Topic: More Bitcoin adoption = lower Bitcoin/Usd rate! - page 4. (Read 4590 times)

Theoretically, yes, and no.

There are two potential fundamentals for a thing like bitcoin: "store of value" (like gold) and "currency" (like fiat).  Of course, there is an overlap between both, but currency essentially serves to buy goods and services, while "store of value" is a kind of a proxy to a currency, that serves to transport value over (longer) times.  Both are the functions of a monetary asset, whose equilibrium value is given by the monetary formula P x Q = M x V.

However, the price of bitcoin at this point is determined by 3, and not 2, elements, because bitcoin is still pretty new.  The 3 elements are:
- currency (to buy stuff with) - mainly black market, but starts now to become something with merchant adoption
- store of value on the longer term (to transport current value in the future, such as saving for your retirement)
- speculation of higher fundamentals in the future: the MAIN drive of the price: the attraction of the bitcoin moon :-)

Bitcoin's price is mainly driven at this moment by speculation of "greater fool".  This is why many people compare it to a Ponzi or pyramid scheme.  However, there's nothing wrong with that: any new would-be currency has to go through that phase.  However, this is of course the most volatile part, as it is not a fundamental itself, but an expectation of a future fundamental, which goes with good and bad news, mood, emotion and everything that affects expectation of the future.

The merchant adoption has to do with the "currency" fundamental.  However, as long as merchant adoption is only part of a scheme:
fiat - bitcoin - buying with bitcoin - conversion to fiat, the VELOCITY of bitcoin is very high. That, combined with a low volume of value (Q), makes the price in bitcoin high (the value of bitcoin low).

This fundamental is still pretty low.

The store of value for the long run without speculative "moon" expectation is probably very low too at this moment.  Bitcoin it, compared to other stores of value such as gold or real estate, much too risky and volatile.  It is much more volatile than the stock market !

So the current fundamentals of bitcoin point to a very low price.  The actual price is essentially speculation of higher fundamentals in the future, which can erode quickly.

However, the real road in my opinion is merchant adoption.  Of course, as long as it is only RETAILER adoption, this will result in immediate conversion into fiat, high velocity, and hence very low bitcoin value.  But from the moment that other merchants also accept bitcoin, retailers will probably accept bitcoin and PAY with bitcoin themselves : there's no point in converting to fiat, and converting back to bitcoin.

When retailers will start KEEPING coins to pay THEIR providers in coin, then velocity will diminish, Q will rise (the intermediate goods will also be paid in bitcoin and add to Q), and bitcoin's currency fundamental will start rising.

But the phase of retailer adoption and conversion into fiat, with low bitcoin fundamental value, is part of the adoption road.

If you go back and count from the beginning, you'll notice that the price has increased with adoption... how do you explain the first few years? It was worth only a fraction of a cent and now it's over $260.

Everyone seems to be using arbitrary starting points that support their ideas.

Hence when something with real market depth appears fake Chinese exchanges will entirely cease to have any meaningful push or pull on the exchange price.

A new liquid ETF or a regulated US exchange are my bets.

Well I was part of the camp that increasing Bitcoin adoption is a good thing in the long run but the conversions to FIAT immediately on any purchase keeps driving the price down as people do not hold Bitcoin for value
Until we switch from that turning point the price is pretty much stuck in a downtrend but as for how long that will take I expect it to end in 2015 although we haven't started off that well yet.

x2. Value is derived from demand. Demand for bitcoin is suggested from buy sell orders.  If the merchant adoption was on par with consumer adoption or mainstream adoption for other purposes, the price would rise.  I see a whole bunch of merchants accepting it, and a whole bunch of already bitcoin holders spending it.

 I agree!


I'm glad they don't move more volume of unique coins. If there were 13 million BTC on the ask side of exchanges, the real price would be $10. 
finex has around $20 million in USD swaps. That's good for $1.53/BTC. Even if they had 50 million Dollars it only brings it up to $3.84 so $10 might be a little generous.

merchants dumping is good to help prevent bubbles. You greedy bastards just whine because you don't get a bubble now.

1 BTC=1 ozt 99.9% gold

That brings it back up to the ATH.

Yeah LOL, when Bitcoin was going up everyone was quoting the exchange rate, now that it is down somehow it is less indicative. Haha. I wish Bitcoin was valued in terms of something other then USD, but so far I haven't thought of anything else.

I can't see a relation between that facts

indeed, in the early years it has been the opposite

Exchange rates are currently the best indicator we have of the fiat value of BTC. During extreme bull markets people do tend to overpay (with cash) at localbitcoins.

I think what more we see altcoin scams and altcoins what anyone no need, that more bitcoin price drop. They want only fiat and dump stealed btc away instantly.

The fact that the daily volume is a small portion of the market cap is irrelevant.  Price does reflect what people are willing to pay. 
You are off your rocker as far I'm concerned when you say the exchange price is somehow fake.

you cannot make any assuptions on true demand or true supply. or true value...

because the indicator you all only see is the price. and this price is so fake you dont realise it.

just look at the exchanges. they are not moving 13million coins. they are not even moving 1.3 million coins. they are not even moving 130k coins...

the exchanges are moving less than 1% of the market cap. infact its less than 1 tenth of a percent. so trying to link exchange movements to proper market trends of the whole 13million coins is utterly obsurd!!

open your eyes people, the exchanges should not be the value bases of bitcoin

This is what I've been saying for quite a while now (ever since all this news about big merchants accepting bitcoin became a semi-regular thing). I would've thought that Bitpay was orchestrating their pitch to companies willing to accept bitcoin and that they'd get even more business from bitcoin users providing they allow the protocol's advantages to allow for discounts to be offered by these businesses. Then, the end result would be better for the bitcoin price as demand would be a reoccurring thing in the overall market and make bitcoin a steady and demanded payment mechanism. Even w/ ATMs popping up there's really no incentive for anyone new to want to use them unless there's a sign at the businesses' payment counter incentivizing people to pay w/ it for a ~10% discount or so.

Which creates a surplus which creates the drop in price.

Also other brokerages that allow buying and selling Bitcoin on margin are not helping either. It just creates excessive volatility that is only good for speculation.

At some point, businesses insta-dumping will drop the exchange rate so low that they should start hoarding it and setting the rate themselves by reselling their own BTC at a massive profit.

There is no reason for the demand to increase unless the merchants provide discount enough for the customers to try and get Bitcoins. Usually, fiat works as well for the customer to buy their products.

Yes, definitely...  Pretty much everything (except people who buy and hold Bitcoin) creates downward pressure on BTC value right now. Even Bitcoin debit cards have to be converted to fiat in order to be useful. This is going to be long and organic process till we no longer need to value Bitcoin in fiat, and Bitcoin will stand on it's own merit.