Personally I've speculated that businesses being unable to hold Bitcoin is a primary factor in Bitcoin's decline as it potentially means the more utility Bitcoin gains the worse it does, obviously inflation & speculation plays a role and other external factors/events. Just thought I'd post to see what people's thoughts are on the subject & whether we should communicate this angle more.
Bitcoin was more well known in 2014 than ever before with more VC investment than ever before and is now accepted by tens of thousands of businesses worldwide, yet the price generally, clearly trended down the whole year. Why?
I suggest the reason is volatility.
The majority of businesses immediately sell their Bitcoin for fiat.
"Mr. White says that Coinbase’s list of merchants is continuing to grow at a rate of 10% each month despite bitcoin’s recent price drop. The “vast majority” of them convert their bitcoin into dollars, he says." http://www.wsj.com/articles/even-bitcoins-fans-prefer-to-keep-cash-1419539916
The problem for the price of Bitcoin is that a sale IN Bitcoin equals a sale OF Bitcoin. Imagine if every time you paid in Dollars at a shop, the shop didn't keep the Dollars and had to immediately sell the Dollars for Euro. I imagine the Dollar would rapidly devalue. Unfortunately the more people shop with Bitcoin the more selling pressure there is.
When few people accepted Bitcoin the price could rise, because we were all hoarding it. New demand had to chase newly mined coins. Now new demand has to soak up high inflation and all the Bitcoin we spend that businesses are selling for fiat as soon as they get it.
Except for inflation, a Bitcoin Dam was in place but now the Bitcoin leaks out via businesses.
If the businesses held & re-circulated more crypto, it would make a lake that got bigger and bigger with new demand & whenever people replenished. But Bitcoin leaks out because businesses don't hold it. Currently we're just refilling a leaking dam, which wouldn't leak nearly as much with a stable crypto-currency option for businesses. Though Bitcoin's short term value is speculative, I think the 2014 trend shows Bitcoin is losing a lot despite greater investment, development, exposure and utility.
It's likely that once options like BitUSD gain traction which offer stability, interest and all the advantages of decentralization that this situation will reverse & crypto will rise especially as an average of $3 worth of BitShares backs each BitUSD, so a little demand could go a long way.
If that is a primary factor. I think we should communicate that more as the mindset now is that 'crypto is doomed/declining or not taking off' - if we can communicate that crypto is doing better than ever before but businesses not using stable BitCurrency options yet is a big factor in the downturn and once they do use BitCurrencies more the trend could rapidly reverse, that could be beneficial.