Another note on Bitcoins

Although I’m still not inclined to recommend bitcoins as an investment (or even ‘a sane thing’), I do have to admit I find it absolutely fascinating as a market phenomenon. BTC prices function not unlike the real stock market, except in 100x fast forward. Take this graph for example.

Makes sense, right? This is the typical way that a market bubble works. This was how the IT bubble of the late 90’s/early Naughties worked. Bitcoin has actually gone through this several times. In fact, here’s the price graph from right now:

Geee, wonder what phase it’s in now. For the record, it had hit $395 earlier today. In about 8 hours it’s been down 90 points, recovering slightly. 

This isn’t a one-time thing, though. Look what happened in April, and again, compare it to that graph above:

Unfortunately I couldn’t get the graph on my display to size down properly and get the greater decline, but you get the idea.

For the record, my data is coming from this site

But you can perhaps see where my interest is coming from. You can see it crash, recover, bubble, and crash, all in real time. I suspect there’s been one or more entities that have been propping it up, and frankly, there’s a lot of opportunity and reason to do so. MTGox, the main bitcoin exchange, is making money on it, so they have reason if nobody else does. The allegations that this has become a convenient source of laundering (that totally won’t work given that the blockchain actually stores all of a given coin’s transactions for convenient traceability) would also give a large, powerful organization with an interest in higher prices.

Or it could just be moronic speculators.

For my part, I still have the funds I gained when I sold my single coin. Since it’d be a pain in the ass to get them out of there, and for my own amusement, I’ve set a ridiculously cheap buy order with the funds (to buy at $100). If the crash goes far enough I’ll buy, wait til it gets up there, sell, etc. Get myself a little day trading going on. Why not? It cost me exactly nothing. 

up Up UP!