One would expect that supply and demand would not increase together for any significant period of time.
Why would one expect that? The demand is increasing, and given the fact that the supply is increasing at a much slower rate, then it's quite normal for the value to increase.
That being said, I don't know what caused the "sudden" (few weeks) increase from $14 to $18, as I don't read about Bitcoin that often. But I do expect the value to keep rising as more companies start adopting Bitcoin payments and more people then get interested in it. And I also expect Bitcoin to remain relatively volatile at least until its market value is counted in billions or tens of billions of dollars, when each individual transaction will have a much smaller impact on its value, in either direction.
I think short term (1-3 years) there is a real issue with liquidity in the Bitcoin market (moving between currencies) & acceptance. I suspect to see a dip dropping below November prices March-July as people need access to cash later in the year (due to January optimism wearing & credit bills to pay) and in the process of trying to make liquid their bitcoin reserves discover the problems with liquidity, which have to do with shady exchanges: causing further dip. In person cash transactions are best at this stage, but require effort. Bitcoin has solid value though and isn't going anywhere.
Basically: what places that do accept bitcoin for currency are shady and uncertain, and few accept for goods.
Comments
One would expect that supply and demand would not increase together for any significant period of time.
Why would one expect that? The demand is increasing, and given the fact that the supply is increasing at a much slower rate, then it's quite normal for the value to increase.
That being said, I don't know what caused the "sudden" (few weeks) increase from $14 to $18, as I don't read about Bitcoin that often. But I do expect the value to keep rising as more companies start adopting Bitcoin payments and more people then get interested in it. And I also expect Bitcoin to remain relatively volatile at least until its market value is counted in billions or tens of billions of dollars, when each individual transaction will have a much smaller impact on its value, in either direction.
Stuff just goes up in January, people are optimistic. https://ssl1.washingtonpost.com/opinions/why-do-stock-prices... Markets aren't rational. I bought in December & exited about a week ago on this strategy.
I think short term (1-3 years) there is a real issue with liquidity in the Bitcoin market (moving between currencies) & acceptance. I suspect to see a dip dropping below November prices March-July as people need access to cash later in the year (due to January optimism wearing & credit bills to pay) and in the process of trying to make liquid their bitcoin reserves discover the problems with liquidity, which have to do with shady exchanges: causing further dip. In person cash transactions are best at this stage, but require effort. Bitcoin has solid value though and isn't going anywhere.
Basically: what places that do accept bitcoin for currency are shady and uncertain, and few accept for goods.
While I agree it used to be very difficult to move between USD and bitcoins, https://coinbase.com (YC S12) has made this pretty easy at this point.
It is crashing.
$16.65 right now, from $19.2 three hours ago.
http://bitcoin.clarkmoody.com/