Personally, I feel that the demand for BTC that is non-speculative is far less than the speculative demand. Therefore, I think the price could continue to fall for some time. I wouldn't be shocked if it gets below $50.
Looking at the 2-year graph, the price is still above what it was for most of 2013, before that massive spike in November 2013. I wonder if what we're seeing is Gartner's Hype Cycle. The drop isn't as rapid, but it seems conceivable people who lose interest still wait some time to sell their bitcoins.
If we are, we haven't hit the bottom of the trough yet. It's now at $233. What is interesting, is that these drops are making mining unprofitable, which will likely make some operations shut down. Also, we might find out which exchanges are running a fractional reserve.
So, I've read some things since, and I think I might have been wrong. Some people think the November spike was largely due to BTC China, and Chinese interest. Since the spike, the Chinese government has steadily increased regulations, with perpetual rumours of an outright ban. It's possible it's still Gartner's cycle, with China as a major player. But it's also possible the steady increase in regulations has steadily scared Chinese adopters away.
I'm not a bitcoin expert and don't even research it that much... but... I simply don't see how the currency is going to survive in the state it's in. I believe it needed at least 6 more months of hyped up shit in order for it to survive. I say this because in order for it to survive it needed (1) technologies, services, sites, etc built using it and (2) get more people to actually start using it for online purchases. ie: it's nice that you could buy from overstock.com using your BTC but the one item I bought from overstock.com, I used my paypal as I was at work and my paypal information was already in my head. Of course, my online shopping habits may differ from others but I would love to see the stats of how many people who had btc actually used btc for online purchases where they had the option to use their debit card / paypal or btc. Sites like overstock, etc. Not sites like silkroad, etc. Unfortunately, the excitement (and price) dropped before any really awesome technologies could be built using bitcoin and before any real demand for it from an economic perspective was created for it. In order for it to be stable it needs to be useful, easy to use and people's habits need to change to use it over older technologies. That last one is going to be a hard one to overcome. Just like Apple changed the micropayments environment with their iTunes accounts and iTunes cards and shit. Just like Amazon changed the ease of purchasing with one-click purchasing. The ease of use and habit forming behavior needs to happen with BTC. We simply haven't seen that. Combine that with the fact that there aren't a ton of things to do with BTC, online ecommerce as a whole has been steadily eliminating pain points that used to be common, and the fact that the fluctuating / plummeting price makes it even harder for people who bought BTC in the $400-$1400 to spend it today - I see this as a pretty significant hole that BTC may not be able to crawl out of. Only time will tell though.
Bitcoin remains terribly user unfriendly. It's also very easy to make an irreversible mistake and lose your BTC. It's years away from being useful as a currency, IMO. Not only must bitcoin be at least as easy to use as current payment systems, it has to be stable, or at least have a multi-year run up in value. Apple Pay isn't going to become the next payment protocol because they are another middle man that is locked in one platform. Bitcoin has the massive benefit of being open, but it is nascent and dwarfed by the current services. It's going to take years and years. Bitcoin's blockchain has much to offer the financial space when it comes to asset management, and that's where I expect it to be put to use long before it is a currency. No one creates a successful currency. However assets can acquire value and then become useful for the exchange of value. To the extent that the bitcoin network is essential, BTC will have a floor of value. But right now, the price is almost all speculation. BTC could fall in value down to a few bucks, and miners can still make money on it, and people can still build apps that use the blockchain. That could go on for years before the real value of the network starts to push the value of BTC higher and higher.
I'm sure bitcoin will continue to be a niche thing (unless it becomes illegal) for a rather long time. But there's definitely no reason to continue using it at this point. Most people were using it as a stock market and since the hype is gone most people are going to cut their losses and get out while they can. Driving the price further down. I don't think we'll see a real resurgence unless something groundbreaking happens. Bitcoins aren't easy to buy or use. Unless it becomes more accessible it most likely won't go any further. Edit: not to mention all the hacking and scamming that goes on in that sector. Cryptocurrencies were a cool experiment that I hope leads to bigger and better things.
OP I am still surprised it is above 50. It is hard to understand and access by a lay person. It is ruined by stories of wallets being hacked. The benefits of anonymous activity probably have limited appeal, and make it sound vaguely nefarious. It has no intrinsic value. It was nice for AMD when people were buying up graphic cards to make mining rigs.
Yeah, you are right. It has seen drops like this last one before. It has just been quite a while since it dipped down sub $300 for so long. It's more psychological than anything, I guess. I long decided never to sell any until after the 25 to 12.5 reward halving. But if it gets low enough, I might actually get some more. IMHO the real floor to this thing is demand for apps that need bitcoin (Ex: bitcoin payroll, bitcoin tipping like ChangeTip, and bitcoin remittance), and I don't think the demand for those services can buttress up even these prices, if I had to guess, I'd say that floor is somewhere between $50-$100, but I have little to base it on.
Hm. Curious: https://news.ycombinator.com/item?id=8837432 I signed up for a Bitstamp account yesterday. Pray to your gods that I do not sign up to any other services...
Yes, it word is that they were hacked, and they lost about 18k BTC from one of their hot wallets. It will be interesting to see if they make good on the losses. From what I recall, Coinbase uses Bitstamp as an exchange. The unloading of these BTC might have been a significant part of the price drop. Just let us know before you sign up to another service. :)