Topic: Help me understand BTC pricing (Read 278 times)

Back in 2008-2009 FED printed 700 billion USD to bail out the economy.

In 2020 the FED stakes were raised to 7 trillion USD (10x).

When the next crisis comes (2030?), I'm pretty sure FED will have to print 70 trillion USD.

See where I'm going?

The price of bitcoin can be rational and irrational from people who do not understand it's domination, actually it's very understandable and obvious to us that bitcoin price is denotes through the market situations, which is pointing at an arrow to the demands and supply of the market, so the price always been in rotational motion, either falling or rising because of the nature of the market movement, when the demand is sufficient than the supply, it's obvious that the market will eventually been accelerated or elevated, so the same thing is applicable to the supply situations which can fall to the decreasing involvements of bitcoin when it occurs.

Sure, I take your point, but in my example where there are only a handful of trades happening, then the most recent trade is the best estimate of the consensus and therefore the market cap. The same is probably not true of bitcoin, since people frequently buy and sell either above or below the current price on a variety of markets for a variety of reasons.

Sure, but the principle still stands. At time of writing this comment, the following numbers are roughly accurate:

Price $61,600
Circulating supply 18,858,637
Market cap $1.162 trillion

Now, if we look at Coinbase, there are presently about 130 BTC of sell orders in the next $1000, up to $62,600. For those to all be bought up, it would cost somewhere around $8.1 million, but the price would then be $62,600, making the market cap $1.181 trillion. So for $8 million of buying, we've increased the market cap by $19 billion, for a multiplier of over 2000x.

And yes, I know Coinbase is not the only exchange, but that is just an example of how the principle still stands with much larger markets with thousands of traders. A relatively small amount of money entering the system can move the market cap by a much larger amount.

What you're saying is possible but the actual price depends on the Availability and Demand of Bitcoin.
Whoever has the most bitcoins can manipulate the market potently compared to those who have less. He' can manipulate the perspective of how the trades will proceed.
If they want then they can bypass al indicators of other users and trade between which will be beneficial for them. I know it's hard to take in but that's what Whale do.

I'm sure they have tools to find what Indicators, strategies Mass traders use.

the analysis will not be 100% accurate and of course there will be some errors. The analysis is only as a reference where the market will go. Many factors will influence. Speculation continues so that the analysis sometimes does not go according to plan.
analysis is still needed even though it does not have 100% accuracy, because by doing the analysis we will understand how the BTC price will go.

The analysis if ofcourse right but may I point out :

- The price is rising every single day then it's attracting more companies, more investors and therefore it's making things bigger for an investment like : Bitcoins
Therefore at the starting it might be normal people in the market or computer geeks or some young people as well, but now companies like Tesla, Microsoft is showing interest and getting involved in their own way.

The more the price is, the more their value would be, the more it would be accepted in the market therefore its going to balance out the price difference and at the end it might even go faster if advertised in the right direction.

The value is dependent upon a lot of things, for example: A country made bitcoins legal, now what ? More people would keep it as an investment, especially people of that particular country and thus we can't really balance the value on this particular fact.

I agree that the amount of money in the system doesn't directly correspond to market capitalization, but I think the example, while correct for 2 people, doesn't quite work with Bitcoin.
Bob paid $3 per coin, but it doesn't mean that $3 per coin is a consensus (average market price), so there's no reason to believe that the market capitalization is now $3 million. The price does matter because market capitalization is the price multiplied by the number of coins (total number, which in this case is 1 million coins). And the price in question is average market price, so I'm not sure Bob and Alice are doing justice to this case, as it's just one deal, whereas what matters is the consensus.
Let's take a quick look at Bitcoin, and the data about it: the price is currently $61k per coin, and the circulating supply is 18,857,893. Multiply these two, and you get 1 trillion 153 billion 28 million (roughly), which happens to be the number listed on coingecko as Bitcoin's market capitalization. Alice selling 100 coins to Bob at $3 per coin might not (and realistically would not) be enough to change the average price to $3 per coin (again, since there are lots of people and lots of trading getting done), so it only works under unrealistic conditions of there being two people, two orders, and the price being adjusted accordingly.

Supply and demand plays an important role for price development of Bitcoin. But currently the main factor affecting Bitcoin is speculation because Bitcoin supply is almost stagnant while the demand on using it is still the same. Traders are just buying it when there's upcoming news that results to hype but the usecase of Bitcoin is still the same.

The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls. It is how bitcoin price works. It is really as simple as everything and it depends on marketcap.

Pricing of Bitcoin is simple and same as everything, it just depends on the demand and supply so whenever more people are selling the price will drop and when mkre people are buying the price will increase but the circulation is not going play a huge role as long as the volume on the exchanges is enough to handle the required trade orders to be executed.

If everyone is buying at a high price, since the supply is constant it is pretty obvious that the price will also increase. And this is happening now in real life. The more adoption has to come, the more we expect that the price of Bitcoin (as an example) will literally be moving high as well.

That is the law of demand and supply, it was not hard to understand it because we can also compare it to many things like in our local market. But as we can see, the price fluctuation has still able to experience because not all the time people are consistently buying, many were still selling and this is why it has become volatile and we can't control this thing.

^ Definitely right, the basic principle is because of the demand and supply and the price will calculate based on the buying pressure increase and it will drop when selling pressure will increase. It was determined by the last trade on a specific exchange which is what they called the last bid. That is the reason becomes BTC price is very volatile because there are many people who buy and sell, and it depends on what they heard on the news, when there is a FUD, eventually the price goes down. And some are manipulating the market.

Depends on the demand and supply. It's the buy and sell pressure that sets the bitcoins price. The more buy pressure (high demand), the higher the price will go since people will be selling their coins at higher price as more people are willing to buy. When the sell pressure (high supply) increases, the exact opposite happens. People are willing to sell their coins cheap for whatever reason and buyers are setting price even lower, causing the price to drop. The buy and sell pressure eventually reaches an equilibrium point, and that's the less volatile price we see.

Obviously yes, you can understand this concept better using the concept of market capitalisation, whenever there is an increase in price or decrease in price there is an corresponding rise or fall in market cap because it is derived from price multiplied by total supply, now whenever you will move the price up the amount of market cap you see has pumped corresponds to the amount of inflow into the market. So obviously it's difficult to move highly priced coins if their market caps are high.

You can see it on practice when company stocks that are worth a couple of dollars are being traded for millions of dollars per trade, yet the price only moves by tiny fractions of percent. Meanwhile on altcoin market coins that are worth a few dollars jump up or down by tens of percent every day.


However, it takes more money to move the price now than it did in the past, because the market has higher volume now. Both the price and the volume are projected to increase, but we can also have a situation when the price grows slowly while the volume and "difficulty to move Bitcoin price" grows at a faster rate. The vice versa is possible too, at least temporarily.

Sure, for every trade there is a buyer and seller, but that doesn't mean there are the same number of buyers and seller or that they are trying to buy or sell the same amount of bitcoin. If both sides of the order book were perfectly balanced, the price would never move. When there are more buyers (or, more accurately, more buying volume regardless of the actual number of physical buyers), the price goes up, and when there are more sellers/sell volume, the price goes down.

it's not in the near future, so usually it happens every 4 years as many of us know here and even then I'm not sure for this year if bitcoin can touch $100k as people predict, looks like we are stuck at $60k and hard to get other cash flows coming into this crypto market, so it's only a matter of time until the end of this year

Buffet concern is understandable, as he is in stocks and has no stake in BTC that's why he thinks BTC is fake.
I too agree with the fact that supply and demand is the main factor driving demand of any commodity. Its latest halving that has reduced the supply rate of BTC and as a result price has gone up.



Just a quick question. Don't you think there are equal no of buyers as sellers and vice verse? When somebody sells then somebody buys.

Yes, brother, it truly depends on marketcap. I know this from a youtube channel. Where he says the market price depends on the market's circulating supply, and then when users buy and sell the coin at a price, it adds to its whole marketcap value. It is trying to stabilize the price of the market. And now you can ask why the price is down to a coin. Look for this: we have to understand when the bitcoin marketcap is up, when LPPT users buy bitcoin, then the amount is added to the bitcoin marketcap. But when a user sells bitcoin, then the marketcap decreases and the user too. And that is how the price-dumping pump works.

You are talking about marketcap. Bitcoin has rised to where it is really fast because the marketcap has been undervalued. Valuation has nothing to with price of a single coin, everything is about the marketcap and bitcoin marketcap started from veery low to where it is now.

But still it's hard to speak about future gains of it, as when bitcoin started there was only few altcoins alongside with it, but now the whole crypto marketcap has sparked at the same time and saturated itself with random shitcoins.