Topic: Bitcoin is a commodity market ? - page 5. (Read 607 times)

I think a regular commodity's price is always aligned not with production cost but with demand, so that the production cost may remain constant while the price rises and falls. Moreover, even if the production cost goes through the roof, without demand, the price would still be falling. The same is basically true with Bitcoin.


Is there such a thing as right price for Bitcoin? I mean, outside the realm of demand? I think there's none. The market determines the price. Of course, there are certain factors that affect the demand such as Bitcoin's scarcity, government regulations, competition within the crypto market, crumbling fiat, and so on. But everything will boil down to demand or how much people would be willing to pay for it.


Well, there are certain technical tools for it. There's Williams %R, Bollinger Bands, RSI, and numerous others, which I am not really a fan of. Fundamentally, though, if only a handful of wealthy investors like the Hunt brothers are buying in massive amounts, hoarding, while the rest are selling, taking advantage of the exponentially rising prices, the price is probably a bubble.


If you're asking about artificially increasing the price of a commodity, then hoarding is a time-tested strategy. If there's a regular use of it which results to the increase of price, then I guess it's not anymore artificial.


The circumstances surrounding the case of the Hunt brothers are different with Bitcoin's. It was more like the Hunt brothers and certain partners versus the United States government. In no way, could the Hunt brothers succeed. Whatever success was definitely temporary. It couldn't be sustained. Not to mention that the production of silver was continuous.

Lately i've been going back throught the old satoshi posts and there are at least two i found really interesting.

First this one

https://bitcointalksearch.org/topic/m.11403


And the other is this one

https://bitcointalksearch.org/topic/m.2078


The main difference i see between bitcoin and a regular commodity is that a regular commodity's price is aligned around production cost, whereas bitcoin is the other way around which is the production cost gravitate around the demand's price.

So thats the eternal question around bitcoin is what is supposed to be the "right" price for it ?

My reasoning is that instead of asking this question peraphs the good question is how to know if it is overpriced ?

And the answer would be another question, how do you inflate artificially a commodity market ? By people with too much monney hoarding it to expect the price to rise and making more profit out of it than just exchanging it as utility as a regular use.

With this reasoning people with lots of monney hoarding expecting to make a profit would end as the Hunt brothers.

People using it as its supposed to be as a commodity or currency would not loose too much as not having too much in stock at any point.

Then ok there are always external economic factor that lead to people being more in saving or spending moods, so there is always some amount that is going to be organically saved. But then saving like keeping monney under the matress is a different attitude than hoarding for profit like "investing" as if it is a stock or a productive asset with some level of risk.

Is this reasoning correct ?

After all bitcoin was designed as digital cash with the coins circulating from address to address which is also part of the security model as i understand it because it makes it even more pointless to search for hash collision on a public address as the coins are always moving and are not supposed to sit on an address for long period but move between single use address which also increase anonymity.

If this is correct it mean some kind of "silver thursday" at some point when hoarders make the price so high nobody really want to buy it anymore and it ends up loosing all value on the market.

Anyway bitcoin as a currency can function at any market price as long as it not null because it still needs to be mined so the price cant go to zero but it can function at 1$ if thats the global economic value as a commodity.