I believe that the moving average of number of transactions is a better indicator of the health of bitcoin than the price. If transactions are declining, then bitcoin is declining in use. If they are increasing, then adoption is growing, even if the price drops.
The price reflects the average market participant’s opinion about whether bitcoin will succeed or fail. Right now a lot more people believe it is going to fail, who used to believe it would succeed. To some extent this could be a self fulfilling prophecy, but I think that the fact that transactions have been steadily growing over the past year indicates that bitcoin is still doing fine.
Bitcoin has dropped over 90% and been proclaimed dead before and recovered. This does not mean that it is guaranteed to do so again, but it does mean it is possible it will do so again. Heck, the price could go to around $50-75 or so, and then recover and go to $10000 two years later! That would merely be a repeat of its history. If I had to give a 90% confidence interval of what the bitcoin price would be in a year, and I said “between $10 and $10000” I think I would still be overconfident, and that range would be too small. Bigger moves than that have already happened in its history. Literally anything could happen here.
The transactions can take place over a large order of magnitude. Bitcoin can experience healthy growth in transaction volume, and still shrink by many orders of magnitude in its tradability against the dollar or the euro or gold or whatever.
I believe that the moving average of number of transactions is a better indicator of the health of bitcoin than the price. If transactions are declining, then bitcoin is declining in use. If they are increasing, then adoption is growing, even if the price drops.
The price reflects the average market participant’s opinion about whether bitcoin will succeed or fail. Right now a lot more people believe it is going to fail, who used to believe it would succeed. To some extent this could be a self fulfilling prophecy, but I think that the fact that transactions have been steadily growing over the past year indicates that bitcoin is still doing fine.
Bitcoin has dropped over 90% and been proclaimed dead before and recovered. This does not mean that it is guaranteed to do so again, but it does mean it is possible it will do so again. Heck, the price could go to around $50-75 or so, and then recover and go to $10000 two years later! That would merely be a repeat of its history. If I had to give a 90% confidence interval of what the bitcoin price would be in a year, and I said “between $10 and $10000” I think I would still be overconfident, and that range would be too small. Bigger moves than that have already happened in its history. Literally anything could happen here.
I have to note you didn’t answer any of the questions in the grandparent comment :-)
The transactions can take place over a large order of magnitude. Bitcoin can experience healthy growth in transaction volume, and still shrink by many orders of magnitude in its tradability against the dollar or the euro or gold or whatever.