Topic: A rally is inevitable (Read 5285 times)

This spring, it was the diminishing return of GPU mining sparked a large wave of rally, simply because there was no way to get enough coin in the foreseeable future at that time (unless you already had a pre-order of ASIC devices since last year)

It is a similar situation now: With 30% jump at each difficulty change, in a couple of months, many ASIC devices will only earn back the basic hosting cost, and this time there is no other more efficient miners in sight, means investing in mining rigs will only be profitable for those with free electricity

Currently exchange rate is still waiting for the difficulty to catch up, after the difficulty rise another 10 times (about 4 months), the only way to invest in bitcoin is to buy. But I think wise money won't wait until that time when everyone else also realized this

This is the most insightful post on this thread.

I am gutted my ROI is going to be abysmal, but ever bitcent it makes when it finally gets here is a bitcent more than i have right now.

I expect to go through the same painful realisation for the monarch too. Yes I got fished in on that as well

Sentiment only affect the price for a while, the fundamental support for the price comes from the long term demand. Official recognition of bitcoin as a reliable long term store of value (digital gold) could be a breakthrough. If pension fund are allowed to invest in bitcoin, then we are going to see a huge amount of capital inflow

Currently I only watch bitstamp exchange rate, it is very clear that any kind of large sale (like thousands of coins) will push the price down for a couple of percent, but then immediately be bought back and push the price even higher, this is exactly what happened during this spring in mtgox, some large player are testing the market weakness before they go ahead and drive a rally

+1

His right the price should rise and reach the value we all put on it , i think around £1000 per coin end of next year

Well bitcoin itself isn't maxed out but the sentiment given the current state of bitcoin IS maxed out. This means that in order for bitcoin to move forward, some significant and corporeal development needs to occur, and this is certainly possible. However, the level of effort needed for bitcoin to drop is relatively minor. Some simple event can occur, such as... mtgox enables withdrawals. Actually, merely the sentiment needs to reverse, which can occur via something psychological.

Some keywords we haven't seen in a while: mtgox, withdrawal, bankruptcy, hacker, worm, legislation, fork, capitulation, winklevoss, scalability.

I don't agree with that. We are not maxed out because every new bitcoin business slowly brings more people to the table who by using bitcoins take them from the market. We are just building up and everything is ahead of us. There are still many many people who don't know how to benefit from bitcoin .

I can give you a corrolary: We've had all the bullish news in the world yet can't pass the same resistance level after 2 months.

This tells me were maxed out for now at the highest possible sentiment. Now what if the bullish news stops, or what if there's some bearish news? The sr crash shows the stagnant market is a ticking bomb waiting to go down at the slightest change of sentiment.

I believe!

Most of the recent difficulty jump are 30%, generated from BFL mass shipping, bitfury deployment and together with kncminer's 28nm ASICs launch, these all make the coin much more difficult to get for anyone

The silk road shutdown just showed that currently no any kind of negative news could affect the bullish trend of bitcoin. People usually say, if the price don't fall when it should fall, then it will rise later, we are going to see a rally very soon, target area at least $500

Sunk costs.

yes, a miner is more likely to buy coins and spend them.  And more likely to encourage others to do so.

Also, consider that there is very little "efficiencies of scale" involved in taking a black box plugging it into power and ethernet and turning it on.  So large miners do not have significant advantages over others.

ASICs are pretty cheap per unit once NRE is paid, so bitcoin miner device prices will crash.  Once that happens electricity costs become important.  At that point, people with cheap or free electricity or a use for the incidental byproduct (heat) will have a definite advantage over large miners. 

So I expect that as the ROI -> 0, mining will decentralize back into a "hobbiest" domain and be used to consume excess power (summertime personal solar cells for example) and provide supplemental heat for homes.  But of course this won't happen at the current mining rig premium.  The will happen once Moore's law stops being applicable.  As long as access to the latest ASICS lets you mine most of the coins centralization makes sense.

Latest difficulty jump: 35.88% 

Market usually price in what will happen in 6 months, the price rally in April basically priced in the difficulty change through October. That's most of the smart money's prediction ability, and that's basically what happened: Difficulty rose by 20 times, price rose from 10 to 200.

Of course, a better prediction should be based on number of participants and how much each of them are willing to invest in bitcoin, but difficulty is a good indicator of supply and demand change (more hash power competing for same amount of coins). The fast increase in difficulty just showed how many people are willing to invest in bitcoin, it is difficult to imagine if someone are totally not interested in bitcoin would like to buy a ASIC mining device

Based on latest data, we are seeing more and more ASIC manufacturers establishing, especially that mysterious phoenixasic.com, if they indeed decided to throw 200 million USD for the project, I'm sure there must be some other insider movement we don't know

Bitcoin's market value is still very small, considering those 30 trillion dollars in tax heaven off-shore accounts, even a tiny bit of those stash will push the exchange rate up several magnitude. If you are a super rich guy and your life are so boring since you already had everything you want, what will be the new fun for your life besides gambling? Bitcoin of course  

Just like internet, bitcoin never existed in human history, and almost everything in bitcoin is against traditional wisdom, people will always be surprised but highly attracted, the more they study it, the more interesting aspect they will discover, and it will almost certainly make people to reconsider the idea of money, which they have been ignoring most of their life

Finally someone gets it.

where are you on this picture?

You have to actually poke holes in OPs logic, not re-state and mis-apply an old concept.

(my bold emphasis)

Absolutely. ASICs are solid-rocket boosters for Bitcoin. With Bloomberg on the verge of legitimizing this revolutionary currency, Core Dev with a load of point-fo-sale improvements I agree with the OP. A rally is inevitable!

How is that 20% estimate holding up?

I do actually believe you.

Yes, in order to protect the income of my ASICs,　I will step into exchanges and purchase a lot of bitcoins