I lurk these forums quite frequently, and I've been hanging out since 2011. We all saw this dip coming. This is that dip where people say, "Fuck it, I'm done! It's not going to the moon EVER!" Pirate has stolen all of our money! etc..
The past is no reliable predictor of the future, but it's all we've got, so let's come up with some expected values based on intuition.
Let's say there's a 25% chance these bubbles will repeat themselves and over the next year we'll reach >$4000 level.
Let's say there's a 50% chance we'll stagnate at an average of $500 over the next year
Let's say there's a 25% chance we'll go to $0 over the next year.
0 * .25 + 0.5 * 500 + 0.25 * 4000 = $1250 expected value over the next year, for me at least.
So keep on selling and I'll keep on buying!
This is the logic I've been using to justify buying in. If Bitcoin becomes worthless I'll lose far less than I could potentially win.
Here's my expected value assumption, still trying to be conservative:
10% chance of $0.
15% chance of $250-400 (avg $325)
25% chance of $400-700 (avg $550)
25% chance of $700-2000 (avg $1350)
25% chance of $2000-5000 (avg $3500) or higher.
0 * .10 + .15*325 + .25*550 + .25*1350 + .25*3500 = Expected value $1,398.75.
Current price = $535
Discount = $863.75 or 62%.
This is a little closer to reality, but still way, way too extreme. Remember that the bubbles are getting progressively smaller and this is an entirely different market than in the Gox days... more professionals, less irrational exuberance, a lot of leverage to unwind, and more post-Gox suspicion.
I am not saying it won't end up higher... in fact, fairly higher, than it is today. I'd say a truer strike price at the end of the year is in the $550 to $800 range. We are oversold, but really only slightly so.