First I want to remember that Bitcoin cost $10 less 24 hours before the $30 plunge than it did afterwards.
Having said that, I don't believe that it will go back up, most speculators will probably be ready to sell after today. It's also hard to say though, because it looks like the volume of bitcoins traded today are equal or less than other days. I can't say for sure, because Mt. Gox isn't loading properly and I'm looking at an unfamiliar set of graphs.
People keep talking about the bubble bursting. Most people don't realize that last time bitcoin flopped, it only lost 30-50% value initially, returning to a value that was still higher than just 2 months before the crash. Bitcoin spent 5 months in a steady decline, not 5 hours. Most early speculators made a profit, even if they couldn't sell until after the crash.
As much insanity as people are predicting, everything will probably be drawn out. If you have bitcoins and are nervous, now is a fine time to sell. If you think bitcoin will keep going up and you bought more than 30 days ago, you will probably be able to come out ahead even if you are wrong.
But you have to appreciate that most of Bitcoin is speculation. Bitcoin seems safe because it is inherently deflationary. That brings an unproportionate amount of speculators to the currency, and causes the deflationary properties to exaggerate. After enough time, the currency will become clearly overvalued. The free market will take care of that in a cyclic fashion.
As long as Bitcoin is used by people for it's anonymous and cryptographic properties, it will be subject to this hyperdeflation/crash cycle. The exiting bits don't last long and ultimately don't make the currency gain or lose terribly extraordinary amounts of value. After a crash, I'm sure bitcoin will still be worth at least $60, which is still fantastic if you bought back when it was less than $15.
I don't think you're wrong on any particular point.
But all of this is what makes Bitcoin irrelevant to the global financial system.
A currency can't be used for daily purchases if you have to account for cyclical periods where you just shouldn't spend them!
Couple this with the fact that this time enough of the mainstream media is paying attention, and Bitcoin won't recover. I'd bet a Bitcoin that this is the highest valuation of Bitcoin over its career as a highly interesting experiment in economics.
I'm not going to buy a Bitcoin. I'll just go into tremendous debt if I lose, and if I win, well, you can just keep it ;)
Oh, and I wouldn't take today's high. I'm talking about this current hump. After it falls below 100, it won't make it back up to 100, is the bet I'd make.
Comments
First I want to remember that Bitcoin cost $10 less 24 hours before the $30 plunge than it did afterwards.
Having said that, I don't believe that it will go back up, most speculators will probably be ready to sell after today. It's also hard to say though, because it looks like the volume of bitcoins traded today are equal or less than other days. I can't say for sure, because Mt. Gox isn't loading properly and I'm looking at an unfamiliar set of graphs.
People keep talking about the bubble bursting. Most people don't realize that last time bitcoin flopped, it only lost 30-50% value initially, returning to a value that was still higher than just 2 months before the crash. Bitcoin spent 5 months in a steady decline, not 5 hours. Most early speculators made a profit, even if they couldn't sell until after the crash.
As much insanity as people are predicting, everything will probably be drawn out. If you have bitcoins and are nervous, now is a fine time to sell. If you think bitcoin will keep going up and you bought more than 30 days ago, you will probably be able to come out ahead even if you are wrong.
But you have to appreciate that most of Bitcoin is speculation. Bitcoin seems safe because it is inherently deflationary. That brings an unproportionate amount of speculators to the currency, and causes the deflationary properties to exaggerate. After enough time, the currency will become clearly overvalued. The free market will take care of that in a cyclic fashion.
As long as Bitcoin is used by people for it's anonymous and cryptographic properties, it will be subject to this hyperdeflation/crash cycle. The exiting bits don't last long and ultimately don't make the currency gain or lose terribly extraordinary amounts of value. After a crash, I'm sure bitcoin will still be worth at least $60, which is still fantastic if you bought back when it was less than $15.
I don't think you're wrong on any particular point.
But all of this is what makes Bitcoin irrelevant to the global financial system.
A currency can't be used for daily purchases if you have to account for cyclical periods where you just shouldn't spend them!
Couple this with the fact that this time enough of the mainstream media is paying attention, and Bitcoin won't recover. I'd bet a Bitcoin that this is the highest valuation of Bitcoin over its career as a highly interesting experiment in economics.
What are your terms on that bet?
My take on it is that it's a mistake to think it's a currency. It has a lot more in common with gold, but without the heavy lifting.
If it's not a currency it shouldn't act like one.
My terms are: if I win, you pay me a (worthless) Bitcoin. If you win, I owe you a stupid amount of money.
It's meant to indicate my disregard for Bitcoin's chances of success.
I'll take that bet. Let's say, 2018-04-04 as the date, and use today's high of $147 USD as the crossover point.
If I lose, I owe you a BitCoin. If I win, you owe me one. Feel free to pre-purchase that coin. I'll stick a reminder in my calendar.
I'm not going to buy a Bitcoin. I'll just go into tremendous debt if I lose, and if I win, well, you can just keep it ;)
Oh, and I wouldn't take today's high. I'm talking about this current hump. After it falls below 100, it won't make it back up to 100, is the bet I'd make.