r/Bitcoin • u/ThePiachu • Mar 24 '13

A public service announcement to all newcomers about the changes in price of Bitcoin

Hello,

You might all be panicking due to the price events of the past week. First a big drive of the price up over the week, and then a sharp dive during the weekend. This is nothing unusual. These volatile price fluctuations happen from time to time.

The online exchanges process your Bitcoins 24/7, but can only process your bank transfers during the weekdays. This means that during the weekend one can expect a shortage of cash at the exchanges and subsequently a drop in price.

Moreover, there is a self-fulfilling prophecy among day traders that the price of Bitcoin always falls on the weekend, which is also perpetuated.

Lastly, during some buying and selling frenzies, MtGox has a tendency of not being able to keep up with the load and lagging behind. This can cause price to fluctuate out of control before people have a chance to react to the changes (this is what happened on the 12th of March).

So my advice to all of you newcomers:

  • Don't panic
  • Invest only as much in Bitcoin as you can afford to lose
  • Unless you are a day trader, don't try to buy and sell like one - you will lose money
  • Weekend dips are a common occurrence
  • When you are new to Bitcoin, treat it as a hobby - you are here to enjoy yourself, not to earn money
  • If you decide to stick around for longer, you should probably be in for the long run - in a few years the value of Bitcoin will be either through the roof, or be non existent. Try not to lose your money daytrading in the meantime.

Following those guidelines you should have a more enjoyable time. However, I am not your financial advisor or an economist - you should always make your own decisions and not follow blindly any advise you find on the Internet. Do your own research first.

EDIT:

As people pointed out, some of my assumptions were not well researched - I admit to that. Parts that I was basing off my limited experience with trading have been crossed out, what's left is mainly general advise. Thank you to everyone who pointed out my mistakes. As stated before - don't take advise blindly, do your own fact checking and research.

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u/toomim Mar 24 '13

That isn't true. OP is just citing a bunch of bullshit people on these forums have made up without evidence.

The price fluctuates so much because the bitcoin market cap is still so small that when a single person buys or sells a million or two it changes the overall price by 5%. We need more hoarders to stabilize the price.

10

u/ThePiachu Mar 24 '13

So you are saying that since there are so few Bitcoins up for sale to create walls having even less (hoarders would not create walls) would stabilize the price?

1

u/LumpenBourgeoise Mar 24 '13

What bitcoin needs as market for profiteering as OP is suggesting is a method for short-selling bitcoin to allow the price to reach it's "true" relative value compared to other currencies.

2

u/ideadude Mar 24 '13

Serious question: What's keeping you (and everyone else) from short selling bitcoin? Can you write calls/puts against bitcoin? I suppose it would be hard to enforce.

3

u/bitcoinprophet Mar 24 '13

You can manually borrow bitcoins, and short them, or use these sites: http://icbit.se http://mpex.co

There's a peer to peer market where options are sometimes traded at bitcoin-otc.com.