Will Bitcoin ever drop down below 2 USD?

Enky1974

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Quote from: iya on May 14, 2011, 12:06:46 PM

Quote from: Enky1974 on May 14, 2011, 09:27:14 AM

i still have to compute the formula for upper and lower 95% confidence level

Lol, remember this depends entirely on your argument being sound. Think of the recent CDO pricing disaster.

Here's my 2 bitcents:
The influx of new users drives the exchange rate.
The exchange rate drives the mining power, with some delay.
For 2 Th/sec we currently need about 1MW electricity. With these costs, the system cannot grow on speculation alone, for very long.
When the user growth slows, current miners will slowly bring down the prices, even if no early adopters cash out.
From the demand side, there's still lots of growth potential.
$10/BTC is psychological resistance and we'll probably retest the lower single digits. If $20 is breached, we could see $100 at the end of the year.
Maybe Bitcoin really does become as big as PayPal, then these prices are justified, but imho the chances are overestimated.

Good analysis , indeed if a real economy based on btc doesnt grow the entire toy can collapse very fast.
Users stop to grow, miners then slowly push prices down, other miners stop to mine because prices go down, with less miners difficulty goes down, with lower difficulty miners earn more bitcoins and then dump the market, and so on....

iya

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Quote from: Enky1974 on May 14, 2011, 09:27:14 AM

i still have to compute the formula for upper and lower 95% confidence level

Lol, remember this depends entirely on your argument being sound. Think of the recent CDO pricing disaster.

Here's my 2 bitcents:
The influx of new users drives the exchange rate.
The exchange rate drives the mining power, with some delay.
For 2 Th/sec we currently need about 1MW electricity. With these costs, the system cannot grow on speculation alone, for very long.
When the user growth slows, current miners will slowly bring down the prices, even if no early adopters cash out.
From the demand side, there's still lots of growth potential.
$10/BTC is psychological resistance and we'll probably retest the lower single digits. If $20 is breached, we could see $100 at the end of the year.
Maybe Bitcoin really does become as big as PayPal, then these prices are justified, but imho the chances are overestimated.

Enky1974

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I've noticed that the networkspeed increased above 1.8 Th/sec

from http://bitcoinwatch.com/
Network Hashrate Gigahashs/s 1827.41

using the formula i discovered few days ago:
btc/usd ratio=-.25882+exp(-.80633+(1.65207)*networkspeed in terahash/sec)
btc/usd ratio=-.25882+exp(-.80633+(1.65207)*1.82741) =~8.88$ in line with actual mtgox quote of 8.72

i still have to compute the formula for upper and lower 95% confidence level
cheers

Enky1974

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Quote from: bitcoinBull on May 11, 2011, 09:16:12 AM

Very nice!

I'd like to put a copy of this in my difficulty vs. price thread, if you don't mind.

Sure, maybe try to replicate my results to see if they are the same.

bitcoinBull

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Quote from: Enky1974 on May 11, 2011, 04:13:21 AM

This might help:

I found, playing with statistica 7 by statsoft, a nice relation using instead of difficulty the network speed in terahash/sec to price btc/usd ratio.
The formula is:
btc/usd ratio=-.4621+exp(-.56571+(1.50987)*networkspeed)
where networkspeed it's intended in terahash/sec.
Example; actual speed it's 1.385 (from http://bitcoinwatch.com/)

so

fair price = -.4621+exp(-.56571+(1.50987)*1.385) = 4.13 $/BTC
the tolerance of the exponential fitness it's around +/- 1 btc

EDIT: btc/usd ratio=-.25882+exp(-.80633+(1.65207)*networkspeed) this formula is better and use last 150 days or "bitcoin GPU-era"
if network speed will drop to 1 TH we will have 2.07 $/BTC as fair price.

this is the regression fit chart
observe vs regression

Very nice!

I'd like to put a copy of this in my difficulty vs. price thread, if you don't mind.

Enky1974

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Quote from: Third Way on May 11, 2011, 09:09:16 AM

Who's buying all these BitCoins?

Maybe long term investors.

Third Way

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Who's buying all these BitCoins?

Enky1974

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Quote from: fabianhjr on May 11, 2011, 06:27:08 AM

Now that is interesting, thanks for the graph.
A think you must consider, does the thash/sec affects the exchange or does the exchange affect the thash/sec?

I dont know:) probably it's a self referential system with a mutual interaction beetween these 2 aspects (speed and price) ; speed influence prices that then influence network speed and so on trying to find an equilibrium, in the meanwhile they oscillate.

fabianhjr

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Do The Evolution

Now that is interesting, thanks for the graph.
A think you must consider, does the thash/sec affects the exchange or does the exchange affect the thash/sec?

Enky1974

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Quote from: FreeMoney on May 11, 2011, 03:09:23 AM

Quote from: fabianhjr on May 10, 2011, 08:24:40 PM

As long as people believe it as a medium of trade everything would be fine.

Yeah, that might work as a proxy for people actually using it to trade, but we don't need a proxy since we're actually trading.

This might help:

I found, playing with statistica 7 by statsoft, a nice relation using instead of difficulty the network speed in terahash/sec to price btc/usd ratio.
The formula is:
btc/usd ratio=-.4621+exp(-.56571+(1.50987)*networkspeed)
where networkspeed it's intended in terahash/sec.
Example; actual speed it's 1.385 (from http://bitcoinwatch.com/)

so

fair price = -.4621+exp(-.56571+(1.50987)*1.385) = 4.13 $/BTC
the tolerance of the exponential fitness it's around +/- 1 btc

EDIT: btc/usd ratio=-.25882+exp(-.80633+(1.65207)*networkspeed) this formula is better and use last 150 days or "bitcoin GPU-era"
if network speed will drop to 1 TH we will have 2.07 $/BTC as fair price.

this is the regression fit chart
observe vs regression

FreeMoney

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Strength in numbers

Quote from: fabianhjr on May 10, 2011, 08:24:40 PM

As long as people believe it as a medium of trade everything would be fine.

Yeah, that might work as a proxy for people actually using it to trade, but we don't need a proxy since we're actually trading.

fabianhjr

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Do The Evolution

Lol, yeah. I mean, you can get enough Bitcoin value, lets say $5K and then just sell the half each time the Bitcoin value doubles.
You can set the ask prices from now and then just enjoy 2.5K for the rest of your life, of course you could go with more.

There is still a risk that they stop being appreciated this wildly or even a consolidation, though doesn't matter.

As long as people believe it as a medium of trade everything would be fine.

Terpie

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Quote from: aahzmundus on May 10, 2011, 05:02:27 PM

I think right now what we see is people buying in easily and then when the price goes up, we get more and more people to buy in.

I have seen only 1 major sell since my time closely watching the market, and with trade bots that was quickly brought back up in price....

I think we are at risk of a group of reasonably wealthy holders "getting out" of bitcoin and striking a fear and then a string of "i told you bubble!" threads poping up that will cause a sharp drop in value for a while... i do feel we are going to see this sometime in the near future. With a 40-50% increase in one day, who wouldn't cash out part of their investment to enjoy it a bit? I know I cashed out a BTC in value of my initial investment to make my wife happy Tongue

I don't know about this. The biggest holders right now tend to be the extremely early adopters, and they also will be the ones most likely to be ideologically driven to see bitcoin succeed. They also probably firmly believe that bitcoin has a permanent place among global currencies. This leads me to believe that they probably won't trade bitcoins if they believe it will hurt its long term viability. At the rate of new services & goods entering the bitcoin economy, it makes sense to wait it out, preserve the high exchange rate, and buy goods and services with their fortunes, which will in turn generate even greater interest in bitcoin usage.

aahzmundus

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I think right now what we see is people buying in easily and then when the price goes up, we get more and more people to buy in.

I have seen only 1 major sell since my time closely watching the market, and with trade bots that was quickly brought back up in price....

I think we are at risk of a group of reasonably wealthy holders "getting out" of bitcoin and striking a fear and then a string of "i told you bubble!" threads poping up that will cause a sharp drop in value for a while... i do feel we are going to see this sometime in the near future. With a 40-50% increase in one day, who wouldn't cash out part of their investment to enjoy it a bit? I know I cashed out a BTC in value of my initial investment to make my wife happy Tongue

fabianhjr

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Do The Evolution

Not anymore. We are way beyond the point of return. We made a jump to 5 USD with both price and volume in currency highs.

The high volum is a really bullish indicator and I am sure we will break 7 or even 10 USD by the end of this month. I have so far gotten more adopters to the system and I am soon to open a business with Bitcoin.

Some events are accelerating the exchange rate and even after the DDoS MtGox suffered we are still on rally. If PayPal were to make an open statement of Bitcoin it would be great.

First they ignore you,
then they laugh at you,
then they fight you,
then you win.

2009, Bitcoin had no value at all.
2010, Bitcoin is told as a concept and not a possibility
2011, PayPal stops processing Bitcoin payments and 2 PayPal exchanges close their doors. More to come.
Is the victory close?

m4rkiz

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so much for guessing the usd-btc prices... day high is so far 4.99

m4rkiz

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due to some new 'discovery' i withdraw my statement

if there is at least one person (most likely with 30k btc or more) that had this idea before me there is very small chance that bitcoin will go down in next weeks

more, i predict price to be quite stable now - 3.x usd for quite long period of time (that is if there one of big players is doing what i think he is)

FreeMoney

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Strength in numbers

Quote from: Anth0n on May 02, 2011, 11:06:00 PM

It is certainly possible, considering the obscene jump in price recently. Lack of volume today suggests that there will be a correction to the short-term uptrend. Just my opinion. Luckily, the long-term fundamentals seem very sound, so I will certainly be looking to stock up at a lower price.

Or it could mean that mtgox.com was down most of the day.

Anth0n

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It is certainly possible, considering the obscene jump in price recently. Lack of volume today suggests that there will be a correction to the short-term uptrend. Just my opinion. Luckily, the long-term fundamentals seem very sound, so I will certainly be looking to stock up at a lower price.

m4rkiz

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Quote from: djex on April 30, 2011, 04:30:40 PM

Will the price for 1 BTC ever go below 2 USD again?

most likely, it is safe to assume that until btc is widely recognized price will be roughly double of price of electricity that you need to generate it

with every 'non mining' person that want to get some (to use or hoard) this margin will be slightly bigger, but for now there is no reason for it to stay
over 2 usd and it will drop as soon as someone will stop buying large quantities as there is plenty of persons that have dozens of thousands or more of btc from less than cent time

they selling btc slowly as they don't want to price falling and end with worthless btcs but there is again more supply than demand at the moment (today at least)

it will take a week or so, but if only big buyer is gone (all big transactions ended on sunday) there is still not too much people interested and willing to spend actual money to get btcs as they are no good for anything more than hoarding\speculating at the moment

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