Bitcoin on a Tear

**TravG** · 22 December 2016, 11:52 am

Bitcoin has been increasing in value pretty nicely over the last few days. Just through dumb luck I left a balance in my wallet and made a few hundred just by the increase in value.

Does anyone actively trade BTC? I have dabbled in the stock market for the last 10+ years and enjoy it but trying to gauge where the value of BTC will be in the next 6+ months seems pretty tough.

If you do trade BTC what do you look for? I would think the main driver for BTC value would just be simple supply and demand. As more BTC is being bought it should increase in value right? So long term are you just betting on BTC becoming more popular and used more as a currency?

What other factors affect the price of Bitcoin?

**Sherlock** · 22 December 2016, 1:06 pm

It is hard to answer if the answer should be short enough to be readable.

Bitcoin is a special kind of asset. I am just hodling and paying and hoarding, waiting for the right time to sell, therefore I am reading trading forums/chats a lot. I used to trade bets for years and I think, that with bitcoin even now the only value is to hold in cold wallet and do not be scared to buy a lot.

There is a big risk to have significant money at exchanges. The counterparty risk can be minimised with margin trading, but then you have to pay quite high interest rates.

The price of course is set on two levels:

1. Fundamental, where the real value of one bitcoin is anywhere between X0,000 - X,000,000 USD (where the lowest estimation is just market cap for money in drugs, gambling, ransomware and the highest estimation is if bitcoin has to be used instead of monetary base of our recent currencies). But because this value is not still recognised, there is an opportunity to buy. Also the discount is there if there will be a bug in code big enough to either destroy bitcoin completely or harm bitcoin so much, that other cryptocurrency will take over.

The important thing when talking about fundamental factors is bitcoin suppply that is provided mostly by miners, who mine and mostly sell constant amount of bitcoins per day (now it seems even miners try to hodl). Next halving is in 3,5 years and it will be another reduction of money supply. It is also important to look for the changes in code, like Segwit and LN, where the progress is worse than expected. https://blockchain.info/charts/bip-9-segwit

2. Psychological level (technical analysis): This is where the price is set in short term. It is wild west. Unregulated exchanges with all kinds of scams and pumps and dumps affect the price. Price is set up in China at 3 exchanges: okcoin, huobi and btcc. There is 16M bitcoins out of 21, but most of those bitcoins are out of exchanges, and even those that are at exchanges usually are not in the orderbooks. On the other hand, there are pretty strong futures markets, where probably the market moves start. The reason is that one can bet there with zero interest rates, but there is huge premium on quarterlies. https://cryptowat.ch/okcoin/btcusd-quarterly-futures/5m

In short, there are crazy gamblers, who affect the price pretty much and they tend to overreact. If you really need action you can read sick gamblers here: https://www.reddit.com/r/BitcoinMarkets/

The best option here is just to hold safely in cold wallet for now and wait, which is something I repeat here for long time. It is stupid not to hold significant money in btc, but it is crazy to do day-to-day trades at relatively unsafe exchanges, when honestly, we do not have any information what is going on short term, but there are so many players that actually do have insider information. We have that information too, but it is the fundamental long term info we have from US affiliate business. The info is that bitcoin works, where fiat does not.

Of course the situation might change and we can see another 5-20x appreciation in very short time maybe even soon. Then we will see another crash and then it will make sense to sell at least some bitcoins. The bubble is maybe starting right now, but it is different time than in 2013, when the last bubble occured. The growth looks milder. Maybe because there is after all much more money in and much more possibilities to short. So the most important question now is: will bitcoin grow through exponential curves and crashes, or will it continue to grow at moderate pace like 25-100% per year without crazy slides?

**TheGooner** · 22 December 2016, 4:56 pm

WARNING BTC SKEPTIC IN THE HOUSE

In response to the OP question about "trading in BTC" ... it's not really a trading opportunity at present.

In order to trade you need to buy and sell - and with BTC seemingly rising continuously there is little opportunity to sell high and buy lower - so you are either accumulating BTC to hold long term (buying) or quitting for profits (selling).

And unless things change - I cannot ever see BTC as a currency - the limitation of 2000-3000 transactions per block with a block every 10 minutes - means it's NEVER going to be used for mundane trade between people.

However, I do acknowledge that BTC does seem to be a virtual commodity that people are willing to pay dearly for ... at present. (even if it is useless for any practical purpose).

The continued slump in both ETH and ZEC tokens (despite both alt-coins having potential technical benefits compared to BTC) suggests the BTC has captured the mind-space of this generation as being THE virtual token of choice. This is hugely positive for BTC's long term prospects of survival.

---------------------------------------

As an affiliate business we will continue to sell BTC as soon as we receive them - converting the wealth into traditional currency ands operating as normal. The volumes are too big to do prudently do anything else.

However, personally, I have created a BTC asset class in my portfolio - and now keep 1% of my overall wealth in BTC. As I understand more about why BTC might continue to hold value in the future or in time of turmoil I may increase this (or just allow holdings to grow) but at the moment this still feels too much like "Tulip fever" to hold any more.

**allfreechips** · 22 December 2016, 4:58 pm

Bitcoins come and bitcoins go out to my bank, thats my theory and i'm sticking to it

**Sherlock** · 23 December 2016, 1:07 pm

Originally Posted by TheGooner

However, personally, I have created a BTC asset class in my portfolio - and now keep 1% of my overall wealth in BTC. As I understand more about why BTC might continue to hold value in the future or in time of turmoil I may increase this (or just allow holdings to grow) but at the moment this still feels too much like "Tulip fever" to hold any more.

Glad to hear you are hodler now. I will buy more because of you, but not at this price.

And unless things change - I cannot ever see BTC as a currency - the limitation of 2000-3000 transactions per block with a block every 10 minutes - means it's NEVER going to be used for mundane trade between people.

Bitcoin was never really aspiring for being used for that. The sidechains over bitcoin, that maybe will be built on the top, have such ambitions. But if states legalise Bitcoins like Russia did now, then the fiat will be the top layer (or one of top layers) of bitcoin.

**DanHorvat** · 23 December 2016, 4:37 pm

I don't see it as
1. an investment vessel
2. a hedge against inflation
and have no use for it as
3. a currency

So I am ignoring it completely.

**Casino Extreme** · 20 January 2017, 4:23 pm

It will take time before we get used to Bitcoins ,having said that I would never keep them for a long period of time ,waiting for a better price .
At the end we are here to earn and convert in real time .
You may read the stories on how much people lost in past 20 days just by keeping them when the price reached $1100+ ,which is when everyone wanted to sell them .That is why an avalanche started so it dropped to $800 within couple of days . At the end the price is determined by supply and demand .

But thats just my opinion

**Sherlock** · 21 January 2017, 7:56 am

Certainly not everyone wanted to sell at 1100+.
The reason for drop was FUD from China, where Chinese central bank rided one of the biggest Chinese exchanges and people fear that bitcoin might be "banned".

The outcome is that Chinese exchanges do not allow so crazy leverage bets as before. The trading volume in China went down a lot. Price is getting up again. The ban on leverage trading in China might be even very good for bitcoin, because now one actually has to have his own bitcoins,so there will be bigger % of hodlers among traders.
Let we see.

**PROFRBcom** · 23 January 2017, 9:44 am

I'm all for bitcoin. As I look now price is back ~920ish. Since the first few days after the Chinese news, prices have become more stable intraday, as they had been leading up to all but the last couple weeks when things flew up to $1,100 so quickly. I try to educate people in the real world about bitcoin when I can and spread the world. The more who adopt it, the better

**Sherlock** · 23 January 2017, 10:26 am

- people will not bother to use bitcoin unless they need it; the process of expanding bitcoin markets will be/is/was quite slow, but once bitcoin conquers some market, it will not go away, unless to some new cryptocurrency. This is the reason why Bitcoin is up only 250% during last year. But this is why people who start holding bitcoin now have one-in-a-life chance for incredible ROI. My experience is that people are very reluctant and the process is complicated for them. The good way of bitcoin-baptism is to pay people, who have some bitcoin sympathy, in btc. Even small amounts make it. Bitcoin has some magic, so many start to love bitcoin only after they own some.

- I do not expect price stability now. The another news is that in few hours there is another restriction in China and they start to Charge 0.2% fees (all 3 "independent" exchanges). This will be major shift towards west, where immediatelly new exchanges (Coinfloor, maybe others) want to seize that 0% fees market. I do not see clear outcome for bitcoin or price of bitcoin, I am permabull of course even now. But I do not expect stability now. The bitcoin markets will be completely changed in few hours and nobody knows where the market making will be done.

- Just a speculation and maybe my wishful thinking: it almost looks like that Chinese governement is not only the most capitalistic and pro free trade, but also pro-bitcoin. The outcome of the PBOC raid is amazing, they certainly do not wish to be against bitcoin. China wants to have an influence.

**PROFRBcom** · 24 January 2017, 5:10 pm

I too saw the 0.2% trading fee chatter. I was surprised that it didn't lead to another leg down. In fact, I took the resiliency as a good sign.

**TheGooner** · 24 January 2017, 5:31 pm

The fees have resulted in an almost immediate plunge in BTC trading volume in China from what I read.
They are suggesting TXs in China are now 1/10th of previous numbers.
(source : https://www.coindesk.com/bitcoin-pric...exchange-fees/ )

However, I note that there are currently 63,000 unconfirmed transactions in the system at present ... that's 25 blocks worth.
So this is actually a good thing in my eyes - as it should mean more breathing room for BTC in terms of volume processing.
( source : https://blockchain.info/unconfirmed-transactions )

Interesting times for BTC ... the initial reaction is a slow downwards drift ...

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