Topic: Why bitcoins are dropping, and will continue to do so - page 3. (Read 28139 times)

I think you could be right if I remember correctly what I read somewhere, that miners can sell for $3 and still make a profit. If that is right, it means the price will go down to just around $3

Another huge problem is early miners sitting at huge amounts of bitcoins which they can also sell for $3 and still make a profit.

In the long term 2-3 years when miners cannot sell to cheap and early adopters have sold, price will increase. But right now its slowly going to go down the coming months. Unless...Unless there are lots of new investors, which is not impossible considering it has just started to appear in china. However if the markets go down, it will attract less investors.

Yeah but if you are going to use daily charts you need to use mtgox, because tradehill data only goes back like 30 days.  If you see the full picture on the long term chart, you see a parabolic run up from zero to 30, followed by a blowoff top, a triangle breakdown, and a pause with a downward drift we are in right now before the next leg which will probably be down to sub 10. 



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Agreed.

http://www.youtube.com/user/BitcoinChannel#p/u/9/aWxbXGQ3Ezk

http://www.youtube.com/watch?v=oJ_Ndua0-n4

Here's the last 30 days on Tradehill.  (I'm using Tradehill because various screwups at Mt. Gox have messed up their data for the last month. Tradehill and Mt. Gox never stay far apart for long.)

Bitcoins seem to be leveling out in the $14-$15 range, and there's a modest downward trend. "Rallies" and "crashes" are just noise. The days of high volatility around June 18-22 reflect Mt. Gox's troubles. The rest of the time, volatility is usually within +- $0.50/day.

There's less going on than looking at short-term market data suggests.

better than inflationary currency, where everyone is buying mass produced electronics every year, and in the process, racking up a ton of debt

Welcome to deflationary economics 101.

 

A system in which he who can afford to sit the longest on their pile of money wins.  A system that resembles a bunch of hens sitting on eggs rather than the exchange of goods and services and economic growth through production and investment.  A system in which if a person was able to take a time machine into the future they would have become richer simply through the 'virtue of saving'.

Perhaps. Or perhaps doing things like designing working/secure phone apps, shop POS systems, ATMs, competent and easy exchanges, and easy-to-use secure wallet software just takes a bit more time.

I made some mistaks in my analysis of bitcoin.  I was looking at it like a stock, but the difference is that my method of analysis is designed to track and piggyback on institutional order flow.  There is no institutional order flow in bitcoin.  Stupid mistake! 

Bitcoin is now behaving just like you would expect if you think about it.  The market is comprised of speculators and miners.  The miners regularly sell, and the speculators can only speculate to the long side.  That leads to the occassional speculative spike, followed by profit taking and selling off by the miners.  This is creating a pattern of the market stepping down price levels in an orderly manner as miners lower their standard of what they are willing to sell for.  This will continue to happen until we reach <$1.00.  If shorting was possible we would already be there IMO.  Of course it could blow up at any time if we get some more dumb money coming in from a media story or something.  And then it will crash again.  I think bitcoin has already seen its all time high though, and will go down soon as a unique piece of internet history.   

Working on it.  I can still put too many holes through it but I'll post for criticism once I can clean it up.


You might be right.  Although natural stabilization may mean a dramatic drop in price.  I wonder what % of the community would bail at that point.

Do you have a proposal?

The markets will naturally stabilize as they grow and mature.  I don't really see any way to force it.

Seen the list.  A bunch of start-up nobodies.  If I showed that list to some person walking down the street they wouldn't be able to recognize 1% of those names. 

For argument's sake, lets say I agree with you.  The currency has done well considering it's infancy (I actually have no issue with this).  What I'm trying to say is what propels BTC from an experiment to a viable medium of exchange.

People inherently dislike change.  It would take a rather monumental benefit for a mass of people to adopt something new.  It's not going to be merchant fees.  

Could it be a decentralized, deflationary currency that can move globally quickly and efficiently?  I can see that as the potential propellant.  If I didn't see some potential in Bitcoin, I wouldn't be here.  My point is even though BTC is in its infancy, there are some big flaws that need to be addressed.  You cannot have a medium of exchange without confidence.  You cannot have confidence without transparency and stability.  BTC may have transparency but it most certainly does not have stability.    

Bitcoins came out 2 years ago.
Paper money has been around for about 2,000 years since imperial China and gold even longer.

I think the currency is doing pretty well considering it's barely even began circulation and usage.

Let me get this straight, a merchant would be upset to pay a few hundred basis points to MC/Visa yet would have no problem with accepting a currency that can swing 20% or more in any particular direction.  You're going to sit there and tell me that your selling point to these merchants is, "Hey we can end those 3% transaction fees hitting your bottom line.  The tradeoff is that 99% of your overhead can't be paid with these Bitcoins, and oh yeah, next week it might be worth half what it is today."

And this is going to be widely adopted?


Send me a list of these actual merchants and I'll ask them myself.  Curious, any of these Fortune 500 companies?  How about publicly traded?  How about revenues of $1MM+ per annum?  Please tell me you're talking about bonafide merchants that can further Bitcoins cause and not Joe Neighbor selling video cards out of his basement.

Seashells can be a currency as long as someone like you and myself are willing to use them as exchange.  I know Bitcoin is touted as a currency, and is being used by more merchants yada yada yada...

I'm talking about a viable currency.  

Tell the admins to edit the front page then.

I think the first thing we need to decide here is what is the argument.  Everyone's examples are all over the map.

Is Bitcoin a store of value?  Gold and silver are commodities NOT currencies.  Last I checked, I can't take any bullion down to McDonald's and buy a happy meal.  My understanding is Bitcoins are supposed to be a P2P currency, so lets move on.

Is Bitcoin a medium of exchange (ie. currency)?  This is where the big problem lies because the Bitcoin apologists will argue that merchants and buyers are adopting BTC's in daily transactions.  While this may be true in geekville, the fact is the majority of merchants do not recognize BTC's as a medium of exchange.  And in its present state, can you blame them?  We're seeing 20%+ swings in price at the moment.  Most businesses (as someone pointed out) run on very slim margins.  Do you honestly think some merchant scraping by to make a profit will be willing to take those types of risks?  Is BTC worth a $1?  $30?  Somewhere in between?  Who the hell knows, it's been priced at all those points over the short-term and that's the problem.

The only way a big merchant would be willing to put up with that type of volatility would be if there is a way to hedge.  The same way a business would hedge foreign currency exposure, interest rates, commodity prices, etc.  As far as I know, no such hedge for Bitcoin exists.  All we have are speculators moving the price around wildly. 

Bitcoin in its current state is a giant casino of monopoly money with speculators running prices up and down until someone is eventually left holding the bag.  If you want to argue that Bitcoin is a store of value, then fine, but in that case I would suggest you go out and buy gold or silver.  At least those have a few thousands years of history that show it can be a viable store of value.  But this horseshit fantasy that BTC's is a currency needs to end.  It's not and will never be without some substantial changes.

How do you even quantify risk of holding bitcoin?  I mean, it's gotta be near infinite with all the question marks.  Which means any derivative, valued by some means involving Black-Scholes or similar would require the premiums to be gigantic enough to make the derivatives worthless. 

Oh, and the spreads would probably be monstrous too.

I like the idea of a no fee sale a lot.  And I enjoy trading stocks and commodities, so find this market pretty interesting to discuss.  Is it against the rules here to have a negative outlook?  And no I am not jealous of those that have done well.  I like what I do and am not looking to get rich quick.

Why sell for bitcoin in the first place if you don't believe it's worth anything

Why bother putting it down at every opportunity because you weren't an early adapter