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Submission + - Bitcoin Bubble: Should Fans Be Celebrating?

F9rDT3ZE writes: Due to its unique features, the economics of Bitcoin are difficult to grasp even for those with advanced degrees in economics. Following generally-accepted economic thought, though, a number of commentators have started to point out that Bitcoin's rise in value relative to other currencies means that it is experiencing deflation (its value relative to what 1 BTC purchases is going down, just as if a Big Mac cost $2 instead of $3), and that most experts believe deflation is unwelcome for currencies because it incentivizes hoarding (often followed by massive inflation when hoarders sell off, sometimes in waves produced by crashing prices). Does the price bubble in BTC indicate not its strong future as a virtual currency (as promoters like Falkvinge suggest), but instead mark the end of its usefulness as the medium of exchange for which it was designed? And are you spending your bitcoins now, or holding them?

Comment Re:Not only that (Score 1) 583

Why so sure?

I think its fair to say the bond market is pretty pumped up right now.

Consider also that $500bn volume is buying and selling. Typical price discovery action. Then also consider a chunk of that is just HFT.

China has the ability to drop a $1.5t sell order on the market. That is going to hurt whichever way you look at it. I doubt everyone else is going to sit idly by whilst the price plummets.

What is preposterous is suggesting that things like this cannot happen.

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