5 ms·

What do you mean "no reason"? Supply and demand are the reasons the prices are shaped the way they are. It's a near perfect market.

by nukeop 9y ago

spookthesunset 9y ago
> What do you mean "no reason"? As in "why is the price what it is". Saying "because of supply and demand" is useless, unhelpful pedantry.
- celticninja 9y ago
  I think that's an unfair accusation, ultimately the price is determined by supply and demand for the product, your question should really be what are the fundamental reasons behind people buying at X price and I think those are many and varied.
kakarot 9y ago
With a healthy dose of FUD from several directions.
bsaul 9y ago
Was that sarcasm ?? In case you don't know, things like https://en.wikipedia.org/wiki/Market_manipulation https://en.wikipedia.org/wiki/Market_manipulation exists..
lkrubner 9y ago
What is the P/E ratio of Bitcoin? There is none. So there is no rational basis for any price. $1 is as valid as $1 million. There is no traditional way to analyze this investment and figure out its real worth. To the limited extent that Bitcoin helps Chinese citizens out-maneuver the capital controls that the Chinese government has tried to enforce, then it could be analyzed as a shadow of the Chinese currency, but since the action is illegal, the data is dark. Thus Bitcoin, and other crypto currencies, are the world's most opaque investment.
- 21 9y ago
  > There is no traditional way to analyze this investment and figure out its real worth. Is that bitcoin's problem or a traditional economists problem? Behavioral economics does have frameworks for thinking about bitcoin price, but then again, behavioral finance is not traditional and highly controversial. For once, it dispenses with the myth of the rational investor (homo economicus)
  - lalaland1125 9y ago
    > Behavioral economics does have frameworks for thinking about bitcoin price, but then again, behavioral finance is not traditional and highly controversial. So, how does behavioral economics supply a price for Bitcoin?
- gfodor 9y ago
  What's the "rational basis" for a specific value of the P/E ratio? There are many stocks that belong to companies that have no mechanisms in place nor could they be reasonably expected to introduce mechanisms to directly return profits to shareholders. These stocks have the same form of "intrinsic value" as gold or Bitcoin: whatever the hell the next person is willing to pay for it. Pretending that an underlying asset that doesn't throw off any yield or return of capital is somehow more rationally valuable than another doesn't make sense.
  - FabHK 9y ago
    Glad you asked. P/E ratios can be anchored (with expected earnings growth and a risk premium) to interest rates. Whether stocks pay dividends or not is not terribly relevant, see Modigliani-Miller. Thus, share prices are rationally anchored to economic reality. Of course, there's a lot of estimation involved, and people can get it wrong for a while, individually or collectively.
  - svachalek 9y ago
    Even if a stock does not return dividends, it still represents a share of ownership in the company. It has a real value to anyone who might want to purchase a controlling share in the company, value in reasonable proportion to the profit or profit potential of the company. From that perspective, taking control of Bitcoin may have a measurable monetary value but as I understand the system the value isn't in the coins, it's in the miners.

What do you mean "no reason"? Supply and demand are the reasons the prices are shaped the way they are. It's a near perfect market.

by nukeop 9y ago

What do you mean "no reason"? Supply and demand are the reasons the prices are shaped the way they are. It's a near perfect market.

spookthesunset 9y ago

> What do you mean "no reason"? As in "why is the price what it is". Saying "because of supply and demand" is useless, unhelpful pedantry.

celticninja 9y ago
I think that's an unfair accusation, ultimately the price is determined by supply and demand for the product, your question should really be what are the fundamental reasons behind people buying at X price and I think those are many and varied.

kakarot 9y ago

With a healthy dose of FUD from several directions.

bsaul 9y ago

Was that sarcasm ?? In case you don't know, things like https://en.wikipedia.org/wiki/Market_manipulation https://en.wikipedia.org/wiki/Market_manipulation exists..

lkrubner 9y ago

What is the P/E ratio of Bitcoin? There is none. So there is no rational basis for any price. $1 is as valid as $1 million. There is no traditional way to analyze this investment and figure out its real worth. To the limited extent that Bitcoin helps Chinese citizens out-maneuver the capital controls that the Chinese government has tried to enforce, then it could be analyzed as a shadow of the Chinese currency, but since the action is illegal, the data is dark. Thus Bitcoin, and other crypto currencies, are the world's most opaque investment.

21 9y ago
> There is no traditional way to analyze this investment and figure out its real worth. Is that bitcoin's problem or a traditional economists problem? Behavioral economics does have frameworks for thinking about bitcoin price, but then again, behavioral finance is not traditional and highly controversial. For once, it dispenses with the myth of the rational investor (homo economicus)
- lalaland1125 9y ago
  > Behavioral economics does have frameworks for thinking about bitcoin price, but then again, behavioral finance is not traditional and highly controversial. So, how does behavioral economics supply a price for Bitcoin?
gfodor 9y ago
What's the "rational basis" for a specific value of the P/E ratio? There are many stocks that belong to companies that have no mechanisms in place nor could they be reasonably expected to introduce mechanisms to directly return profits to shareholders. These stocks have the same form of "intrinsic value" as gold or Bitcoin: whatever the hell the next person is willing to pay for it. Pretending that an underlying asset that doesn't throw off any yield or return of capital is somehow more rationally valuable than another doesn't make sense.
- FabHK 9y ago
  Glad you asked. P/E ratios can be anchored (with expected earnings growth and a risk premium) to interest rates. Whether stocks pay dividends or not is not terribly relevant, see Modigliani-Miller. Thus, share prices are rationally anchored to economic reality. Of course, there's a lot of estimation involved, and people can get it wrong for a while, individually or collectively.
- svachalek 9y ago
  Even if a stock does not return dividends, it still represents a share of ownership in the company. It has a real value to anyone who might want to purchase a controlling share in the company, value in reasonable proportion to the profit or profit potential of the company. From that perspective, taking control of Bitcoin may have a measurable monetary value but as I understand the system the value isn't in the coins, it's in the miners.