When most merchants take bitcoin for a purchase,
they immediately sell for dollars.
This is ignoring the other side of the equation. For someone to spend bitcoins, they had to have bought them for cash.
Bitcoin has declined lately because of 3 main reasons:
1. There was a massive 10x price increase in the past year or so. (You could call this a bubble.) Now a 50% drop from the high just means a 5x increase in the past year.
2. Much of this growth was due to China speculation, and with the Chinese government cracking down on bitcoin ownership and exchanges, this pops much of the speculation.
|This is ignoring the other side of the equation. For someone to spend bitcoins,
|they had to have bought them for cash.
This is not true. 3600 coins are mined every day. The people with the most incentive to spend coins are early miners who have a significant chunk of their net worth in Bitcoin.
Bitcoin has declined lately because of 3 main reasons:
1. There was a massive 10x price increase in the past year or so. (You could call this a bubble.) Now a 50% drop from the high just means a 5x increase in the past year.
2. Much of this growth was due to China speculation, and with the Chinese government cracking down on bitcoin ownership and exchanges, this pops much of the speculation.
3. Mt. Gox going insolvent.