When I left off with Part XII, I commented on the relationship between currency preferences and ideology, arguing that bitcoin-bugs are basically just goldbugs, updated for the computer era, and that we should be aware of the ideological history of currency preferences. When conducting transactions, though, most consumers just want to conduct transactions smoothly and easily, so while bitcoin-bugs will pay transaction costs for the ideological satisfaction of using their favorite currency, most consumers won't.
As has been clear for a long time, the market fluctuations in the price of bitcoin are driven, not by currency traders converging toward the proper exchange rate between dollars and bitcoin, but by market speculators buying bitcoin at an inflated price hoping to turn around and sell it to a bigger sucker at an even higher price because for a while, that strategy was successful.
You just can't keep that going forever. That plan, for the housing market, is what crashed the entire world economy back in 2007 and 2008, in case anyone forgot. Fortunately, not many people actually own bitcoin or get involved in this scheme, so bitcoin can't crash much of anything, but... remember 2007-8. This is a stupid plan. House flipping made some people money. Until the housing market crashed and took the world economy with it.
There came a point at which the speculators and flippers got out of the market. For a while, anyway. Real estate is a tempting market for scammers and con artists, and it always will be. Just sayin'... Sometimes, when an asset bubble bursts, there are longer term consequences. Consider the tech bubble from the 1990s and early 2000s. There were a bunch of companies that pretty much did jack fucking shit. But, venture capitalists and market speculators threw money at any company that put a ".com" in their names because... well, because. People were dropping out of college to earn six-figure salaries to build web pages. Yes, really.
That couldn't last. The companies that had no business plans just went belly-up and their stock collapsed. Since then, the tech sector has done quite well, market-wise, and investors haven't been willing to invest in tech companies that didn't have business plans. I guess they learned that lesson.
Once the speculators got out of the market, assets wound up being priced appropriately. For a lot of those companies, that meant... well, they couldn't give stock away.
The point is that markets need to kick the damned speculators out in order for assets to be priced appropriately. The speculators are still driving things in the bitcoin market, but once they're gone, it won't be quite like the tech bubble bursting with bitcoin. Why? Ideology. That, and criminals.
Remember that there are a couple of types of people drawn to bitcoin: techno-libertarians who are just making an ideological statement, hipsters who just want to be different (fuck you, I'm not that kind of hipster), and crooks-- people who are either moving illegal goods, or just avoiding taxes. They'll still use cryptocurrencies. Maybe not bitcoin. Hell, the hipsters will probably prefer Dogecoin because it's even more ironic. Still, that's a market.
What you may see now in the analysis is a bunch of people doing conventional stock analysis of whether or not bitcoin's price has hit important "technical" levels that indicate either stabilization or further decline. That completely misses the point because bitcoin is not an asset backed by anything. They can't even use the kind of analysis that would usually be done for currencies. Bitcoin is way too volatile, which as I keep reminding you, makes it useless as currency anyway. Speculators are freaking out because of rapid price drops. They should. Bitcoin could climb again. Or drop more. There isn't history for anything quite like bitcoin, and the people involved in this particular market speculation have no clue what they are doing. Obviously. So, a lot of them are losing a lot of money, unnecessarily.
At some point, though, they will get sick of losing money on that volatility, and leave the bitcoin market. When they do, there won't be the highs anymore, because the market highs are driven by speculators. Where will it settle? Wherever the hipsters, techno-libertarians and crooks want it to settle. We have no clue where that is, but if I had to guess based on empirical data, some point around where it was before all of the stupid market speculators jumped on board. Pick a point representing that, and there's your price.
Remember, though, a currency doesn't work as currency unless it is a stable store of value. Any movement, up or down, and it is useless as currency to one party in any exchange, and since bitcoin has no value as anything other than currency, its movement itself makes bitcoin a joke.
Bitcoin is bullshit.
I think I have probably covered most of what I want to cover here. At some point soon, I'll wrap this up, do a summary and compile the links. Besides, with the shutdown possibility, and politics ramping up again, I don't need to keep stalling. Perhaps I'll come back to this, but look for a wrap-up post on this soon.