The biggest rally - the one cut off by Mt. Gox getting hacked - was from $1 to $30. That popped, but the lowest it ever went back to was $2; there was enormous resistance there, and $2 became the new bottom, and the price slowly began climbing back up from there.
The most recent big rally was from $3.20 to $7. That eventually popped, but the lowest it ever went back to was $4; there was enormous resistance there, and $4 became the new bottom, and the price eventually stabilized at $5, where it sat rather comfortably for about three months.
This rally was from $5 to $6.75. Why, this time, will we bottom out at lower than we began?
With reward drop coming $10 is inevitable sometime this year or Jan 2013.
I'm still unconvinced that the reward drop will have an effect like this. Block reward affects production rate, not supply, and the difficulty exists to insulate mining costs from the price.
Two facts to remember.
As blocks are found bitcoins are added to the pool. At the moment 50
BTC a block 6 times an hour.
If all the solved blocks end up being sold on MTGox Exchange thats a big "IF". Then that exchange will need to absorb 7200
BTC a day. At the present market value $6.3 it is just over $45,000 USD a day.
Once the reward is 25
BTC then the MTGox Exchange will only need to absorb 3600
BTC a day to keep the same price.
IF the market value is the same at that time then it is just over $22,000 USD a day.
As more users adopt Bitcoin and use its network. Demand will only increase, compound this fact with less bitcoin entering the market via the traditional means, Bitcoin value against USD will also increase.
