This isn't the stock market. The Bitcoin market, and its investors, are extremely fragile. It won't take much to topple the house of cards.
The real question is who is buying Bitcoins now and why?
It seems to me that the botom of the upward exponential curve began right when BTC hit parity with the USD. That is a milestone that tends to generate a little bit of chatter in the financial media and would have a fresh batch of economists and speculators exposed to bitcoin for the first time. Now hands up who's heard of the butterfly effect? My guess is that some critical mass of smart money people, who can see bitcoin for what it is, suddenly wanted in and the seculators seeing the sudden rise followed suit. Then we have the masses who are curious but unsure, riding on the sudden wave of publicity. So many of them now, are all hearing about bitcoin for the first time and they only need to be buying $100 or less worth of BTC to play with for micro transaction and the price will continue to rise. I don't think it's realy a bubble at all. I agree with Koolio, It's just normal market dynamics. The price of one bitcoin will have to be $1000 USD one day (if enough people want to use it as currency) and it might just as well go up now as anytime.
Some speculators may panic sell, but as long as many more average joes want to buy up smaler amounts to use it for trading and holy on to the little amount's they do have, then I don't see that it has to crash at all. It may spike (like the last couple of days) flounder around for a while like today and then grow more slowly until another spike drives it higher. I'm realy just speculating here, but I can't see the price crashing like the stock exchange has.
Commodities and financial products are traded on the stock exchange, almost exclusively by speculators mostly professinal, without a large reserve being held by people who buy it for it's utility. People seem to either think about bitcoin like investment brokers or like traders/consumers . But the market contains a combination of investors and consumers and traders the consumers and traders, wont stop wanting to make use of this utility bitcoin has, for making small online transactors. So of course that sugests the need to offer more diversity in the products and services that are traded in bitcoin is high priority, but nobody is going to go into a fit of panic, becasuse they have 73.50 worth of BTC in their wallet and hardly anything they can spend it on, especialy not if the price keeps rising. Even If the price goes down, they havn't got much to loose. It isn't worth trying to pull $25 out of the market because you think it's going to crash. Wouldn't the larger numbers of smaler amounts have a buffeing effect on any downward spirals? Not everybody in this market is a gun ho, stock broker trying compete with other stock brokers for nothing other than profit. In any case the serious investors will be smart enough to settle in for the long haul. Not everybody is going to go into overtime trying to sell out on the falling market.
I think we'll see a few dips of a few dollars, over the time frame of days perhaps, but generaly over weeks and months, I think BTC has to trend upwards. Bitcoin is too usefull to NOT be taken up by more and more people, and generaly it has to be divided more and more, while accrueing value as it must, to support the masses who want a piece of a limited pie. The scarcity and utility both function together, to make this a currency/comodity
like nothing there ever was. I always assumed there would have to be a time of exponential growth as the masses caught on to the idea. Conversely, I just don't see why there must be a backlash counteracting the boom. I'm not saying this out of feverish optimism. I just don't see how a crash, is anywhere near inevitable, as if bitcoin were some infinitely renewable, artificialy generated comodity (like fiat currency). Of course I might not be seeing this correctly at all.
That's always a possibility.
