Mainstream merchant adoption leads do declining Bitcoin price?

scarsbergholden

hero member

Activity: 686

Merit: 500

Quote from: WeGotCactus on October 29, 2014, 06:43:36 PM

Quote from: odolvlobo on October 14, 2014, 12:20:33 AM

Quote from: BTCmoons on October 13, 2014, 06:20:06 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

According to blockchain.inf/markets, bitstamp has ~$9.5 million in trades in the last 24 hours, with bitcoin trading at ~$400, that works out to ~24k bitcoin in the last 24 hours. The amount mined per day is roughly 15% of that figure. Taking away 15% of the supply of a product would almost always have an impact on the price

According to Bitcoinity (http://bitcoinity.org/markets/list), the total traded in the last 24 hours on all exchanges was 484k. Bitstamp's 25k is a little more than 5% of the total exchange volume. 3600 BTC is only 0.75% of the total exchange volume, and don't forget that 3600 assumes that all mined bitcoins are sold.

Anyway, my point is not that the price is unaffected by newly mined bitcoins. Of course it is. It's basic inflation of the money supply. I just don't think it is the major cause of the steep decline over the last 9 months.

Mining has increased the number of Bitcoins over the last year from about 12 million to about 13.5 million. The increase is about 13%, so from a mathematical standpoint, inflation can account for only a decline in the price by about 11%.

Regarding your 11% comment, I don't think that's how it works. Example: If you were to take 11% of the value of bitcoin's market cap today and dump it on all exchanges at once, it would SURELY drive the price to zero. That's because the size of the cumulative exchange orderbooks is just a fraction of what's sitting in cold storage etc. So for every 1% of coins dumped it will have more than 1% effect on the price, unless done over a loooooooooong period of time such that the order books are thoroughly replenished between sales.

He is talking about monitory inflation, not the sale of additional bitcoin in the market.

His calculation comes from the assumption that the market cap of bitcoin will stay fixed while the number of bitcoin will increase. Since there will be more bitcoin overall, the price per bitcoin will go down by 11% if the number of bitcoin goes up 13%

jinxx

member

Activity: 83

Merit: 10

Quote from: pitham1 on October 14, 2014, 09:53:10 PM

Quote from: SomethingElse on October 14, 2014, 08:06:21 AM

I double checked, the block reward is currently 25 and that means 3600 bitcoins come into play a day. By the end of next year though that will half to 1800 and I think that might help the system as a whole. Not sure though.

The block reward drop is 2 years away.

http://bitcoinclock.com/

how accurate is that site? just curious..

also thanks for reminding us about the block reward, i totally forgot about that stuff..

odolvlobo

legendary

Activity: 4354

Merit: 3260

Quote from: WeGotCactus on October 29, 2014, 06:43:36 PM

Quote from: odolvlobo on October 14, 2014, 12:20:33 AM

Quote from: BTCmoons on October 13, 2014, 06:20:06 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

According to blockchain.inf/markets, bitstamp has ~$9.5 million in trades in the last 24 hours, with bitcoin trading at ~$400, that works out to ~24k bitcoin in the last 24 hours. The amount mined per day is roughly 15% of that figure. Taking away 15% of the supply of a product would almost always have an impact on the price

According to Bitcoinity (http://bitcoinity.org/markets/list), the total traded in the last 24 hours on all exchanges was 484k. Bitstamp's 25k is a little more than 5% of the total exchange volume. 3600 BTC is only 0.75% of the total exchange volume, and don't forget that 3600 assumes that all mined bitcoins are sold.
Anyway, my point is not that the price is unaffected by newly mined bitcoins. Of course it is. It's basic inflation of the money supply. I just don't think it is the major cause of the steep decline over the last 9 months.
Mining has increased the number of Bitcoins over the last year from about 12 million to about 13.5 million. The increase is about 13%, so from a mathematical standpoint, inflation can account for only a decline in the price by about 11%.

Regarding your 11% comment, I don't think that's how it works. Example: If you were to take 11% of the value of bitcoin's market cap today and dump it on all exchanges at once, it would SURELY drive the price to zero. That's because the size of the cumulative exchange orderbooks is just a fraction of what's sitting in cold storage etc. So for every 1% of coins dumped it will have more than 1% effect on the price, unless done over a loooooooooong period of time such that the order books are thoroughly replenished between sales.

The 13% I'm talking about was added over a period of a year, not all at once.

WeGotCactus

newbie

Activity: 31

Merit: 0

Quote from: odolvlobo on October 14, 2014, 12:20:33 AM

Quote from: BTCmoons on October 13, 2014, 06:20:06 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

According to blockchain.inf/markets, bitstamp has ~$9.5 million in trades in the last 24 hours, with bitcoin trading at ~$400, that works out to ~24k bitcoin in the last 24 hours. The amount mined per day is roughly 15% of that figure. Taking away 15% of the supply of a product would almost always have an impact on the price

According to Bitcoinity (http://bitcoinity.org/markets/list), the total traded in the last 24 hours on all exchanges was 484k. Bitstamp's 25k is a little more than 5% of the total exchange volume. 3600 BTC is only 0.75% of the total exchange volume, and don't forget that 3600 assumes that all mined bitcoins are sold.

Anyway, my point is not that the price is unaffected by newly mined bitcoins. Of course it is. It's basic inflation of the money supply. I just don't think it is the major cause of the steep decline over the last 9 months.

Mining has increased the number of Bitcoins over the last year from about 12 million to about 13.5 million. The increase is about 13%, so from a mathematical standpoint, inflation can account for only a decline in the price by about 11%.

Regarding your 11% comment, I don't think that's how it works. Example: If you were to take 11% of the value of bitcoin's market cap today and dump it on all exchanges at once, it would SURELY drive the price to zero. That's because the size of the cumulative exchange orderbooks is just a fraction of what's sitting in cold storage etc. So for every 1% of coins dumped it will have more than 1% effect on the price, unless done over a loooooooooong period of time such that the order books are thoroughly replenished between sales.

pitham1

legendary

Activity: 1232

Merit: 1000

Quote from: SomethingElse on October 14, 2014, 08:06:21 AM

I double checked, the block reward is currently 25 and that means 3600 bitcoins come into play a day. By the end of next year though that will half to 1800 and I think that might help the system as a whole. Not sure though.

The block reward drop is 2 years away.

http://bitcoinclock.com/

SomethingElse

full member

Activity: 210

Merit: 100

Looking for the next big thing

Quote from: SomethingElse on October 14, 2014, 01:22:23 AM

Quote from: NapoleonBonaparte on October 13, 2014, 12:37:31 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

It is one thing to trade the same coin back and forward for profit. Quite another to add 3600 coins into the circulation everyday.

Many might be sold off exchange as just dumping that many coins is dangerous. Still.... Even if a discount is given, it's more than a million dollars a day, somedays two or three.

In someways this might keep the price of Bitcoin from going to high.

I always thought of it as 0.00006 percent difference each day which to me meant basically nothing. But when you say 1-3 million a day, that sticks pretty hard.

I double checked, the block reward is currently 25 and that means 3600 bitcoins come into play a day. By the end of next year though that will half to 1800 and I think that might help the system as a whole. Not sure though.

SomethingElse

full member

Activity: 210

Merit: 100

Looking for the next big thing

Quote from: NapoleonBonaparte on October 13, 2014, 12:37:31 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

It is one thing to trade the same coin back and forward for profit. Quite another to add 3600 coins into the circulation everyday.

Many might be sold off exchange as just dumping that many coins is dangerous. Still.... Even if a discount is given, it's more than a million dollars a day, somedays two or three.

In someways this might keep the price of Bitcoin from going to high.

I always thought of it as 0.00006 percent difference each day which to me meant basically nothing. But when you say 1-3 million a day, that sticks pretty hard.

odolvlobo

legendary

Activity: 4354

Merit: 3260

Quote from: BTCmoons on October 13, 2014, 06:20:06 PM

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

According to blockchain.inf/markets, bitstamp has ~$9.5 million in trades in the last 24 hours, with bitcoin trading at ~$400, that works out to ~24k bitcoin in the last 24 hours. The amount mined per day is roughly 15% of that figure. Taking away 15% of the supply of a product would almost always have an impact on the price

According to Bitcoinity (http://bitcoinity.org/markets/list), the total traded in the last 24 hours on all exchanges was 484k. Bitstamp's 25k is a little more than 5% of the total exchange volume. 3600 BTC is only 0.75% of the total exchange volume, and don't forget that 3600 assumes that all mined bitcoins are sold.

Anyway, my point is not that the price is unaffected by newly mined bitcoins. Of course it is. It's basic inflation of the money supply. I just don't think it is the major cause of the steep decline over the last 9 months.

Mining has increased the number of Bitcoins over the last year from about 12 million to about 13.5 million. The increase is about 13%, so from a mathematical standpoint, inflation can account for only a decline in the price by about 11%.

BTCmoons

full member

Activity: 173

Merit: 100

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

According to blockchain.inf/markets, bitstamp has ~$9.5 million in trades in the last 24 hours, with bitcoin trading at ~$400, that works out to ~24k bitcoin in the last 24 hours. The amount mined per day is roughly 15% of that figure. Taking away 15% of the supply of a product would almost always have an impact on the price

NapoleonBonaparte

full member

Activity: 176

Merit: 100

Quote from: odolvlobo on October 13, 2014, 12:19:22 PM

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

It is one thing to trade the same coin back and forward for profit. Quite another to add 3600 coins into the circulation everyday.

odolvlobo

legendary

Activity: 4354

Merit: 3260

Quote from: kutaka on October 13, 2014, 12:09:58 PM

3600 are produced daily I think....

And it is only a small fraction of total exchange volume.

kutaka

member

Activity: 97

Merit: 10

3600 are produced daily I think....

arbitrage001

legendary

Activity: 1067

Merit: 1000

Quote from: cryptovalues on October 08, 2014, 06:02:45 AM

Merchant adoption has always been the Holy Grail of Bitcoin enthusiasts. Supposedly it should have lead so soaring Bitcoin price. But recent overlap of really major adoption (Paypal) and price slump shows that things are trickier.

The dynamics seems to be the exact opposite one: new high volume merchant will never hold bitcoin, due to obvious reasons. They will sell it the second they accept it. So basically it leads to Bitcoin sell-off through huge market sell orders, which are not matched by opposite buy orders, since no one is going to buy Bitcoin in order to pay using Paypal. Existing Bitcoin holders spend their coins, this is the main effect of mainstream merchant adoption.

Don't expect Bitcoin price to rise as new merchants jump on board. Only Wall street can push BTC higher now, but probably the time hasn't come yet. $100-200 BTC price is realistic, Bitcoin economy will still work fine at this price level.

Wanna hear your opinion.

Don't forget 7200 BTC is being produced everyday. If miners as a whole only hold half and sell half, that still need around 1.35M dollars infusion everyday to keep price stable.

abrahamlitcoin

member

Activity: 81

Merit: 10

♔ of ♥

What? It should be helpful to the bitcoin community.

pitham1

legendary

Activity: 1232

Merit: 1000

Quote from: Eisenhower34 on October 11, 2014, 03:21:19 PM

Quote from: IIOII on October 11, 2014, 11:13:53 AM

Quote from: teukon on October 08, 2014, 07:44:51 AM

Quote from: cryptovalues on October 08, 2014, 06:02:45 AM

Existing Bitcoin holders spend their coins, this is the main effect of mainstream merchant adoption.

Why did these bitcoin holders buy coins in the first place? You are presuming a large demographic of people that considered bitcoins worth having when there was little merchant adoption but not worth having now that bitcoins are more widely accepted.

Besides, there's a far simpler explanation for the 2014 bear market: A correction to the 2013 bubble(s).

We can't prove that the price decline is triggered by mainstream merchant adoption with the merchants dumping bitcoin for dollars. I do not believe in this theory, because merchant adoption is increasing in general with some of the merchants keeping their bitcoin. Also I do not think that bitcoiners waited for more merchants to cash out (they could have done this earlier if they'd wanted to), instead I consider the majority of early bitcoiners being hardcore holders which rebuy Bitcoin any time they spend them. Why? Because they adopted Bitcoin to escape from the shortcomings of the current monetary system.

So it's reasonable to assume that the decline in price stems from an ordinary correction of the epic rise of 2013.

I think higher merchant adoption is causing somewhat of our current price decline. I also believe it will be short term. The reason some people may have not sold their bitcoin would be they would need to give up privacy in order to do so (or risk getting scammed on places like LBC or the currency exchange section). I would argue that some people with, say 50 BTC might decide they want to "sell" 2 BTC to overstock (who would end up selling 1.8 BTC of this) in exchange for some goods on their website.

I would argue that over longer periods of time that merchants will start to discount prices for people paying in bitcoin which will result in more people buying bitcoin in order to take advantage of these discounts

The benefits start accruing to the merchants immediately. I wonder why they aren't passing on these savings to customers through discounts. Sad

Eisenhower34

legendary

Activity: 906

Merit: 1002

Quote from: IIOII on October 11, 2014, 11:13:53 AM

Quote from: teukon on October 08, 2014, 07:44:51 AM

Quote from: cryptovalues on October 08, 2014, 06:02:45 AM

Existing Bitcoin holders spend their coins, this is the main effect of mainstream merchant adoption.

Why did these bitcoin holders buy coins in the first place? You are presuming a large demographic of people that considered bitcoins worth having when there was little merchant adoption but not worth having now that bitcoins are more widely accepted.

Besides, there's a far simpler explanation for the 2014 bear market: A correction to the 2013 bubble(s).

We can't prove that the price decline is triggered by mainstream merchant adoption with the merchants dumping bitcoin for dollars. I do not believe in this theory, because merchant adoption is increasing in general with some of the merchants keeping their bitcoin. Also I do not think that bitcoiners waited for more merchants to cash out (they could have done this earlier if they'd wanted to), instead I consider the majority of early bitcoiners being hardcore holders which rebuy Bitcoin any time they spend them. Why? Because they adopted Bitcoin to escape from the shortcomings of the current monetary system.

So it's reasonable to assume that the decline in price stems from an ordinary correction of the epic rise of 2013.

I think higher merchant adoption is causing somewhat of our current price decline. I also believe it will be short term. The reason some people may have not sold their bitcoin would be they would need to give up privacy in order to do so (or risk getting scammed on places like LBC or the currency exchange section). I would argue that some people with, say 50 BTC might decide they want to "sell" 2 BTC to overstock (who would end up selling 1.8 BTC of this) in exchange for some goods on their website.

I would argue that over longer periods of time that merchants will start to discount prices for people paying in bitcoin which will result in more people buying bitcoin in order to take advantage of these discounts

IIOII

legendary

Activity: 1153

Merit: 1012

Quote from: odolvlobo on October 11, 2014, 11:22:10 AM

Quote from: IIOII on October 11, 2014, 11:13:53 AM

So it's reasonable to assume that the decline in price stems from an ordinary correction of the epic rise of 2013.

A "correction" is a term that describes a phase of a market cycle. It does not cause the price to decline any more than daytime causes the sun to shine.

You're right. By "correction" I meant to say that the price is declining because those speculators are selling who initially drove the price to the previous highs. Those speculators are not real bitcoiners, because they quickly switch between different assets to generate USD profits. They don't care about the Bitcoin use case.

odolvlobo

legendary

Activity: 4354

Merit: 3260

Quote from: IIOII on October 11, 2014, 11:13:53 AM

So it's reasonable to assume that the decline in price stems from an ordinary correction of the epic rise of 2013.

A "correction" is a term that describes a phase of a market cycle. It does not cause the price to decline any more than daytime causes the sun to shine.

IIOII

legendary

Activity: 1153

Merit: 1012

Quote from: teukon on October 08, 2014, 07:44:51 AM

Quote from: cryptovalues on October 08, 2014, 06:02:45 AM

Existing Bitcoin holders spend their coins, this is the main effect of mainstream merchant adoption.

Why did these bitcoin holders buy coins in the first place? You are presuming a large demographic of people that considered bitcoins worth having when there was little merchant adoption but not worth having now that bitcoins are more widely accepted.

Besides, there's a far simpler explanation for the 2014 bear market: A correction to the 2013 bubble(s).

We can't prove that the price decline is triggered by mainstream merchant adoption with the merchants dumping bitcoin for dollars. I do not believe in this theory, because merchant adoption is increasing in general with some of the merchants keeping their bitcoin. Also I do not think that bitcoiners waited for more merchants to cash out (they could have done this earlier if they'd wanted to), instead I consider the majority of early bitcoiners being hardcore holders which rebuy Bitcoin any time they spend them. Why? Because they adopted Bitcoin to escape from the shortcomings of the current monetary system.

So it's reasonable to assume that the decline in price stems from an ordinary correction of the epic rise of 2013.

dothebeats

legendary

Activity: 3542

Merit: 1352

Cashback 15%

We're not into 'mainstream' adoption YET. We can only say that we're into this 'mainstream' adoption when almost all things are also priced in bitcoin. Of course, the recent involvement of PayPal into bitcoin seems a good signal for bitcoin users about mainstream adoption, but PayPal is only a payment system/service. If merchants all over the world start to price their goods and services in bitcoin, then it's a good sign of mainstream adoption. Also, not many people in the world use bitcoin as a money, instead, they still treat it as a stock or an investment. Also, the massive sell-off of merchants that get paid in bitcoin is another factor of the decline in price. If almost all the services and goods in the world are also priced in bitcoin, then there's a good reason for the merchants to keep bitcoin as it is, and not trade for any other currencies to fund their businesses. :3

Topic: Mainstream merchant adoption leads do declining Bitcoin price? (Read 3671 times)