Post
Topic
Board Economics
Re: The Bitcoin economy needs about $100,000 a day of new money
by
SlipperySlope
on 05/07/2011, 15:51:05 UTC
Bitcoin production is supposed to be about 7200 coins per day, which at $13.75/BTC is currently $99,000. So, right now, it takes about $100,000 a day in new money to keep the price of Bitcoins stable.

An unknown, but substantial portion of miners are hoarding bitcoins.  It is a hassle for the small miner to establish an exchange and dwolla account in order to liquidate their mined coins.

I respect your analysis but guess the figure might be closer to $50000 per day than to $100000.

My own contribution to this analysis is that the new cash required to support bitcoin prices drops directly with the price of bitcoins.  So, suppose that as the bitcoin bubble deflates, prices return to April 2011 levels, i.e. around $1 per bitcoin.  Then to keep the price of bitcoins stable, the market would not require $50000 per day, but rather only $7200 per day.

Once the bottom sets in, it will not take much buying power to turn it around.  That's why I think that there will be one or more premature rallies off the bottom, that will make the bottom hard to figure out.