Ever thought: “I should buy silver bitcoin.” Or, how about, “i should sell some silver for Bitcoin.” Well, depending on when you had these thoughts, the idea could have been a great one or a terrible one.
Buy silver for Bitcoin at $50 silver and $1.25 Bitcoin, and you might be no longer with us. R.I.P.
Buy silver for Bitcoin at $266 Bitcoin and $30 silver, you’re probably looking at life through a much rosier hue.
The history of Bitcoin and everything is very short. For that reason, not much data is available in any recognizable historical context, especially when you join two tiny markets: bitcoin for silver. But, looking at the numbers can give us a sense of where this is heading, especially in the context of pre-conceived notions many of us have about the future, such as dollar devaluation, technological advancement or whatever you feel the future holds.
Bitcoin came into existence on October 31, 2009. But this was hardly the first time one could buy silver for Bitcoin, unless it was a most likely rare in-person P2P trade. At that point, the Bitcoin market was a speck of dust upon the face of the planet’s economy. To buy silver with Bitcoin was a trade that hadn’t come to fruition.
Since then, and overwhelmingly so, to buy silver with Bitcoin has been an expensive exercise today. Today, however, when you buy silver with Bitcoin, you’re getting a relatively cheap silver price.
On October 31, 2009, the price of silver was, well, right about where it is now. One year before Bitcoin was unleashed into the wild, silver was just $12. Shortly thereafter, it had rebounded back to $20. Bitcoin’s nascence coincided with silver bull market in April 2011. Bitcoin has since bore witness to a virtual crash of the silver price compared to its high. Though, over the last decade silver has been a valuable store of wealth, from bitcoin’s perspective silver is very cheap compared to yesterday. The difference between buying silver with Bitcoin then and buying silver with bitcoin now is a completely different story.
As you can tell, towards the end of 2009, as Bitcoin was a nascent creation, one needed 1900 BTC to procure just one ounce of silver, which sat just below $20. This was before silver would nearly break the $50 an ounce psych-record. Then, before Bitcoin skyrocketed, all one needed was approx. 49BTC per ounce of silver. Soon, all one would need, with silver at $35 at the beginning of this past two year correction, was .86BTC.
Note the market caps. At the beginning of buying silver for Bitcoin, the market cap for Bitcoin was nil. By April of 2013, the price of Bitcoin was 250bn. In the latter time, commercial hedgers (read: banks) were negative net, say, 25k, while as Bitcoin rose to $260 or so commercial hedgers were heading towards 0 contracts short. Today, they seem to be approximately 10k contracts short on silver.
At GoldSilverBitcoin, our charts display the price of gold, silver, platinum and palladium in terms of Bitcoin. They are my personal favorite part of the website.