I think what is important is how much Bitcoin is bought for serious use. Serious uses include investment that benefits the bitcoin economy, using Bitcoin within the economy, holding long-term, etc.
Doesn't include buying to gamble (which means taking big risk) to make quick gains and exchange for fiat
I think if Bitcoin Network continues to develop and build a thriving self-sustaining economy without compromising on its principles, there will be continuous demand that keeps pushing price higher. It's important to create the right kind of economy that encourage demand with the kind of security that give people the confidence to use Bitcoin as a store of value
Topic: Help me understand BTC pricing - page 2. (Read 317 times)
Anyway, isn't that explanation a bit oversimplified?
Oh absolutely, but it shows that increases in market cap don't reflect that amount of money entering the system, and it highlights that less money can result in bigger price changes at a higher base price, depending on the buy and sell orders on the books. 
In the first trade it took $10,000 to raise the price by $1, but in the second trade it only took $300 to raise the price by $2, even though the coin was already more expensive.
Anyway, isn't that explanation a bit oversimplified? Otherwise, it would be very easy to pull down the price of Bitcoin, stocks or other assets, with many small volume buy orders. Imagine there is only one order to buy many coins for $1M and many orders for only $1. Would the price go down? It is clear to me that with lower trading volume the stock can move more, as I said before, but I don't know if it would go to those extremes.
A lot of incorrect responses in here.
The market cap does not tell you how much money is in the system. Raising the price depends on the amount of buy and sell orders on the books, and not on the current price.
Lets say I have just created a new coin. There are 1 million coins, and I hold all of them. I sell 10,000 coins to Alice for $10,000. She has paid $1 per coin, so the market cap of my coin is now $1 million. $10,000 entered the system, my market cap increased by $1 million, and the price of a single coin increased by $1.
Alice now sells 100 of her coins to Bob, but she charges him $300. Bob has paid $3 per coin, so the market cap of my coin is now $3 million. Only $300 more entered the system, but the market cap increased by $2 million this time, and the price of a single coin increased by $2.
In the first trade it took $10,000 to raise the price by $1, but in the second trade it only took $300 to raise the price by $2, even though the coin was already more expensive.
So no, it does not necessarily take more money to raise the price when the price is higher. It depends entirely on how many people are buying and how many people are selling.
The market cap does not tell you how much money is in the system. Raising the price depends on the amount of buy and sell orders on the books, and not on the current price.
Lets say I have just created a new coin. There are 1 million coins, and I hold all of them. I sell 10,000 coins to Alice for $10,000. She has paid $1 per coin, so the market cap of my coin is now $1 million. $10,000 entered the system, my market cap increased by $1 million, and the price of a single coin increased by $1.
Alice now sells 100 of her coins to Bob, but she charges him $300. Bob has paid $3 per coin, so the market cap of my coin is now $3 million. Only $300 more entered the system, but the market cap increased by $2 million this time, and the price of a single coin increased by $2.
In the first trade it took $10,000 to raise the price by $1, but in the second trade it only took $300 to raise the price by $2, even though the coin was already more expensive.
So no, it does not necessarily take more money to raise the price when the price is higher. It depends entirely on how many people are buying and how many people are selling.
I'm looking at it from a different standpoint. If you were to check the total supply/circulating of BTC, you would see it as around 18,856,656 BTC, and the total market cap is $1,117,068,131,730
To get the price you just divide the market cap with the total supply
That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.
The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.
To get the price you just divide the market cap with the total supply
Code:
1,117,068,131,730/18,856,656 = 59,239.99099999491
That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.
Code:
1,885,665,600,000/18,856,656 = 100000
The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.
This explanation, although logical at first glance, does not take into account trading volume. In periods of low trading volume the price can move with less money than in periods of high volume. I think this is what pooya87 was trying to explain when he said the following:
But how much money it takes to go up 1% for example, depends on how packed the orderbooks are not what the price is. For example if the order book from $1 to $2 is $10 million but from $1000 to $2000 is $9 million it still is easier to do the later.
This is what we sometimes see when we have a quick jump. Like from $3800 to $6200 in a couple of days. Or the recent 63% rise in 19 days from $41k to $67k.
This is what we sometimes see when we have a quick jump. Like from $3800 to $6200 in a couple of days. Or the recent 63% rise in 19 days from $41k to $67k.
I'm looking at it from a different standpoint. If you were to check the total supply/circulating of BTC, you would see it as around 18,856,656 BTC, and the total market cap is $1,117,068,131,730
To get the price you just divide the market cap with the total supply
That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.
The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.
To get the price you just divide the market cap with the total supply
Code:
1,117,068,131,730/18,856,656 = 59,239.99099999491
That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.
Code:
1,885,665,600,000/18,856,656 = 100000
The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.
Remember also that we are talking strictly about spot markets here if you want to talk about supply and demand. Most of the other markets you see out there are derivatives, as in, derived from what is actually happening on the spot market.
I think apart from supply in circulation, you also have to take into account flow/stock like the s2f model.
It is not just how much is in circulation, but also how much is available to be bought, and how much more is coming in the pipeline
I think apart from supply in circulation, you also have to take into account flow/stock like the s2f model.
It is not just how much is in circulation, but also how much is available to be bought, and how much more is coming in the pipeline
Speaking of bitcoin price, the value can be changed overtime by many factors, people including Mr.buffet believe bitcoin price is fake and it doesn't have any value by itself and the price and the rise of the price is just fake, but if you think deeply into it you will understand the price cames from the supply and demand, regarding supply everything is clear and the supply is limited by the demand of bitcoin rises every day after more people know about bitcoin and it's being available for trading on new people and the price rises in return.
Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price?
This is both right and wrong.First we have to see what "raise the price" means. Going from $1 to $2 is a $1 rise but percentage wise it is a 100% increase. However going from $1000 to $1001 is also a $1 rise but it is a 0.1% rise. The former will take a much bigger amount of money compared to the later. So we have to first take percentage rise into consideration which is what people usually forget. An stock example is Berkshire Hathaway that got dumped $5936 in the past 24 hours but that was 1.35%.
Secondly we have to take adoption into consideration. Bitcoin is not like other things, it is on the growth. This means as we move forward we see an increasing amount of people adopting bitcoin and they are bringing a lot more money in total, so it is understandable to see price rises take place even faster than before.
But how much money it takes to go up 1% for example, depends on how packed the orderbooks are not what the price is. For example if the order book from $1 to $2 is $10 million but from $1000 to $2000 is $9 million it still is easier to do the later.
This is what we sometimes see when we have a quick jump. Like from $3800 to $6200 in a couple of days. Or the recent 63% rise in 19 days from $41k to $67k.
While much money is needed, demand has to also increase and this two factors work together. The increase in demand brings in more money to the market which makes the sellers withhold from selling or place higher selling price therefore increasing the price of Bitcoin. Actually, the more the price of Bitcoin increase the more money is in the market.
Bitcoin bought are only taken from circulating supply available for trading when you buy from an exchange and transfer to your wallet. Keeping them on an exchange do not take them out of circulation as the exchange still have control over the coins and what is currently displaying as Bitcoin in your dashboard is not Bitcoin but IOU version of it, they only send you real Bitcoin when you withdraw to your personal wallet, which you should always do.
Bitcoin bought are only taken from circulating supply available for trading when you buy from an exchange and transfer to your wallet. Keeping them on an exchange do not take them out of circulation as the exchange still have control over the coins and what is currently displaying as Bitcoin in your dashboard is not Bitcoin but IOU version of it, they only send you real Bitcoin when you withdraw to your personal wallet, which you should always do.
Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span
You are absolutely correct. The potential growth ups to market capitalisation. Since Bitcoin has the biggest capitalisation, it is really difficult to be pumped in the short time. So to make the price of bitcoin goes up it will take a lot more cash inflow to raise the price compared to low market cap coins. But it will grow just because of its value, so we are hodl it.
Yes, of course. That's basic logic. But there's no taking out of circulation. The Bitcoin that you bought is not taken out of circulation. It is not up for selling, though.
The price of Bitcoin is simply about how much do buyers bid. Since there is a strong demand and there's very limited supply for selling, buyers will compete against each other. To make sure that somebody's buy order gets filled, one needs to put the best price. This is primarily the reason why the price goes up.
So it is correct to say that for the price to go much higher, more money is needed. It is, therefore, easier for Bitcoin's price to double when it was just $1,000 than when it is already $60,000.
The price of Bitcoin is simply about how much do buyers bid. Since there is a strong demand and there's very limited supply for selling, buyers will compete against each other. To make sure that somebody's buy order gets filled, one needs to put the best price. This is primarily the reason why the price goes up.
So it is correct to say that for the price to go much higher, more money is needed. It is, therefore, easier for Bitcoin's price to double when it was just $1,000 than when it is already $60,000.
Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span
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