lose.

The estimate trading widget on BitcoinWisdom shows a single flash sale of 20,000 BTC would take the price sub $200.

20,000 BTC sell offs are not unheard of.