Quote from: moravian on June 19, 2014, 06:54:10 PM

But what actually happens. At the same time someone SELLS that bitcoin to me. So there are actually 2 events... or each transaction has two sides. Cash actually goes into his pocket.

Now I guess if buyer initiates transaction, he maybe needs to accept slightly higher price, so if it starts from buyer, this is that pressure that drives prices up. And if seller initiates transaction, he can accept slightly lower price, which pushes the price down...

I am not sure if this is good understanding...

When a lot of people who are holding bitcoins want to sell at the same time because they think the price is going to drop this will cause a chain reaction of people undercutting each other to be able to sell them before others do and the price drops even further. It's just fear feeding on itself and can get pretty ugly. We call this a panic sell off. The opposite can happen too when lots of people think the price is going to rise and they keep increasing their bids to be able to buy before others do. It's just a constant psychological warfare between fear and greed of buyers and sellers and the interaction between the two determines the market price.