Two summers ago, coins fell down to 15, bounced up to 20, then back down to 15, then to 17, then slowly down to $3 after that.
Will history repeat itself? Is $50 like the old $15 support level two summers ago? http://bitcoincharts.com/charts/mtgoxUSD#rg730zczsg2011-04-30zeg2011-10-31ztgSzm1g10zm2g25zv
This time may be different due to broader and deeper media exposure and markets, but the flaws of btc (growing blockchain, long confirmation times, etc.) open the door to other currencies displacing btc. The usual response to that is that btc already has critical mass and resistance to 51% attacks, but they said similar things about friendster attaining critical mass (like social networks, currencies get stronger or weaker depending on how many people use them and how intensely), and look how that turned out. Fact of the matter is that a lot of people are learning about distributed currencies now and many attempts at better ones will keep getting made. And a lot of money that would otherwise go to btc will go to those instead, because who wants to be a late adopter on btc when they can scoop up bucketfuls of others for cheap in the hopes of higher returns? (Note--i actually dont agree with this logic 100% but some people obviously do, else you would not get anything for alt currencies.) And heck even miners are doing it--it's like a latecomer to a gold patch where you probably will get SOMEthing for your efforts even if it doesn't cover your cost of mining, learning about another patch where he may get zero or may get an absolutely huge return... some miners will be content to mine the existing patch and the more adventurous will go mine at the virgin patch.
Furthermore, do not overestimate how much money is in btc... The amount of money NOT in btc absolutely dwarfs btc market cap (which is less than $1 billion). This is like Friendster: it was the first big social network, but the number of Friendster users was much, MUCH fewer than the number of people NOT on Friendster. Myspace seized that opportunity and outgrew Friendster. But even Myspace wasn't that big compared to the people NOT on Myspace. That gave Facebook an opportunity to grab all the people NOT on Myspace and for a significant share of Myspacers to move over to Facebook. Once you get to Facebook-size levels of global coverage, you probably do get enough scale to fend off rivals, which is part of why Google has made such slow progress with Google+. But note that even Facebook doesn't have enough of a lead to fend off Google entirely; Google+ has been slowly gaining traction. Bitcoin is nowhere near Facebook levels. Bitcoin is more like the Friendster of digital currencies, where it is the first big network but is tiny compared to everyone NOT on the network.
So summer 2013 prices may well follow a different path than 2011.
If you guys like speculation, I recommend going into the big-boy leagues and playing with commodities derivatives, FOREX, etc. Hell even equities and bonds. Way more liquid and fun. But dont spend more than you can afford to lose on any kind of speculation--bitcoin mining, forex, stocks, or whatever.
Watching Mt.Gox arbitrarily shut itself down and limit you to $1000/day withdrawals, or $10k/month, is sketchy and not fun. I just can't trust an unprofessional exchange like the Magic the Gathering Online EXchange (which is what Mt.Gox stands for... yes that really is how bitcoins get traded, on a site originally designed for the exchange of trading cards for a kid's game). They'll probably screw up again eventually, like they did with their unsalted MD5 password fiasco a while back. We definitely need a more professional exchange, but Gox is where the liquidity is at unfortunately.
P.S. Apparently big players (market makers) get to trade on gox even when gox is officially down, according to bitcointalk chatter. I guess because the market is so thinly traded that market makers get to have that kind of leverage over gox. Not sure people knew that or not. Even less reason to trust gox.
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