Fools and their money ...

It occurred to me last week that something is not right about the valuation of Primes in the marketplace.  When private sales were allowed, the going rate was a discount off the "retail" (about 25-35/mhs).  So how is it possible that the market NEVER dips much below $48/mhs and typically stays pegged right around the "retail" $49/mhs price?  Sure there are brief times when lower prices are posted, but not often.  And, regardless of the hype, the price never blips up too much either.

Moreover, the $49/mhs price is just out of whack with any real mining.  Prices per mhs are now $3-10 for real mining hardware (scrypt).  The only justification for anything more would be a belief that Paycoin is going to be worth more than $20 - but even then, Zens make more sense than Primes as someone else has shown (can't recall the link, sorry) with a pretty detailed analysis.

Even stranger is the lack of volatility in Prime prices (up and down movement from day to day).  Even if there were lots of folks who "believed" in Paycoin, and despite all rational analysis were willing to pay a premium to own the Primes, Paycoin is a pre-release product and you would expect volatility.  Lets say that there are sophisticated Wall Street insiders who "know" primes are worth more than $50.  When the price runs down they would buy; BUT, being sophisticated investors, they would wait until the prices hit a floor before buying (creating rapid, large, up and down swings).  There is almost none of that.

So how is it that the Prime prices remains so darn stable and high, with almost none of the volatility you would expect to see from a pre-release product? 

My hypothesis that there are buyers (GAW or resellers most likely) who are propping up the Prime market, buying up quickly any hashlets posted for less than $49/mhs.  Much like GAW plans for Paycoin, where a floor will be established through buybacks.  Seems to me that could already be being done with Primes.

Buoyed by my new hypothesis, I decided to put my feet back in the water last week right before the Big Announcement about Primes.  I deposited 22 BTC back into GAW, and hit the "reverse sale and prepare for market button" which gave me back the approximately 350+ mhs in Primes that I had sold back to GAW early on.  Between Thursday night and Saturday morning, I was able to sell the Primes on the market for a total of about 40 BTC.  It took several withdrawals and 3 withdrawal holds over 3 days before I got all my BTC back out with profit. 

Maybe my hypothesis is just a salve for my conscience. I am sincerely hoping that I am right about my hypothesis (in which case I just took money from the folks trying to prop up prices); or that I am wrong about GAW (in which case I feel great having made 18 BTC in one day, and I will be thrilled to see buyers of my Primes make even more money).  Otherwise, there will be some sad folks holding my former Primes when the house falls down.   

YMMV but if you have a revert button on your account, something to consider.