Topic: Why bitcoin prices are always very unstable (Read 10448 times)

yeah... people are deriving the value of BTC based on the markets, which only represent a small portion of the market capitalization, and are subject to sudden drastic changes. You want to buy an apple with bitcoin, people check price against the markets, but the markets only hold about 5% of the volume, and only 10% of that is being actively traded

This guy is so confused.

In related news:
Bulls make Money;
Bears make Money;
Pigs get slaughtered.

speculators will continue to whine, cry and beg ,This is just bitcoin  nature, unstable. good time to buy some

Is it maybe not a good sign that the price is kind of volatile? Of course only in the case that it doesn't vary by more than, let's say 20% within 24 hours.
It is not a secret that a large amount of XBT is in the hands of a small group (just like FIAT, right?). These guys can literally steer the value. Even though we don't really know who this group is, can we not assume that they also share interest in the currency? And thus "manipulate" to its good? It is like a quasi-decentralization - hopefully with people behind the system that want to adjust the course in a good way, to establish stability.
Wouldn't the outing of major XBT holders increase trust and therewith price stability?

The price of Bitcoin is unstable because whoever controls the price is unstable.

im working on a vertically integrated financial services for people with liquidity, among other things... This makes a lot of sense. Aside from just liquidity, there needs to be a next wave of innovation that utilizes more advanced uses of the new Bitcoin Core. I have a few ideas, just need a good programmer as I only have one other person working with me atm. But def +1 the response..

You can easily detect bot on exchange. just add and remove one offer and you wil see that one at some designated % of what you placed will immediately appear on market.
Bots dont manipulate market, they just make you really hard to sell bitcoins for fiat or sell fiat for bitcoins, but force you to buy them and pay more and get less.

Bots actually make exchanges more stable, since there si more BTC on offer and more fiat on offer.

So the willy bot wasn't huge manipulation for a manipulated exchange that stole everybody's coins???

Well, IMO people arent doing this drop, but bots are. Too many exchanges, too coordinated.. this is a plan in motion. All we can do is sit here and talk to each other like sick people waiting to heal

If the price moved up by such a large amount when the bots were buying, there definitely was slippage.

I agree that bots were certainly used, however I don't think there is evidence that the bots were used to manipulate the prices. From what I can tell the willy bot was only a way that whales were able to buy up large amounts of bitcoin without suffering excess slippage.

It was covered widely in the media.

http://www.theguardian.com/technology/2014/may/29/bitcoin-bots-bought-millions-in-the-last-days-of-mt-gox

To me, that does not lead to the conclusion directly. 

Is there any evidence on the use of bots?

The bots were purchasing on behalf of speculators with a lot of money. It is not a conspiracy.

Zoznoz is likely correct to say that speculators were trying to profit from quick and massive bitcoin adoption but the chinese government was able to stem this in their country. I would anticipate them easing off these bans/regulations over the long term as they become more of a free market economy

The increase in price last year was due to market manipulation by bots.

It's not a bad thing. Unstable means opportunity and opportunity means money you can make   

In terms of bitcoin, the price of litecoin has been declining for some time now. The price of LTC and other major altcoins have been declining all year. The reason for this is because they have no underlying value.

The price of bitcoin has been unstable throughout it's life because it is very illiquid when compared to other investments and other currencies. If you look at the dollar value of the volume of shares traded in most major stocks, and compare that to the volume of bitcoin traded, you will see that the volume of bitcoin traded is significantly less

I could be completely wrong but from observation, it seemed as though BTC/USD increased to $1,000 each last year because most of the speculators (particularly the newest speculators) hoped that people would develop more and greater services which would be centred around bitcoin. Which has happened but not quick enough then most had hoped and this is completely due to Government intervention, particularly China who is trying to eliminate it completely and the US Government would love to do the same thing but instead they will keep crippling the unregulated financial services offered in bitcoin. Now, I might be wrong but I believe that the fact that these asset exchanges and lack of banking services is a major contributor to why the price isn't higher than it is now. If everyone believed they could get huge returns quite easily using bitcoin then of course the price would be back to where it was beforehand. If people were so scared about the volatility then they would just hedge.

A lot of the early adopters have hoards of bitcoin. They have been holding for a long time now. I guess it will be some time before others think that way as well.

At this point in bitcoins life, people are treating it more as a stock... people are buying into bitcoin and waiting for it to go up...Any little ups or downs cause a rush to sell or buy as if there was bad news with a tech company's product or third quarter earnings... As long as bitcoin is treated this way... we will have these price swings.

More people need to treat bitcoin as if it were gold or silver.... hoard it away for 5+ years .... and then see what the price is... there needs to be a few more reward halving for to be realized just how rare bitcoin really is.... Then and only then can bitcoin be used as a stable means of trade....

Next ... Bitcoin must not be traded into and out of fiat currency.....

100 years ago...you could buy a fine 3 piece suit for a 1oz .gold coin.. And at today's prices... you can buy a fine 3 piece suit for that same gold coin...... this is only a reference at the gold or the suit didn't change any in 100 years.... it was the fiat currency value that changed.....

Buy and hold bitcoin for long term investment .. and price doesn't matter.

Great so we're all gambling on a digital currency with no use yet... great.

I think about this question for quite a long time. The main reason I think is because it is only used for speculation. We need more real world applications to make it more stable.

Lmfao this comment is hilarious... Lite coin is crashing & burning atm, soon LTC will be a thing of the past! It has no future!!

I have to agree with this.. I think you have more to say than others here.

The correct response.  Anyone with an inkling of how capital markets work will realise liquidity in Bitcoin is a serious issue.  We only just got our very first regulated derivative FFS.  We have a long way to go but ultimately liquidity will bring price stability.

Gonna have to go with this response IMHO

In other words the price will keep falling at a faster rate as more and more cooperations get involved

BTC become more stable now at $350 and will always be the daddy coin, but IMO LTC does have more profit potential, like right now LTC to $12 is not going to be as hard as BTC going to $1000 again

Maybe Russians are selling because they are making their own.

Nowadays a lot of btc users are traders and ASIC owners. They create the up and down waves. Price will be stable if shops, customers and other participants of market use more btc.

There is the forecast for btc exchange rate from Korea

Part of the selling pressure is because of large merchants selling the bitcoin they receive from their customers. If they were to engage in b2b transactions then this selling pressure would be reduced

But the price is going UP

Russians selling all their BTC should be pushing the price DOWN.

it is because a lot of selling going on bitcoin in Russia, this is because his existing laws that prohibit possession of bitcoin in Russia, it makes the holder bitcoin bitcoin in Russia to sell to the market, so stock bitcoin abundant in the market, and as a result of law if the stock market an abundance of goods, then the selling price of the item will be dropped ... 

While I understand the point you're trying to make, it's moot because OP asked what factors were dropping price and creating volatility. As Im sure you already know, when sell orders are larger than buy orders it creates downward pressure on price... As far as the corps having lack of desire to conduct B2B transactions in Bitcoin, I agree until we see larger willingness from said corps to utilize their btc in a way that supports price, it will continue to be volatile.

Corporations need to convert their bitcion back to fiat because they have nothing to do with it. Corporations are not investment vehicles and will generally not hold an asset for an investment (except extremely safe ones like US treasuries) unless it relates directly to their business (for example a warehouse or their inventory). Until we see more B2B bitcoin transactions corporations will continue to sell their bitcoin quickly (likely causing large spikes in supply), however as we see more b2b transactions this will slow down and eventually stop

I guess China has contributed a lot to the volatility. There are many irrational traders. They get panic or ecstatic quite often.

I personally think that corporations that are accepting need to turn it over back into fiat (because thats how they ultimately look at their bottom lines), miners needing to cover their costs, various reports of very early adopters converting large sums, & regulatory uncertainty is the reason for the extreme volatility. If you're bullish bitcoin, this shouldn't matter much. Considering bitcoin went parabolic last year, this type of retrace amid the black swans that I just mentioned is natural. From a technical standpoint you'd be a bit concerned maybe in the near term, possibly. Real price expansion will happen once we work thru alot of transitory variables (most mentioned above) and more mainstream aggregate demand occurs along with merchant adoption to support the supply/demand imbalances we are seeing being reflected in price as volatility. Hope that helps!

he can only make it go to $1, he cant make it go to $1000

Because the price isn't regulated by a central authority like the government, so Bitcoin is worth purely what other people make it out to be.  It's pretty much just supply and demand, where even medium sized orders will affect the price of BTC to a degree.

we must ask satoshi  

i just called him, and he said it`ll go to $1,000 soon.

for now this bitcoin prices have started to slowly rise, although slowly but surely, this is most likely because many bitcoin demand in the market, and sell bitcoin is happening in Russia has stopped, due to the prohibition of possession of bitcoin in Russia ... 

Are you serious?

Only way is that much more users start using BTC, and then one guys actions will not push price up or down.

Volatility may not be that bad as you trade volatility as well. Using options, you can sell or buy volatility. If you are interested, you can have a look at my new platform https://coinut.com

Price of bitcoin is very unstable because there are many manipulator (early adopters) which can play with price of bitcoin in easy way. Anyway, I'm sure that in future if there will be some regulation from an authority we can stay relaxed 

Whales manipulating the price down? what do you mean? this naturally happens when large holders sell, no manipulation found. I can just see all the trolls here that dumped under $400 and all yelling floor and crash... the desperation screams BTC rise. BTC continues to impress me in new ways I can never explain

I think it is because bitcoin have a lot of traders and bitcoin is a magnet which can give more peoples interesting with it.

There are more speculators with a lot of fiat then there are speculators with bitcoin. However if the only reason a speculator were to buy bitcoin is because they hope other speculators would buy more at a later time is really just a form of a ponzi. The reason that speculators are buying needs to be that they hope that 'normal' people are going to buy bitcoin in order to use it if they are to be successful

Because most people invested in Bitcoins are whales and big time miners that sell and buy constantly.

Miners sells, in case that they sell their entire production are only 3600BTC / day

Speculators can only buy have so much bitcoin fiat. And for every seller, there's a buyer.

Anyone have any tips in spotting chinese bull traps? Besides the obvious volume rise, I have yet to see any other ways of spotting them

A substantial amount of trading gets done outside of exchanges too. That has a negative effect on liquidity at exchanges. Consequently, price movements can be large.

I agree on this. 

Really? Too many speculator in China..

I don't think it is so much that it is an unregulated market, it is that it is an illiquid market that is trading something very new and that is very difficult for finance professionals to price.

One word.....CHINA

What you are seeing is an unregulated market. The stock market of the 19th. century was wild like this also. Since then laws and banks have stepped in to "stabilize" the market. And in the process game your money right into their pockets.

some little fish, can "steal some btc" from those whales manipulation, this is true in my case at least, i have more btc than before now, with this current price(not many just 3-4 more, still a success  )

Because people is lossing interest, and we see bumps of whales entering the market when people like overstock withdraw big stashes of BTC. So you have a bill sell off, a big whale entering (pump and dump) and in general the 99% of people that can't afford BTC lossing interest. So we have a downtrend with up and downs.

Price will always be unstable, because fresh suckers are needed to pay for the miners' electricity costs.

Either there will be a 4th viral bubble outbreak, or the price will steadily slide down.

There will never be stability.

Agreed, this is obviously whale manipulation, and if I had the kinda btc they had I would do the same thing. But remember, they are making money off you, and at some point of their choosing they will pump BTC sky high

If you look at this discussion, you can clearly see how diverse the opinions are, even among bitcoin supporters. This shows how "unstable" this development still is, and kind of reflects the volatility of bitcoins. However this is often the case with new ideas, developments, etc. and I'm sure with more confidence among investors, traders, entrepreneurs, etc. there will be more stability as well!

because it's not distributed right, and there is plenty of manipulations going on, on each exchange

The price of it what it is because the whole activity of the exchanges only involve nearly the 10% of the total amount.

The more diversification of the Bitcoin economy and independance of the exchanges the lower the price inside an exchange.

Also wonder why the changes/decline was quite big not just by a dollar or two. BTC now is $375.53.

but if they dump the price like that, mining will not be convenient anymore!!

The miners are dumping millions a day to pay for electrical and other costs - I don't see this amount being replaced

Speculators can only buy so much bitcoin. What we need to see happen is more people buying bitcoin that will actually use bitcoin to stimulate the bitcoin economy. If we only have speculators buy bitcoin then they will eventually wish to sell causing the price to decline

It's more volatile because it's something completely new, the world has never seen such a thing before, so we are not sure how we should rate it.

Some people think bitcoin is completely useless and worthless, and therefore it has no value at all, other  people think bitcoin is useful, scarce and very valuable. And therefore they think bitcoin may be worth millions.

Many people think something in between.

Many people now try to agree on the current value by buying and selling. They buy when they feel the price is too low (and they have fiat left over), they sell when they feel the price is too high. Of course this is not a stable thing, because the idea of high or low price changes constantly. If something happens that may change the personal opinion of everyone, but not everyone's opinion will change at the same rate. Some people may think the news is slightly good, others may think the news is perfect, and yet others may even think the news is bad. So they will change their value accordingly.

It will take a long time before people agree how much a bitcoin is worth, and than the price will eventually become more stable.

First we should probably care about the value, because at current value we are much too low to have enough value in bitcoin to serve the whole world.

When bitcoin more popular, lot people buy bitcoin
and bitcoin owner sell bitcoin they have

This happen everytime, so the price is very unstable


It's not new anymore

The rally is real on good news, but there are still more miners selling than speculators buying.

A few years ago, mining were spread out over many small fish when people believe in the technology and horde all the coins they mined. This is no longer the case when ASIC came out and cooperation get involved.

Dollar Price Reduction
btc down on

bitcoins isn't already new and besides you can see ads about it in facebook

bitcoin is still new it will become more stable in the future

Because the bitcoin price its based in the transactions. If BTC get more transactions price will go up.

Not enough people use it to be more stable. It will also need to get a bit higher price, that more people will be able to use it.

the volume on exchanges is low compared to forex.
ignore the price, there's no point getting excited about big movements in a market with only a few million USD in volume, focus on the technology.

There are a lot of people with hidden agendas that have a lot of money invested, we can't never know if the market fluctuations are exclusively genuine supply and demand or actual manipulation.

because :
* nothing control bitcoin except buy and sell
* paypal don't do anything now for bitcoin ... always bloody news annoncment without real event
* because more miner, more sell of BTC on exchange (prices fall).

Just keep them.

Which is a result of poor float (measured in USD or some other fiat). This will improve when the market cap improves, or when large holders start using their coins more.

Bitcoin market is still small compared to big money market like forex and commodities.
A few million usd will be able to move bitcoin market but is nothing in forex.

I want to give you an answer: Do not care about its price, care about that  in the future whether you  have a greater number of bitcoins.

its because people are thinking that all 13million bitcoins are being traded.

infact the majority are being traded on BTC-E, coinbase and bitstamp... and in many cases coinbase follows the pricing of the other two..

so if for instance btc-e went up, bitstamp would move too, and then coinbase would see a price change and follow suit.

its called "sheep following" prices.

the major problem is that on btc-e for instance most orders are $5(0.0015~) and so it only takes 100btc to make the price jump $70.

so that 100btc whale bite can make the entire market cap of bitcoin move from $5.2bill to $6.1bill market cap estimate.

yes you got it right 100bitcoins ($40k) can fool people into thinking the entire bitcoin market moved $1bill in value.

ill make it clear again. SHEEPLE are following statistics of small trades and FUD. and we all need to wise up and value bitcoins properly

In my view, I think it hasn't had the time to settele yet, but its settling now, i guess.

Bitcoin price is instable, because it is not stable compared to most goods.
But it doesn't matter, it will get stable if it get widely accepted.

Because of the poor liquidity... Even moderate orders can move the price up or down big time.

You mean: not the bitcoin's price instability, but the Dollar's price instability?

Only if you are looking at rate to $

 Bitcoin price is always so strange, two days ago also once close to $390, Paypal a message about Paypal  made the price get up to $460, Then slowly decline. This lets the human mind is always anxious ah, buy or sell it ?Next, the price is up is down?No one can give correct answers.