What Satoshi said about price action

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Bearing this in mind and just thinking logically; from a purely finance point of view, what a prudent mining company (btc or other) would do when planning production, is to hedge future production plans either partially or in full via futures markets or swap contracts. I have experience doing just this when working in finance for a coke and coal production company. If a company has committed to the investment of the capital required to produce the bitcoins (i.e. the miners) then they will short the futures market aggressively, particularly when the futures prices are greatly above the cost of production in order to lock in guaranteed gains. This has particular consequences when there is also other supply side issues like the mt Gox coins and demand side issues like the public losing interest due to dwindling prices.

It is reasonable to assume that there is a floor price which will be met in a market which is largely dictated by supply. Miners will contract their supply somewhat if the marginal cost then begins to exceed production.. simple economics therefore would suggest that there will be a self corrective mechanism which would keep the floor price around the cost of production which by all accounts appears to be $3-4.5k.

For this reason alone, this is a great place to have speculative bids in my opinion.

Sources:

Myself: Previous experience in Finance at a mining production company.
crypt.la/2014/01/satoshi-nakamoto-quotes/
buybitcoinworldwide.com/mining/pools/
elitefixtures.com/blog/post/2683/bitcoin-mining-costs-by-country/
reddit.com/r/BitcoinMarkets/comments/4o5fa5/napkin_math_total_global_average_cost_to_mine_a/
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The Economics of the Bitcoin Cycles
Beyond Technical AnalysisBitcoin (Cryptocurrency)BTCUSDTechnical IndicatorsTrend AnalysisXBTUSD

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