9 ms·

Bitcoin falls below $300, lowest in 11 months

117 points by sillysaurus3 12y ago

chatmasta 12y ago
Last time Bitcoin fell significantly, BitPay announced three days later they were partnering with PayPal. BitPay has a lot of Bitcoins floating in their accounts (since they need to exchange USD <--> BitCoin). They also could predict that announcing a partnership with PayPal would spike the price of BitCoin. It makes me wonder if some of these price drops could be market manipulation by insiders who have a big announcement on the way.
- kiba 12y ago
  There's always insider manipulation, but people cannot prove it either way. It's like saying that there is insider manipulation behind every price dip and price rise on wallstreet. Maybe it's true. Maybe it's not. You cannot prove either way. So it's just noise.
  - deleted 12y ago
    [deleted]
  - Chronic29 12y ago
    And what if you can prove it?
- ChuckFinley 12y ago
  That's not how PayPal's "bitcoin integration" works. All it is is a partnership with bitpay, where if you're a paypal digital merchant (doesn't sell physical things), and you also have a bitpay account, you can link them. So someone buys something from you, sends bitcoin to bitpay, bitpay sends actual money to paypal, paypal takes a cut, and gives it to you. Before you would just use your bitpay account to get actual money, and paypal wouldn't get a cut. The PayPal partnership is silly.
  - michaelbuckbee 12y ago
    I think the reasoning for a spike isn't anything to do with the actual details of the implementation. The spike in demand is caused by an existing legit payment company that is widely known and used saying: "We think Bitcoin is important and interesting enough to do something with.". This implicit endorsement draws in new buyers, gets more speculators buying, etc.
- pbhjpbhj 12y ago
  Did you manage to rebound the price by a few pips with this suggestion? ;0)
- SuperbCrew 12y ago
  I'd say you theory is pretty on-point, and I agree. Someone will probably profit from this, and it's an artificial fall of BitCoin value.
- sanswork 12y ago
  Bitpay only does Bitcoin -> USD/etc so they really shouldn't have many bitcoins floating around in their accounts unless they are having difficulty finding buyers for them. With a downtrend the longer it takes them to sell the more then lose.
- davidgerard 12y ago
  December - Just a small market correction after bubble, soon we go up uP UP! February - Price dropped because Mark Karpeles is a incompetent thief, now that Goxy is closed we go up uP UP! May - China dropped the price, now all Chinese is priced in, we go up uP UP! August - Wall Street dropping the price because they want to enter cheap. HODL and we go up uP UP! October - THE B3ARWHAL3 DROPPED THE PRICE, CHEAP COINS!!1 up uP UP! http://www.reddit.com/r/Buttcoin/comments/2idb3s/looks_really_cheap_right_now/cl14wef http://www.reddit.com/r/Buttcoin/comments/2idb3s/looks_reall...
gatsby 12y ago
What are the major reasons to be bullish on bitcoin right now? Not sarcasm, totally serious. I've owned a small amount of bitcoin for a while and have followed the market from a far. This observation is highly anecdotal, but I just haven't seen many signs of serious traction over the last six or nine months (i.e. post a ton of the initial retailers partnering to accept bitcoin, Coinbase raising their monster round, etc.)
- TillE 12y ago
  There are lots of reasons to be interested in and somewhat optimistic about cryptocurrency in general. But I think there are enough arguable flaws in Bitcoin's specific implementation that its first mover advantage ultimately won't count for much.
  - gatsby 12y ago
    Well said. My thoughts exactly regarding bitcoin vs. the overall crypto market 10 years from now.
  - ericb 12y ago
    I'm interested to hear what those flaws are and how they will prevent the success of bitcoin.
  - pseudoscops 12y ago
    I agree that Bitcoin has some flaws. I posted about it on Reddit after the last slide in price. Link here for anyone interested: http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily_discussion_tuesday_september_09_2014/ckdb1bl?context=3 http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily...
- fchollet 12y ago
  Reasons to be bullish on the concept? Bitcoin is a secure public registry backed by a decentralized 300k THash/s computing network (and fast growing). That alone is insanely valuable, and not just as a vector of monetary transactions. It's one building block of our decentralized future. Reasons to be bullish on the BTC/USD exchange price? That would be pure speculation. BTC seems to be now at low levels enough that it wouldn't be insane to buy some for short-term speculation, but it of course it would still be very risky.
Nursie 12y ago
Maybe as the last big wave of people flocking to BTC figured out there's not a lot to do with it and lose interest? Because we've got to have moved past the point where it's all currency enthusiasts, and if you're not enthusiastic about alt. currency in general, is there any reason yet to prefer it?
- jaequery 12y ago
  bitcoin will be on your mind the next time you want to send/receive money oversees, i guarantee you that.
  - pron 12y ago
    I'd be crazy to bet on such a volatile asset even for 30 minutes (BTC value changes often far exceed transfer fees), so every simple transfer turns into a bet, which I'm willing to pay to avoid. Not to mention that Bitcoin isn't liquid in many currencies.
  - danbruc 12y ago
    This is true for 0.02 % of the world's population, at best. (This is more than the estimated number of people owning Bitcoins, like it or not.)
    - rglullis 12y ago
      25 years ago, the same could be said of international phone calls. The world is getting smaller and smaller, there will be a point in the future where getting goods/services from someone across the ocean is as common as sending an email.
      - danbruc 12y ago
        And I can already pay for this with my credit card today.
        rglullis 12y ago
hawkice 12y ago
The exchange rates of normal currencies are primarily interesting as tools to look at trade deficits &c. I can't think of an analogy with Bitcoin. I think the only reason this is interesting is because so many people treated as an investment. Using it as a store of wealth is clearly silly -- much too volatile. But Bitcoin as investment seems very common. It's hard to emphasize how bizarre that choice is, but suffice it to say, there are people who make a living speculating on currency, and (almost certainly) you aren't one of them.
- ericb 12y ago
  Why is it bizarre to use it as an investment choice? If you have a sense for what makes a technology prevail and think that bitcoin will, it isn't a big leap to look at the value that can be transferred through bitcoin and say "in the success scenarios, it will have to grow to be many times larger." Like any investment, you have to be prepared to be wrong, though.
  - hawkice 12y ago
    That's remarkably similar to saying: 'If you have a sense for what makes a trade deficit occur and think that one will, it isn't a big leap to look at the value that can be transferred through international trade and say 'in the scenarios where I am right, it will have to grow many times larger''. The analysis above is completely correct... and also available to precisely everyone, and is how the price is set globally. You aren't buying at a nerds-only price. So what you are really saying is that you are a more accurate speculator on currencies than people who do it for a living and have large trading and research apparatuses at their disposal. Could be true, but if you haven't attempted to speculate on currency before, there's no way for you to know that (and the prior probability is low).
    - ericb 12y ago
      Bitcoin is more than a currency, so reducing opinions about it solely to "speculating on currency" is disingenuous. Bitcoin is a technology. I've made my career by picking winning open source technologies and betting my career on them. If you think some people who spend their lives predicting day-to-day price movements are better at making technology predictions than I am, I question your assumption. There's a reason I don't speculate in international currency, but that I am willing to express my fiscal-opinion on bitcoin. I also question your assumption that these groups are anywhere near representing the primary driving forces in the thinly traded bitcoin market at this point. There is no such thing as a nerds-only price for any investment in so much as you believe a given market is efficient. Fundamentally, what I would argue about investing in bitcoin is that small differences in the estimate of the success scenario produce wide differences in fair value estimates of this asset (because the outcomes possibilities are asymmetrical), so if you have a strong opinion on the different weighting of the possibilities it is no more unreasonable than buying an individual stock, and in fact may be the more rational choice.
iowai 12y ago
I once was an intern in a venture capital funded startup where the CEO decided to hold most of the companies cash in Bitcoin. I think it was in early 2014 or so, when the price fell like mad and he was in deep shit. Im not sure if anybody up to that date knew about the Bitcoin investment. He was a nervous wreck. Close to suicide. For about a week, he brought a stuffed animal into the office every day. And carried it around wherever he went. He said it calms him down. During that time, he crashed his $80,000 Mercedes SLK badly and broke up with his girlfriend. When the price rose again, he sold it all. And made a profit! The company survived to this day. Last I heard is that he is invested in Bitcoin and other cryptocurrencies again.
- mrestko 12y ago
  Well that was an insane thing for him to do.
- anonymouz 12y ago
  > Last I heard is that he is invested in Bitcoin and other cryptocurrencies again. I'd have hoped that he'd at least have learned something from the first experience. High volatility can end either way.
- lordnacho 12y ago
  This kind of thing is what investor due diligence is for. This, along with guys like Madoff, would be easily uncovered with an asset test. Basically a phone call to the bank asking how much equity an account has, naturally with the approval of the entity being tested. Surprisingly few investors actually do this.
- deleted 12y ago
  [deleted]
- gatsby 12y ago
  Sorry, calling bs on this. Your last four comments all start with "I once was an intern" - and my guess is that's why your alias is "I.o.w.a.i." Did all this stuff really happen? And to you? Because from your past comments, you were an intern in the "golden 90's" and in this scenario, in 2014.
angrycoder8 12y ago
Ok this is
angrycoder8 12y ago
Ok here is my 2 cents. The reason I feel Bitcoin has lost so much over the last couple of months is because in some ways its a victim of its own success. The more merchants that come online and support BitCoin payments the faster its going to drop in value. The reason is simple, supply & demand and bitcoin payment/exchange gateways. When merchants say they are accepting Bitcoin as payment they aren't really, they are simply using Bitcoin as a conduit to process the payment from you the customer with Bitcoin. When a merchant uses a Bitcoin payment gateway, upon receiving Bitcoin payment, the gateway immediately turns it into a fiat currency by hitting the buy side of an exchange. They are putting more bitcoins back into circulation, in other words increasing the SUPPLY of Bitcoin. Its Economics 101 increase the Supply of any commodity, and the price goes down. On the other side of the equation, the investors who are buying and holding Bitcoin, with the expectation of it going higher, are seeing it plunge, so what they are doing is buying more goods and services instead of holding, a way to get 'out' of their position if you will, and that further drives the price down, its a vicious cycle. When will the price of Bitcoin start going back up? Who knows, for me I feel the indicator will be similar to observe the relative strengths of the fiat currencies, in times of peace or economic uncertainty ( not now ) they tend to show weakness, and traditionally speculators will find safe haven in gold, I think some may try to weather the storm in Bitcoin as well. Unfortunately that is not the case at the moment, both US and Canadian economies seem to be doing well, partially because of the 'war' the US is currently waging. So for me I think I'm going to sit on the sidelines and wait.
- pron 12y ago
  > The more merchants that come online and support BitCoin payments the faster its going to drop in value I don't know enough to say it definitively, but this may be pure fantasy. Merchants "accepting Bitcoin" seems, to me at least, like a publicity stunt to attract the young, techno-hipster crowd, which is valuable for marketing. I wonder if "accepting Bitcoin" translates to actual high-volume transactions. I think this drop is just business as usual for Bitcoin, which tends to rise and fall according to the publicity it gets. Also, its trading volume is still sparse enough for random noise (or deliberate manipulation) to change the price significantly.
vijayboyapati 12y ago
The thing I find interesting is how thin the order book is: https://www.bitstamp.net/market/order_book/ https://www.bitstamp.net/market/order_book/ It shows that you don't need to sell a particularly large block of btc to substantially move the price in either direction. If one big buyer jumped into the market it could easily move the price $50+. This shows that bitcoin is still immature and in its infancy. The more the liquidity of bitcoin grows, the less this kind of volatility will plague the market.
- paulgb 12y ago
  Couldn't there be automated traders waiting to jump in if the price changes, rather than having orders on the books? (I know they exist, I just don't know whether they would appear in the order book)
  - jcfrei 12y ago
    At the current levels of volatility it's probably not a good idea to keep a lot of open orders - unless you can watch the markets 24/7. Automated traders would likely wait for a significant price change and then execute a market order or just place an order on very short notice.
bdcravens 12y ago
The easier it gets to buy Bitcoin, and accept Bitcoin, the worse it will be. Even if you wanted to spend Bitcoin, you had to think ahead. Now Circle lets you buy within minutes (in most cases) of setting up your account. On the other side of things, Bitpay and Coinbase let merchants convert back to USD (or other currency) right away. So it's possible to do "just in time Bitcoin": Bitcoin is merely the payment protocol. When Bitcoin becomes a pure cash equivalent, no one will care about the price. I believe that once the price becomes irrelevant, it'll trend downward. I think it'll take something serious to move the price upward, like a serious event creating major doubt in USD. Most of the bulls are quick to conflate the advantages of the protocol, as if that magically makes it more valuable as a traded commodity. Bitcoin is simultaneously a currency and a protocol. I believe when it was hard to obtain, the use of a store of value held the most potential, and early risk takers had an opportunity for reward. It's entirely possible, as the protocol becomes more or more utilized, those days of risk and reward are well behind us.
- pron 12y ago
  > like a serious event creating major doubt in USD. I think you are way overestimating Bitcoin's (current) significance. If something major happens to the USD -- i.e. something major happens to the US economy -- Bitcoin will be the last thing people think about, and there are quite a few other currencies (with much better track records) that people will prefer before betting their money on Bitcoin. > It's entirely possible, as the protocol becomes more or more utilized, those days of risk and reward are well behind us. If you have any evidence that Bitcoin is becoming more and more utilized, I'd love to hear. And I mean actual transactions, not services supporting the protocol (which could be publicity stunt, very cheap bets for something that just might take off one day, or simply wishful thinking).
  - zanny 12y ago
    > there are quite a few other currencies (with much better track records) that people will prefer before betting their money on Bitcoin. So I'm in the US. Assuming hyperinflation starts tomorrow, the only money I have, or anyone else will accept broadly enough to keep me able to exchange in the market, is bitcoin. Nobody has Euros, nobody takes them, nobody takes Canadian dollars on the boarder, and nobody would accept or buy the equipment to measure weights of gold or platinum. Of course, the market would probably broadly move (more due to ignorance than any real justifiable reason not to) towards another states fiat in the event of a gradual loss of faith in USD. You would not have a situation where you woke up tomorrow and suddenly your dollars are worthless, at least if you are paying attention. > If you have any evidence that Bitcoin is becoming more and more utilized, I'd love to hear. And I mean actual transactions, not services supporting the protocol Overstock is apparently making like 2% of revenue from bitcoin sales. I know the Subway nearby that takes bitcoin is making money when I spend btc there. I'm exclusively buying computer hardware for customers through tigerdirect / newegg in bitcoin, though they have not released statements on how much revenue is generated through it yet.
marcosdumay 12y ago
I've always dismissed people complaining about volatility, as it's not really a huge problem for currencies... But I've never seen a real-time track of Bitcoin! There is volatility, and there are currencies that change each second the same that the normal "volatile" currencies change a week. Bitcoin seems to be the latter, and that's a qualitatively different problem from mere volatility.
TheEzEzz 12y ago
My working hypothesis is that this is the market impact of the liquidation of Hal Finney's bitcoin estate. If true, due to the thinness of the market and the large size of Hal's holdings, the price has a long way to go. (Full disclosure: this is pure rumor mongering.)
forthefuture 12y ago
So to even buy bitcoin you have to do with money what you would do on any site to buy anything else. Why would you ever turn your money into bitcoins to do that? It's easy to say now, "oh bitcoin will never work" because it's tanking, but can anyone explain any practical use whatsoever for this monopoly money? Do people really expect companies to start paying people in marbles and tops cards or is this as straightforward as it seems?
- Estragon 12y ago
  Escrowed transactions are far easier cheaper than in USD.
- shuska 12y ago
  I'm not an expert on it by any means, but from what I understand just the technology behind the blockchain (essentially how the entire network works) is what is really valuable with Bitcoin. Bitcoin does have some practical uses - I've heard of people transferring money between countries/across the world with little to no fees as an example. It's basically a way to get around banks being difficult/charging ridiculous amounts of money for transfers. The point is not to store all your cash in the form of bitcoin, but rather transfer it to bitcoin when you need to buy something. There's some people who put their savings into bitcoin which is really dumb.
Animats 12y ago
Bitcoin should have been the petty cash of the Internet. People should be buying music tracks, in-game items, and junk food from vending machines with Bitcoins. But, as discussed in a previous topic, it doesn't do small or quick transactions very well. That may not necessarily be a bad thing. Enthusiasm for micropayments, which predates the Internet (look up Ted Nelson and Xanadu) comes from the people who want to collect them. There's no vast consumer demand for the ability to send $0.10 over the Internet. Even the big players couldn't make that happen. Beenz, Microsoft Points, and Facebook Credits were all failures. The big run-up from $100 to $1100 last year was because, for a while, it was possible to easily and legally bypass China's exchange controls by buying Bitcoins with yuan and selling them for dollars or euros. Then the People's Bank of China cracked down, and that bubble popped. We're still in the aftermath of that event. As a speculation, Bitcoin is zero-sum. There's no productive activity, and no profits. All gains by winners come from losses by losers. Much effort is spent by the Bitcoin community recruiting more losers.
- thom 12y ago
  Was part of the rise last year due to MtGox's increasingly desperate market manipulation? I remember reading the theories, but don't know if a better picture has developed since then.
  - sillysaurus3 12y ago
    Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin over a long period of time. The reason we know it was an Mt. Gox bot is because when Gox's API went down, the bot was still able to execute trades on Gox even though no one else could. Of course, Karpeles will never stand for his crimes, because they weren't crimes. This is just what happens in an unregulated market, and everyone who buys into it is along for the ride. Here's the rub: A price fluctuation at one exchange will always affect every other exchange. If Bitstamp drops by $50, someone is going to buy at Bitstamp and then sell at some other exchange in order to take advantage of that. That means any exchange that manipulates the market will literally be manipulating the entire Bitcoin market. There's no way for outsiders to know the difference between an artificial, manipulated price spike and a true increase in value. So if you see bitcoin rising sometime in the future, beware buying into it: you may be buying into a manipulation. I don't know whether this problem is solvable. Even if America enforces regulations for American bitcoin exchanges, the rest of the world won't be playing by the same rules, and it only takes one dishonest exchange to mess with the global price. I'd like to know how the regular stock market deals with this. Are all stock exchanges regulated worldwide? Is there such a thing as a dishonest stock exchange? If so, how is that dealt with?
curiously 12y ago
I fear that just as bitcoin arrived suddenly it will go just as quickly. It's based on fundamentals that is not well understood, at least by people who buy it (because its gonna go up!).
parksy 12y ago
As of right now there's a 28k sell wall on bitstamp which might be forcing prices down a tad. Looks like someone's trying to buy some coins on the cheap, but I'm no expert in these things. http://i.imgur.com/lmcu15f.png http://i.imgur.com/lmcu15f.png
kolev 12y ago
That's what happens to a market driven entirely by speculation and adding tools like shorting in addition to the lack of interest from the general population. Prof. Bitcorn might be right, just not right about the date, I guess. We saw that outside of a short-live spike, even the PayPal announcement couldn't help it. I won't be surprised if the Chinese oligarchs already moved their funds outside of China via Bitcoin and now there's not enough demand to fuel the increasing price like before.
adamtucker 12y ago
What is preventing the Federal Reserve or any other central banks with endless supplies of liquidity, from collapsing the value of bitcoins or any other convertible currency, virtual or otherwise?
- tim333 12y ago
  For the Fed to collapse the value of bitcoins they would have to sell lots of bitcoins. They can't do that because they don't have bitcoins to sell. The can print USD but not bitcoins.
  - adamtucker 12y ago
    If the Federal Reserve can print USD, and USD can buy Bitcoins... am I missing something?
    - tim333 12y ago
      Yeah they can buy them but that won't make their price fall.
      - adamtucker 12y ago
        "For the Fed to collapse the value of bitcoins they would have to sell lots of bitcoins." tim333
scotty79 12y ago
Apparently the sole reason bitcoin goes for 300 now is that one guy is dumping 30k btc at 300$. Apparently he just needs 9mil $ in few days.

117 points by sillysaurus3 12y ago

Last time Bitcoin fell significantly, BitPay announced three days later they were partnering with PayPal. BitPay has a lot of Bitcoins floating in their accounts (since they need to exchange USD <--> BitCoin). They also could predict that announcing a partnership with PayPal would spike the price of BitCoin. It makes me wonder if some of these price drops could be market manipulation by insiders who have a big announcement on the way.

kiba 12y ago
There's always insider manipulation, but people cannot prove it either way. It's like saying that there is insider manipulation behind every price dip and price rise on wallstreet. Maybe it's true. Maybe it's not. You cannot prove either way. So it's just noise.
- deleted 12y ago
  [deleted]
- Chronic29 12y ago
  And what if you can prove it?
ChuckFinley 12y ago
That's not how PayPal's "bitcoin integration" works. All it is is a partnership with bitpay, where if you're a paypal digital merchant (doesn't sell physical things), and you also have a bitpay account, you can link them. So someone buys something from you, sends bitcoin to bitpay, bitpay sends actual money to paypal, paypal takes a cut, and gives it to you. Before you would just use your bitpay account to get actual money, and paypal wouldn't get a cut. The PayPal partnership is silly.
- michaelbuckbee 12y ago
  I think the reasoning for a spike isn't anything to do with the actual details of the implementation. The spike in demand is caused by an existing legit payment company that is widely known and used saying: "We think Bitcoin is important and interesting enough to do something with.". This implicit endorsement draws in new buyers, gets more speculators buying, etc.
pbhjpbhj 12y ago
Did you manage to rebound the price by a few pips with this suggestion? ;0)
SuperbCrew 12y ago
I'd say you theory is pretty on-point, and I agree. Someone will probably profit from this, and it's an artificial fall of BitCoin value.
sanswork 12y ago
Bitpay only does Bitcoin -> USD/etc so they really shouldn't have many bitcoins floating around in their accounts unless they are having difficulty finding buyers for them. With a downtrend the longer it takes them to sell the more then lose.
davidgerard 12y ago
December - Just a small market correction after bubble, soon we go up uP UP! February - Price dropped because Mark Karpeles is a incompetent thief, now that Goxy is closed we go up uP UP! May - China dropped the price, now all Chinese is priced in, we go up uP UP! August - Wall Street dropping the price because they want to enter cheap. HODL and we go up uP UP! October - THE B3ARWHAL3 DROPPED THE PRICE, CHEAP COINS!!1 up uP UP! http://www.reddit.com/r/Buttcoin/comments/2idb3s/looks_really_cheap_right_now/cl14wef http://www.reddit.com/r/Buttcoin/comments/2idb3s/looks_reall...

gatsby 12y ago

What are the major reasons to be bullish on bitcoin right now? Not sarcasm, totally serious. I've owned a small amount of bitcoin for a while and have followed the market from a far. This observation is highly anecdotal, but I just haven't seen many signs of serious traction over the last six or nine months (i.e. post a ton of the initial retailers partnering to accept bitcoin, Coinbase raising their monster round, etc.)

TillE 12y ago
There are lots of reasons to be interested in and somewhat optimistic about cryptocurrency in general. But I think there are enough arguable flaws in Bitcoin's specific implementation that its first mover advantage ultimately won't count for much.
- gatsby 12y ago
  Well said. My thoughts exactly regarding bitcoin vs. the overall crypto market 10 years from now.
- ericb 12y ago
  I'm interested to hear what those flaws are and how they will prevent the success of bitcoin.
- pseudoscops 12y ago
  I agree that Bitcoin has some flaws. I posted about it on Reddit after the last slide in price. Link here for anyone interested: http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily_discussion_tuesday_september_09_2014/ckdb1bl?context=3 http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily...
fchollet 12y ago
Reasons to be bullish on the concept? Bitcoin is a secure public registry backed by a decentralized 300k THash/s computing network (and fast growing). That alone is insanely valuable, and not just as a vector of monetary transactions. It's one building block of our decentralized future. Reasons to be bullish on the BTC/USD exchange price? That would be pure speculation. BTC seems to be now at low levels enough that it wouldn't be insane to buy some for short-term speculation, but it of course it would still be very risky.

Nursie 12y ago

Maybe as the last big wave of people flocking to BTC figured out there's not a lot to do with it and lose interest? Because we've got to have moved past the point where it's all currency enthusiasts, and if you're not enthusiastic about alt. currency in general, is there any reason yet to prefer it?

jaequery 12y ago
bitcoin will be on your mind the next time you want to send/receive money oversees, i guarantee you that.
- pron 12y ago
  I'd be crazy to bet on such a volatile asset even for 30 minutes (BTC value changes often far exceed transfer fees), so every simple transfer turns into a bet, which I'm willing to pay to avoid. Not to mention that Bitcoin isn't liquid in many currencies.
- danbruc 12y ago
  This is true for 0.02 % of the world's population, at best. (This is more than the estimated number of people owning Bitcoins, like it or not.)
  - rglullis 12y ago
    25 years ago, the same could be said of international phone calls. The world is getting smaller and smaller, there will be a point in the future where getting goods/services from someone across the ocean is as common as sending an email.
    - danbruc 12y ago
      And I can already pay for this with my credit card today.
      - rglullis 12y ago

hawkice 12y ago

The exchange rates of normal currencies are primarily interesting as tools to look at trade deficits &c. I can't think of an analogy with Bitcoin. I think the only reason this is interesting is because so many people treated as an investment. Using it as a store of wealth is clearly silly -- much too volatile. But Bitcoin as investment seems very common. It's hard to emphasize how bizarre that choice is, but suffice it to say, there are people who make a living speculating on currency, and (almost certainly) you aren't one of them.

ericb 12y ago
Why is it bizarre to use it as an investment choice? If you have a sense for what makes a technology prevail and think that bitcoin will, it isn't a big leap to look at the value that can be transferred through bitcoin and say "in the success scenarios, it will have to grow to be many times larger." Like any investment, you have to be prepared to be wrong, though.
- hawkice 12y ago
  That's remarkably similar to saying: 'If you have a sense for what makes a trade deficit occur and think that one will, it isn't a big leap to look at the value that can be transferred through international trade and say 'in the scenarios where I am right, it will have to grow many times larger''. The analysis above is completely correct... and also available to precisely everyone, and is how the price is set globally. You aren't buying at a nerds-only price. So what you are really saying is that you are a more accurate speculator on currencies than people who do it for a living and have large trading and research apparatuses at their disposal. Could be true, but if you haven't attempted to speculate on currency before, there's no way for you to know that (and the prior probability is low).
  - ericb 12y ago
    Bitcoin is more than a currency, so reducing opinions about it solely to "speculating on currency" is disingenuous. Bitcoin is a technology. I've made my career by picking winning open source technologies and betting my career on them. If you think some people who spend their lives predicting day-to-day price movements are better at making technology predictions than I am, I question your assumption. There's a reason I don't speculate in international currency, but that I am willing to express my fiscal-opinion on bitcoin. I also question your assumption that these groups are anywhere near representing the primary driving forces in the thinly traded bitcoin market at this point. There is no such thing as a nerds-only price for any investment in so much as you believe a given market is efficient. Fundamentally, what I would argue about investing in bitcoin is that small differences in the estimate of the success scenario produce wide differences in fair value estimates of this asset (because the outcomes possibilities are asymmetrical), so if you have a strong opinion on the different weighting of the possibilities it is no more unreasonable than buying an individual stock, and in fact may be the more rational choice.

iowai 12y ago

I once was an intern in a venture capital funded startup where the CEO decided to hold most of the companies cash in Bitcoin. I think it was in early 2014 or so, when the price fell like mad and he was in deep shit. Im not sure if anybody up to that date knew about the Bitcoin investment. He was a nervous wreck. Close to suicide. For about a week, he brought a stuffed animal into the office every day. And carried it around wherever he went. He said it calms him down. During that time, he crashed his $80,000 Mercedes SLK badly and broke up with his girlfriend. When the price rose again, he sold it all. And made a profit! The company survived to this day. Last I heard is that he is invested in Bitcoin and other cryptocurrencies again.

mrestko 12y ago
Well that was an insane thing for him to do.
anonymouz 12y ago
> Last I heard is that he is invested in Bitcoin and other cryptocurrencies again. I'd have hoped that he'd at least have learned something from the first experience. High volatility can end either way.
lordnacho 12y ago
This kind of thing is what investor due diligence is for. This, along with guys like Madoff, would be easily uncovered with an asset test. Basically a phone call to the bank asking how much equity an account has, naturally with the approval of the entity being tested. Surprisingly few investors actually do this.
deleted 12y ago
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gatsby 12y ago
Sorry, calling bs on this. Your last four comments all start with "I once was an intern" - and my guess is that's why your alias is "I.o.w.a.i." Did all this stuff really happen? And to you? Because from your past comments, you were an intern in the "golden 90's" and in this scenario, in 2014.

angrycoder8 12y ago

Ok this is

angrycoder8 12y ago

Ok here is my 2 cents. The reason I feel Bitcoin has lost so much over the last couple of months is because in some ways its a victim of its own success. The more merchants that come online and support BitCoin payments the faster its going to drop in value. The reason is simple, supply & demand and bitcoin payment/exchange gateways. When merchants say they are accepting Bitcoin as payment they aren't really, they are simply using Bitcoin as a conduit to process the payment from you the customer with Bitcoin. When a merchant uses a Bitcoin payment gateway, upon receiving Bitcoin payment, the gateway immediately turns it into a fiat currency by hitting the buy side of an exchange. They are putting more bitcoins back into circulation, in other words increasing the SUPPLY of Bitcoin. Its Economics 101 increase the Supply of any commodity, and the price goes down. On the other side of the equation, the investors who are buying and holding Bitcoin, with the expectation of it going higher, are seeing it plunge, so what they are doing is buying more goods and services instead of holding, a way to get 'out' of their position if you will, and that further drives the price down, its a vicious cycle. When will the price of Bitcoin start going back up? Who knows, for me I feel the indicator will be similar to observe the relative strengths of the fiat currencies, in times of peace or economic uncertainty ( not now ) they tend to show weakness, and traditionally speculators will find safe haven in gold, I think some may try to weather the storm in Bitcoin as well. Unfortunately that is not the case at the moment, both US and Canadian economies seem to be doing well, partially because of the 'war' the US is currently waging. So for me I think I'm going to sit on the sidelines and wait.

pron 12y ago
> The more merchants that come online and support BitCoin payments the faster its going to drop in value I don't know enough to say it definitively, but this may be pure fantasy. Merchants "accepting Bitcoin" seems, to me at least, like a publicity stunt to attract the young, techno-hipster crowd, which is valuable for marketing. I wonder if "accepting Bitcoin" translates to actual high-volume transactions. I think this drop is just business as usual for Bitcoin, which tends to rise and fall according to the publicity it gets. Also, its trading volume is still sparse enough for random noise (or deliberate manipulation) to change the price significantly.

vijayboyapati 12y ago

The thing I find interesting is how thin the order book is: https://www.bitstamp.net/market/order_book/ https://www.bitstamp.net/market/order_book/ It shows that you don't need to sell a particularly large block of btc to substantially move the price in either direction. If one big buyer jumped into the market it could easily move the price $50+. This shows that bitcoin is still immature and in its infancy. The more the liquidity of bitcoin grows, the less this kind of volatility will plague the market.

paulgb 12y ago
Couldn't there be automated traders waiting to jump in if the price changes, rather than having orders on the books? (I know they exist, I just don't know whether they would appear in the order book)
- jcfrei 12y ago
  At the current levels of volatility it's probably not a good idea to keep a lot of open orders - unless you can watch the markets 24/7. Automated traders would likely wait for a significant price change and then execute a market order or just place an order on very short notice.

bdcravens 12y ago

The easier it gets to buy Bitcoin, and accept Bitcoin, the worse it will be. Even if you wanted to spend Bitcoin, you had to think ahead. Now Circle lets you buy within minutes (in most cases) of setting up your account. On the other side of things, Bitpay and Coinbase let merchants convert back to USD (or other currency) right away. So it's possible to do "just in time Bitcoin": Bitcoin is merely the payment protocol. When Bitcoin becomes a pure cash equivalent, no one will care about the price. I believe that once the price becomes irrelevant, it'll trend downward. I think it'll take something serious to move the price upward, like a serious event creating major doubt in USD. Most of the bulls are quick to conflate the advantages of the protocol, as if that magically makes it more valuable as a traded commodity. Bitcoin is simultaneously a currency and a protocol. I believe when it was hard to obtain, the use of a store of value held the most potential, and early risk takers had an opportunity for reward. It's entirely possible, as the protocol becomes more or more utilized, those days of risk and reward are well behind us.

pron 12y ago
> like a serious event creating major doubt in USD. I think you are way overestimating Bitcoin's (current) significance. If something major happens to the USD -- i.e. something major happens to the US economy -- Bitcoin will be the last thing people think about, and there are quite a few other currencies (with much better track records) that people will prefer before betting their money on Bitcoin. > It's entirely possible, as the protocol becomes more or more utilized, those days of risk and reward are well behind us. If you have any evidence that Bitcoin is becoming more and more utilized, I'd love to hear. And I mean actual transactions, not services supporting the protocol (which could be publicity stunt, very cheap bets for something that just might take off one day, or simply wishful thinking).
- zanny 12y ago
  > there are quite a few other currencies (with much better track records) that people will prefer before betting their money on Bitcoin. So I'm in the US. Assuming hyperinflation starts tomorrow, the only money I have, or anyone else will accept broadly enough to keep me able to exchange in the market, is bitcoin. Nobody has Euros, nobody takes them, nobody takes Canadian dollars on the boarder, and nobody would accept or buy the equipment to measure weights of gold or platinum. Of course, the market would probably broadly move (more due to ignorance than any real justifiable reason not to) towards another states fiat in the event of a gradual loss of faith in USD. You would not have a situation where you woke up tomorrow and suddenly your dollars are worthless, at least if you are paying attention. > If you have any evidence that Bitcoin is becoming more and more utilized, I'd love to hear. And I mean actual transactions, not services supporting the protocol Overstock is apparently making like 2% of revenue from bitcoin sales. I know the Subway nearby that takes bitcoin is making money when I spend btc there. I'm exclusively buying computer hardware for customers through tigerdirect / newegg in bitcoin, though they have not released statements on how much revenue is generated through it yet.

marcosdumay 12y ago

I've always dismissed people complaining about volatility, as it's not really a huge problem for currencies... But I've never seen a real-time track of Bitcoin! There is volatility, and there are currencies that change each second the same that the normal "volatile" currencies change a week. Bitcoin seems to be the latter, and that's a qualitatively different problem from mere volatility.

TheEzEzz 12y ago

My working hypothesis is that this is the market impact of the liquidation of Hal Finney's bitcoin estate. If true, due to the thinness of the market and the large size of Hal's holdings, the price has a long way to go. (Full disclosure: this is pure rumor mongering.)

forthefuture 12y ago

So to even buy bitcoin you have to do with money what you would do on any site to buy anything else. Why would you ever turn your money into bitcoins to do that? It's easy to say now, "oh bitcoin will never work" because it's tanking, but can anyone explain any practical use whatsoever for this monopoly money? Do people really expect companies to start paying people in marbles and tops cards or is this as straightforward as it seems?

Estragon 12y ago
Escrowed transactions are far easier cheaper than in USD.
shuska 12y ago
I'm not an expert on it by any means, but from what I understand just the technology behind the blockchain (essentially how the entire network works) is what is really valuable with Bitcoin. Bitcoin does have some practical uses - I've heard of people transferring money between countries/across the world with little to no fees as an example. It's basically a way to get around banks being difficult/charging ridiculous amounts of money for transfers. The point is not to store all your cash in the form of bitcoin, but rather transfer it to bitcoin when you need to buy something. There's some people who put their savings into bitcoin which is really dumb.

Animats 12y ago

Bitcoin should have been the petty cash of the Internet. People should be buying music tracks, in-game items, and junk food from vending machines with Bitcoins. But, as discussed in a previous topic, it doesn't do small or quick transactions very well. That may not necessarily be a bad thing. Enthusiasm for micropayments, which predates the Internet (look up Ted Nelson and Xanadu) comes from the people who want to collect them. There's no vast consumer demand for the ability to send $0.10 over the Internet. Even the big players couldn't make that happen. Beenz, Microsoft Points, and Facebook Credits were all failures. The big run-up from $100 to $1100 last year was because, for a while, it was possible to easily and legally bypass China's exchange controls by buying Bitcoins with yuan and selling them for dollars or euros. Then the People's Bank of China cracked down, and that bubble popped. We're still in the aftermath of that event. As a speculation, Bitcoin is zero-sum. There's no productive activity, and no profits. All gains by winners come from losses by losers. Much effort is spent by the Bitcoin community recruiting more losers.

thom 12y ago
Was part of the rise last year due to MtGox's increasingly desperate market manipulation? I remember reading the theories, but don't know if a better picture has developed since then.
- sillysaurus3 12y ago
  Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin over a long period of time. The reason we know it was an Mt. Gox bot is because when Gox's API went down, the bot was still able to execute trades on Gox even though no one else could. Of course, Karpeles will never stand for his crimes, because they weren't crimes. This is just what happens in an unregulated market, and everyone who buys into it is along for the ride. Here's the rub: A price fluctuation at one exchange will always affect every other exchange. If Bitstamp drops by $50, someone is going to buy at Bitstamp and then sell at some other exchange in order to take advantage of that. That means any exchange that manipulates the market will literally be manipulating the entire Bitcoin market. There's no way for outsiders to know the difference between an artificial, manipulated price spike and a true increase in value. So if you see bitcoin rising sometime in the future, beware buying into it: you may be buying into a manipulation. I don't know whether this problem is solvable. Even if America enforces regulations for American bitcoin exchanges, the rest of the world won't be playing by the same rules, and it only takes one dishonest exchange to mess with the global price. I'd like to know how the regular stock market deals with this. Are all stock exchanges regulated worldwide? Is there such a thing as a dishonest stock exchange? If so, how is that dealt with?

curiously 12y ago

I fear that just as bitcoin arrived suddenly it will go just as quickly. It's based on fundamentals that is not well understood, at least by people who buy it (because its gonna go up!).

parksy 12y ago

As of right now there's a 28k sell wall on bitstamp which might be forcing prices down a tad. Looks like someone's trying to buy some coins on the cheap, but I'm no expert in these things. http://i.imgur.com/lmcu15f.png http://i.imgur.com/lmcu15f.png

kolev 12y ago

That's what happens to a market driven entirely by speculation and adding tools like shorting in addition to the lack of interest from the general population. Prof. Bitcorn might be right, just not right about the date, I guess. We saw that outside of a short-live spike, even the PayPal announcement couldn't help it. I won't be surprised if the Chinese oligarchs already moved their funds outside of China via Bitcoin and now there's not enough demand to fuel the increasing price like before.

adamtucker 12y ago

What is preventing the Federal Reserve or any other central banks with endless supplies of liquidity, from collapsing the value of bitcoins or any other convertible currency, virtual or otherwise?

tim333 12y ago
For the Fed to collapse the value of bitcoins they would have to sell lots of bitcoins. They can't do that because they don't have bitcoins to sell. The can print USD but not bitcoins.
- adamtucker 12y ago
  If the Federal Reserve can print USD, and USD can buy Bitcoins... am I missing something?
  - tim333 12y ago
    Yeah they can buy them but that won't make their price fall.
    - adamtucker 12y ago
      "For the Fed to collapse the value of bitcoins they would have to sell lots of bitcoins." tim333

scotty79 12y ago

Apparently the sole reason bitcoin goes for 300 now is that one guy is dumping 30k btc at 300$. Apparently he just needs 9mil $ in few days.