
Ask HN: Why is Bitcoin's value rising so fast? - Michie
What is causing it&#x27;s rise and do you think there will be a sudden rush of downfall to it soon? What may cause the downfall of it?
======
xchaotic
By design, Bitcoin is scarce - there will only be 20999999.9769 bitcoins ever
made. Contrast that with USD where more and more money is being printed or
added to the system via: quantative easing increasing federal debt ceiling So
that is one factor. The other is simple supply and demand - more and more
people want to invest in bitcoin for speculative reasons, not as a means to
buy goods and services but to heard in hopes that the price is going to
continue going up. That removes even more bitcoins from circulation, driving
the price even higher. To sum up: supply of bitcoin is limited by design, the
shortages are made worse by speculators. It's not too different from
speculators driving iPhone or Nintendo prices up on secondary markets. Same
can be said some cars and many luxury good in general - look up veblen goods.

~~~
theklub
It's not really scarce though because you can divide up bitcoins into tiny
pieces. It's more of a mental scarcity.

~~~
asafira
I don't think that means it isn't scarce: if there was a supply of water (and
you could buy it in any amount) and people were buying it up and selling it on
a secondary market, it would still cause the price to go up.

~~~
theklub
Water isn't bitcoin though.. you can meaningfully divide a bitcoin down to
.0001 and give it to someone. You can't really trade drops of water.

~~~
asafira
Why can't you trade drops of water? If people were interested (for eye drops
it aerosols, for example), why not?

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alva
CME has announced they intend to introduce a Bitcoin Futures product. If this
is allowed it will allow institutional investors (think pension funds, hedge
funds etc) to legally indirectly invest in bitcoin.

The amount of money in the hands of institutional investors is huge, multi
hundred billions. If a minuscule numbers of these investors put a tiny amount
of their portfolio in bitcoin, the price will rocket even further.

------
cs702
Because it provides a _highly uncorrelated alternative_ to both (1) precious
metals like gold and (2) sound currencies like the US Dollar and the Euro.
Bitcoin will coexist with them for as long as the Internet exists and
encryption works.

In Zimbabwe, where most citizens don't have sufficient or easy access to a
sound currency, the price of Bitcoin has skyrocketed past US$10,000:
[http://www.cnn.com/2017/10/31/africa/zimbabwe-bitcoin-
surge/...](http://www.cnn.com/2017/10/31/africa/zimbabwe-bitcoin-
surge/index.html)

Here's a link to something I wrote in 2011 about Bitcoin's potential for long-
term price appreciation -- in it I mention not only Zimbabwe's longtime issues
with money, but also those of other countries, including Argentina in the
early 2000's, Belarus in the years leading to 2002, Bolivia in the mid-1980’s,
Brazil in the early 1990’s, Indonesia in 1997, Mexico in December 1994, Poland
circa 1991, Russia in August 1998; South Korea in 1997, Thailand in 1997, and
Yugoslavia in the early 1990’s. This is far from a complete list of countries
that have had major currency problems. Currency crises are pretty common as
you go back in history.

[https://cs702.wordpress.com/2011/05/29/on-the-potential-
adop...](https://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-
price-appreciation-of-bitcoin-in-the-long-run/)

------
sharemywin
The biggest factor behind the rally was the announcement of Chicago Mercantile
Exchange’s decision to offer Bitcoin futures.

In an earlier rise, coming after the Aug. 1st fork, Bitcoin hit a massive
rally that was attributed to Wall Street flooding into Bitcoin once the heat
was off from the so-called ‘civil war.’

[https://cointelegraph.com/news/the-what-and-why-bitcoin-
pric...](https://cointelegraph.com/news/the-what-and-why-bitcoin-price-
reached-7000)

------
tobltobs
There is yet another Bitcoin fork (seg2wit) coming. If you hold BTC at the
time of the fork you might get free money like with the last fork (bitcoin
cash). If and when it will fall? Hard to predict, but it sure looks like a
Ponzi scheme.

~~~
shanusmagnus
This fork is Segwit2x, and is considered to be an adversarial fork -- some
even consider it the first battle in a civil war. The 'dividend' of getting
free money does not apply here. In fact, a lot of folks in the Bitcoin
community think that the price of BTC is actually signficantly _depressed_
because of this uncertainty. It's almost certainly not contributing to the
price rise.

------
MrFantastic
Any asset that goes up 500% in a year gets a lot of press as people fear
"missing out" on a "sure thing". It's a positive feedback loop.

I don't see the intrinsic value of BTC although I think Blockchain is a great
invention.

------
xendo
Some reasons behind bitcoin rising so fast: CBOE announces plans to launch
futures and options trading for Bitcoin[0]. Amazon buying cryptocurrency
domains[1]. Bitcoin segwit2x hard fork coming[2]. Snowball effect

If you are looking for an investment advice for cryptocurrencies then a
Fortune Teller may be your best bet, but please don't invest more than a
couple % of your savings.

[0] [https://seekingalpha.com/article/4118265-bitcoin-cboe-
trade-...](https://seekingalpha.com/article/4118265-bitcoin-cboe-trade-
options-futures-push-bitcoin-higher) , [1]
[https://www.cnbc.com/2017/11/01/amazon-buys-crypto-
domains-b...](https://www.cnbc.com/2017/11/01/amazon-buys-crypto-domains-
bitcoin-ethereum.html) , [2]
[https://www.forbes.com/sites/laurashin/2017/10/31/what-
will-...](https://www.forbes.com/sites/laurashin/2017/10/31/what-will-happen-
at-the-time-of-the-bitcoin-hard-fork/#17f1c89337d4)

~~~
celticninja
The domains story is old news being brought up again. IIRC they were bought in
2013.

------
nfin
You should look at it in a logarithmic scale (like all things that has been
growing exponentially):

[https://bitinfocharts.com/comparison/bitcoin-
price.html#log](https://bitinfocharts.com/comparison/bitcoin-price.html#log)

Here you can see how long it takes to double or get 10x bigger. And you see
that at times bitcoin did grew faster (the curve was steeper at some moments).
You also see that the corrections were bigger... so volatility does seem to
decrease (until now).

So it is not new that is grows fast. Why it does grow fast? I prefer to let
this question open. There are many different possible answers. Maybe the
actual system has no solid fundamentals? (if every runs to the bank, the is
not enough there for everybody o_o). Or the younger libertarian generation
prefer it to gold? Or it could bank the unbanked of this world (once lightning
implementations in bitcoin and other improvements are past alpha/beta
stadium)? Or because venezuela might not be the last state with hyperinflation
and cryptocurrencies might be the alternative (once scaling through
lightning/... is improved)? Or a new way for machines to exchange with each
other?

Obviously speculation on some of these (and other) reasons is still
dominating... but it may mean that people seem to belive these secenarios
might happen

------
skypedog5
In a way, the same problem exists with Bitcoin where the supply is basically a
fixed quantity that expands at less than 1% a year while the number of those
wanting to speculate in it, expands like a pyroclastic eruption. This drives
the price ever higher, increasing volatility and making it even less likely
that anyone would adopt it for normal transaction activity. The participant
speculators smack their lips while they drive their protege currency further
and further away from it’s intended purpose. The same thing happens in
conventional Mining stock promotion, the price of the stock becomes the
material and tangible nature of the enterprise while the plans, potential and
possibilities of the ore body, the very thing that speculators should be
considering, become more and more amorphous and immaterial. In simple terms,
the cart is before the horse.

------
steeleduncan
The success of bitcoin (amongst other cryptocurrencies) has led to great
investor interest in blockchain techologies. Investments in these technologies
are generally made by way of an ICO, usually denominated in bitcoin and/or
ether. This increases demand for bitcoin & ether which raises the price and
generates even more investor interest in blockchains/cryptocurrencies, leading
to further ICO's and so on.

There are of course speculators, and an increase in the number of businesses
accepting bitcoin for regular transactions, but I suspect the ICO boom is
likely the driver behind the recent spike.

It is the same mechanism noted by Paul Graham in his time at yahoo -
[http://www.paulgraham.com/yahoo.html](http://www.paulgraham.com/yahoo.html)

------
theklub
I've said this before, my non-educated analysis of the situation... There is
no reason for it not to go up..there is a finite amount and people are buying
because its going up. Each time someone buys bitcoin it goes up because
typically people are only going to sell above what they paid. It's not a
stock, there isn't a huge company behind bitcoin trying to satisfy people.
It's a store of value and a way of transferring value. The only reason it
would go down is if the network gets hacked or the government makes laws
against it or some pure panic situation (which has happened before). Other
than that why would something like bitcoin drop? People stop being interested
but with the price going up and the news coverage it advertises itself.

~~~
Xixi
It's trust: if people in general stop trusting Bitcoin its value will very
rapidely converge to nil. Because there's nothing to back up its value, it
will stay there and never recover, and will be remembered as the 21st century
tulip bulb.

On the other hand take gold: as a metal, it has little practical use (compared
to its availability, it's not _that_ scarce), yet its value is still up there
after several thousand years of use. Why? Because there's a consensus that
it's worth something, and trust that this value will remain (and even go up)
in case of war/disaster/etc. Bitcoin could be a new gold. That's highly
hypothetical.

Don't invest what you cannot afford to lose.

------
eregorn
I've speculated that it might be related to ransomware picking up in recent
years. In particular, wannacry and notpetya coincided with some of bitcoin's
surges in price.

Before this, purchases with Bitcoin not for investment purposes were niche in
the illegal or attempts at regular purchases that only involved a few users.
After these large-scale attacks, Bitcoin has basically been forcibly
introduced to the populace at large to (possibly) retrieve their data.

I could argue that this has finally attached Bitcoin's value into something
more than trust: data. Hence, bitcoin's value is mirroring the value of
another increasingly valuable commodity.

------
cornedor
From what i've read, probably people selling their alt coins and buy bitcoins
to get "free money" when the hardfork happens this month. That also explains
why almost every other coin is going down.

------
6d6b73
It's rising because people worry that if they don't get on it soon they won't
be able to get on this newest "get rich quick scheme" later.

------
mapmeld
\- price has been less variant (moving around between $5600-6000) from mid-to-
late October, so maybe catching up to a rising trend

\- up and down and back over $7000 - Bitcoin tends to do rapid swings around
$1000 milestones, probably due to buyers and sellers setting their next bid
for that point

\- China rumors and lack of China rumors (though this can be pointed to for
any movement)

\- upcoming Bitcoin fork causing uncertainty (as mentioned by other
commenters)

------
gyvastis
Around November 16th there will be a fork to a new coin Bitcoin2x. The moment
this happens markets will put the same amount of Bitcoin you have in Bitcoin2x
to your wallet. I think at least for this month this is the sole reason the
prices are exploding.

------
auganov
I'd wonder how much of that is new money poured into the ICOs. Selling
something in the crypto-world usually means trading it for BTC. So I'd imagine
all crypto money finds it's way into bitcoin eventually.

------
DeepYogurt
No idea and yes. Any number of things could cause the downfall, but it may
come out that some party has been pumping the value or a big sell off might
occur. /comments of a bitcoin hater.

------
thisisit
Unfortunately there is no answer to it. If someone could know/predict the
reason, they might have bought a lot and became rich.

------
jbb67
Mostly a bubble. Partly more people realizing that it's interesting and
wanting to try it out. Partly people wanting an alternative to their national
currency when it's weak or difficult to exchange.

I'm hoping the value becomes much more stable so I can go back to using it as
currency and not as a high risk "investment" that I'm afraid to spend.

------
etuil
HN guys are generally blockchain haters. Not the best place to ask...

~~~
tobltobs
What would be a good place to ask?

~~~
argo_
reddit.com/r/bitcoin

