While yesterday I was lamenting my inability to buy bitcoins as the market fell. Today, I'm kind of glad of it since there were many false bottoms, and I don't think we're seen the real bottom yet.
So why did (is) the market falling? The Chinese government came out against allowing their banks to speculate on bitcoin, and it was the Chinese banks (in large part, since they invested so heavily) that caused and persistently inflated the bubble. So, now that they're pulling out and liquidating their coins, the bubble is bursting. And of course the slide, has urged other speculating banks out too. After all, banks aren't in the business of losing money by betting on a currency that is losing value - are they?
If bitcoins resumes its original trend before pump and dump mania hit from the speculative market... it may well wind up at about $400 USD per coin. I arrive at that estimate by inserting a regression line while ignoring the bubble. About $400 a coin is where it would have been without the speculation bubble.
With that said - I think it has further to fall and we won't see how things shake out until about 5-6 days after the slide started. So I guess we'll see the shape of things to come by next Wednesday. (12/11/13 or if you're in Europe, 11/12/13. LOL).
In truth I suspect it'll wind up a bit higher than $400 since a lot of coins will go into "cold storage" and won't be in circulation. So that will decrease the supply as the demand returns to a more stable and realistic state. There's a conversion point between supply and demand - and hoarding will drive that up a bit. If were to guess where it will stop... my gut (and some calculations) suggest $535ish.
Oh! And never forget... this is all thought exercise for me. So I could be wrong, wrong, wrong!
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