Topic: Price vs Difficulty Charts - indicators for buying or mining - page 4. (Read 81503 times)

Nevermind I found one:
http://bitcoincharts.com/charts/mtgoxUSD#rg60zvztgSzbgBza1gEMAzm1g10za2gEMAzm2g25zi1gMACDzi2gFStochzi3gAroonzi4gRSI

mmmmmmmm less than 1 ratio... what an amazing time to buy!  Best price ever based on current difficulty to mint a coin.

Or just bumped a lot...

This should be a sticky.

Any chance we can get a candle stick version of the charts? They give a great deal of information that no other type of chart can give if you know how to read them.

So we have 0.6*1.5=9$

It is not a coincidence that 9$ is an old important top and now is support, as i pointed out in my last post http://btctrading.wordpress.com/2011/07/05/long-term-update-mtgox-2/
It will be hard to broke 9$ without a drop in difficulty.
Good job bitcoinbull, i sent you 1 btc.

Great graphs. Thank you for your contribution to the community.

excellent analysis...sent another .02

As the last chart shows, the price over difficulty ratio is approaching the historic low below 1:1.

Here's what I said shortly after the crash from $30 to $10:


Difficulty has held steadfast, and is now on target for ~1.5 million for the next readjustment.  Price broke the strong support at $15, and is now between $13-$14.  That puts the ratio below 1:1, approaching the historic low reached in April when difficulty was at ~100,000 and price was around $0.75, and had briefly dipped to $0.59, setting an absolute bottom of the ratio to around 0.6.

If bitcoin history repeats itself, we could see a brief price dip to $10.00 while the difficulty estimate is ~1.5 million, which would place the ratio at 10/15 = 0.67.  Then price recovers from the ~$10 low, rising slowly at first and then more quickly, spurring a rally and difficulty increases afterwards.

Otherwise, price could break through $10 and "free fall" (quoting S3052), setting record lows for the ratio.  In that case, all bets are off.

I remain bullish on bitcoin and my bet is still on.  Difficulty is still holding steadfast.  I predict the price has either already bottomed or it will bottom before $10, then recover until faith is restored and another rally ignites.

what as goxgate done to these ratios?

Yes, and at times this difference can be important in terms of supply fundamentals.  One common misconception about bitcoin is that supply is "fixed."  Eventually it is (22 mil) but the 6/hour rate is not fixed at all.  During periods of rapid network growth the production of bitcoins is borrowed from the future since the lagging difficulty calculation causes the block production rate to increase well above 6/hour.

The obvious (though not necessarily correct) inference from bitcoinBull's latest chart is that this is a good time to buy since the ratio being near 1 has been the bottom end of the trading range historically. 

As seen here:

the Bitcoin network's computation speed growth is certainly not in the decline, nor even leveling out.

As for your concerns, I can clearly see the validity in them. It is a niche/geek currency us of now. Nevertheless I also do believe that there are some people out there trading/mining that wouldn't really be classified as geeks, but rather were brought here following the media buzz looking for some "easy money" and or investment.

That said, as the situation is leveling out following last Friday's correction (read exchange abuse, could easily have been the start for a long lasting exponential price boom where it not for the abuse, if you ask me), transferability and user friendliness of Bitcoin will have the much needed time to increase and provide the opening for larger masses and the foothold to sustain bubble-less price increases that bring the price/difficulty ratio to the orders of ~3:1 again.

I can only be sure that as we speak there are numerous projects and services under development to further support the Bitcoin economy and after a short period of about a week or two, until the market regains it's trust and all faint hearted bitcoin owners have sold out, we are in for another bullish rally following the miners' raised mining costs due to the last difficulty change.

Besides, mainly due to the -until recently- immense daily growth, most projects out there have been rushed to the public at a proof-of-work quality standard because they had to be out there as soon as possible.

And that actually leads to my main point:
Since we have been brought here after last Friday's market correction/exploitation, the Bitcoin economy has been granted precious time to catch it's breath and take advantage of, reinforcing the market with modernly designed, accessible, user friendly, secure services that will drive the prices through the roof. As soon as that happens, leave the rest to the media, and the people will flock.

I think it is hard to imagine a scenario where demand outstrips difficulty for any really significant period of time. We might have bubbles of media/public created inflation but... Commercial and public interest will quickly lead to solutions for mining these coins, ASIC, FPGA etc not too long afterwards. The players involved will eventually find an equilibrium to balance it out.

There is a good, old analogy with gold mining in america. The gold rush made a few lucky, early miners rich. The company that sold them all the shovels got absolutely loaded pretty damn quick.


But now here we are back to demand. Gold is tangible, shiny, rare. It's quite easy to understand why people valued trading in it, it was quite obvious to the average joe why having lots of gold was a good aim. Can we do the same on the internet with BitCoins?

Part of the problem is the technological barrier. How many here really understand the way BitCoin operates, i mean, really get it. Not many i imagine and i don't see that may people (my friends included)  become immediately interested when i start talking about private and public key cryptography.

 So my main concern is that bitcoins has thus far been a highly niche interest that attracts a good percentage of the geek and liberal population without really grabbing an equal share of the general public or business interest. Essentially we have too much difficulty and too much coming every day.

If we can break through that barrier, by simplifying and enhancing security AND solving liquidity (amongst others) issues maybe we will see the growth spurt we all want.

that's true - it's still profitable to mine. I was thinking the growth rate in hash rate could slow down relative to price (who knows where price is going though?). So we could see price continue to rise (over the course of weeks/months, still may see crazy day to day fluctuations but I'm long term bullish) but hash rate not able to keep up so mining could become more profitable especially for the more efficient miners

The hash rate still hasn't caught up to the rise in the BTC/USD so there is much room yet for capacity to come online.  Though there are supply constraints on the most efficient hardware (e.g., 6990s, etc.) there is an even larger base of the less efficient GPU hardware yet for sale, or already in use by consumers that needs only to be re-purposed for mining.  Heck, even those with i7s and those with free electricity are profitable right now.  And don't dismiss the capacity that FPGAs do now and will soon represent.

When the difficulty reaches the point that electricity starts to eat into profits, those with the less efficient hardware and those less motivated by the declining returns will start to drop off once again.  The difficulty level will equilibrate towards whatever level the market price ends up at.

I was thinking price could start outstripping difficulty as the marginal supply constraints on gpus started to stall the growth in hash rate - maybe not at that point yet. If the growth in hash rate does start to stall will be interesting to see where price goes.

I've really enjoyed these posts BitBull, i don't think i've found much technical analysis which gets right to the heart of the matter of the bitcoin conundrum like this does. Thanks.  I'm no economist but my two cents worth..

I like to keep an eye on google trends: very strong intrest in the last few days, search numbers are rocketing, perhaps after the bubble which made headlines...  

We've had some nice stability the last few days, prices hovering just below $20, i guess partly explained by many getting fingers burnt and the market becoming more nervous. Volume of trading is well down too compared to recent flurry of activity.  

But difficulty really is moving quickly now, after the jump this morning we're going to be at +1mil in 12 days! Miners need to see the price move up to keep costs down.

I really agree with poster above... now comes a major test of the relationship between price and difficulty. Can the market attract enough investment to sustain the disparity caused by every geek on earth buying a radeon and shooting up difficulty.

If you use a diffiulty estimate and not the real difficulty, you are rather comparing with the network hash rate than "difficulty", just saying.