We find an uncanny similarity in the bitcoin price track over 8+ months to a prior gold price track over 8+ years. Then the fun evaporated

The bitcoin price has been having a rollercoaster ride recently.

Mainly it has been going up in spectacular fashion. But there have been sharp corrections as well.

Bloomberg published this chart on Tuesday, graphically tracking these movements since the beginning of 2017.

But that chart looked familiar.

Here is the gold chart from 2005 to 2013, an eight year period.

Two thoughts occur: One is that the bitcoin price trajectory is quite similar to the gold one but bitcoin is gold on steroids. Bitcoin's price rollercoaster is happening a lot faster.

And the other is, what happens next? If gold is the precursor, perhaps that is suggesting that bitcoin may now just wind off on a slow steady period of price atrophy. No big collapse, just a tailing off.

But of course, gold has other uses and values than bitcoin does. Perhaps that is what has kept gold holding on to its 2009 price levels?

What does bitcoin have? Oh yes, (like gold) a medium of exchange for the underworld.

Maybe that's enough.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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9 Comments

Maybe it is just another measure of inflation, like fine art prices and old cars, or BID on NYSE. That is it provides an alternative measure of the varying purchasing power of other virtual commodities, such as the NZD and USD.

"What does bitcoin have? Oh yes, (like gold) a medium of exchange for the underworld."
What an ignorant statement. The USD is the preferred currency for the underworld. Every drug dealer in the world accepts fiat money. Bitcoin and gold not so much..

The fun hasn't even started yet, on our current trajectory of money printing and debt inflation hyperinflation is the end result. Only assets of limited supply will be desirable(Housing, Gold and bitcoin etc).

The fallacy of current mainstream thinking is the obsession of price per unit. They are missing the fundamental value of bitcoin - Personal sovereignty of money.

Exactly - 'the bad people use it' is a pathetic argument and intellectually dishonest - if only the US government used it (printing money is not really on the up & up)

The problem I have is that it is hard to buy when price pulls back (short term) at lower prices in NZ. Does anyone have a solution?

The bigger Australian exchanges if you manage get on one. Some of them accept transfers direct from NZ banks accounts. You would need to have funds available in the trading account to take advantage of the lows.

Personal sovereignty of money.

That's a really cool way of promoting the concept of bitcoin. We shouldn't allow corporations or even governments to track and control how we spend our own money. Many people have been demonetized by being banned from Paypal or Patreon or similar because they expressed thoughts that are deemed politically incorrect or were considered "hurtful" even though they were not unlawful. The terms of use clause can be used to practically ban just about anyone from these platforms. Private companies don't even need a particularly good reason even though they are virtual monopolies. Bitcoin may be able to be used to foil these oppressive practices.

Thought experiment - something happens, and governments ban bitcoin and also ban gold. Ten years elapse and much changes. What's the purchasing power of your 1 kg of gold vs your 6.2 bitcoins.

Thought experiment - The global economy recovers just fine. Zerohedge was all wrong. In 20 years time how much is your 1 kg of gold worth, how much will your 6.2 bitcoins be worth.

IMHO gold has huge upside potential and moderate downside potential whereas bitcoin has the opposite.

You have to wonder when one guy can push the price up so much. http://www.zerohedge.com/news/2017-11-13/mysterious-bitcoin-dip-buyer-id...

Bitcoin will really take off when we have more bitcoin ATM machines. If anyone could go to an ATM, put in cash, then pay using bitcoin or convert bitcoin to cash it could become quite popular.
https://en.wikipedia.org/wiki/Bitcoin_ATM

David, you forgot to mention Bitcoin blockchain is also a ledger of account. All transactions are recorded on the blockchain forever. It can be tracked and using it as a medium of exchange is probably not the smartest idea if you're up to no good. Better off using cash for that.