Quote from: dinofelis on January 12, 2015, 10:34:43 AM

Quote from: inca on January 12, 2015, 09:58:35 AM

Two points. It isn't in miners interest to sell coins at ever lower prices, certainly not in multi thousand coin tranches very suddenly. Simply looking at the price and corresponding volume on the charts tells the simple story that the price is being driven down by heavy selling that is not interested in obtaining best price.

The problem is that miners have real expenses in $$ (or other fiat). They have to cover that. Well, they can work at loss for a while, but sooner or later they have to pay the bills.

Of course, mining can be a way of acquiring coins ; it is a different way of *buying* coins. But when it starts to be cheaper to buy coins than to mine them, it would be totally ridiculous to spend your $$ on mining, while you can get more coins buying them.

In any case, whether you spend your $$ on mining, or you spend them on buying coins, that is fiat that is flowing into bitcoin. So it doesn't matter. You can abstractly consider that a miner "sells his coins to himself" if he's holding them.

Normally, the mining cost is close to the market price in any case.

Quote

You are entirely wrong saying bitcoin has one fundamental price support, it's use as a nascent currency for medium of exchange. In fact speculation (hoarding) as a store of value with sound money properties are the main source or value and probably will be for decades.

People will flock to bitcoin once the price rises and re enters a bull market again. The trigger could be a price point which cannot be breached by colluding whale traders or some exogenous event.

You give the exact reason in your second paragraph why your first is wrong.
If it would be right now a fundamental of bitcoin for people to "store value in for the long term" (so, WITHOUT the idea of getting more out of it than the economic growth, which is what stabilized sound money brings you ; so WITHOUT the speculation on seigniorage), then those people would not "wait for a bull market". A more or less flat price would be good enough for them. It would be a STORE of value, and not a means to GAIN.
Point is:
1) last year bitcoin has been going down for the whole year: you must be a nutcracker to "store value" in something that is loosing value on the short term so much
2) bitcoin only exists for 6 years ; you must be a nutcracker to store value for a much longer time in something that even didn't exist for that time.
3) bitcoin is NOT YET "sound money" with an inflation rate of about 10%

So all these reasons indicate that it is totally absurd to consider - at this moment - bitcoin by any measure a "store of value" for the long term.

I agree with you that "store of value in the long term" is ALSO a fundamental. It is most of the price of gold, and part of the price of real estate. But right now, for bitcoin, that doesn't make any sense. There's no long term proof of faith (like gold and real estate). In order to want to put value in a "store of value" you want to have long term faith in its ability to KEEP its value. First of all, bitcoin is too young, and second, bitcoin has shown for more than a year that it can go down severely.

However, and that is what your second paragraph indicates: people buying into bitcoin do this for *speculative* purposes: to get much much more out than they want to put in. To "go to the moon". That is nothing else but the "greater fool" principle.

"greater fool" is NOT a fundamental. It is a strong price component... until the bubble bursts. Once the belief in "greater fool" is gone, it's gone.

Your reply is too long to break down as my time is short.

Your first reply regarding miners entirely missed my point. Miners have no financial interest in smashing the price in a manipulative manner by selling huge tranches of coins in a single sell. They have costs (although we know that many are either VC backed or have significant fiat reserves and sell OTC instead) but a business which relies upon selling a commodity generally wishes for the best price when they sell it. Unless of course they are trying to drive other miners out of business - this is a possibility but if the price falls much lower then the bitcoin ecosystem will be harmed for some time, which in turn will damage mining companies prospects over the longer term.

For the second point. You do not seem to understand that bitcoin has very little current or past usage as a medium of exchange for goods and services. It has algorithmically exponentially falling inflation with each block reward halving. Yet the price has rocketed up from 0 to where we are today in only a few short years. This despite an inflation rate much higher than now. How is this? The calculation amongst holders that buying now and previously will result in future gains. Why, when inflation will still be ~10% until mid 2016 and the block halvings are four years apart? Clearly because of two things IMO. Firstly there will only ever be 21,000,000 coins. And secondly 10% inflation sounds a lot but is it really? Obviously we are in the depths of a bear market but the reality is that even then adoption of bitcoin is rising significantly more than 10% a year. It will continue to rise more than 10% a year and therefore anyone buying now (barring unexpected disaster) is highly likely to have an advantage over those buying later.

You are focussing on the price and saying that because the price is falling adoption is failing and bitcoin is dead (points at last year on chart). You miss that this has happened several times before and yet we are still here several orders of magnitude higher in price