Bitcoin Forum

I am calling the 2013 bubble-burst completed. This is based upon the observation that the 2013 bubble was structurally more similar to the August 2012 event than the 2011 one.

March 28 to April 1st - pre-2013 peak. Stability in low 90s.
April 18/19 - same during period of large oscillations.
July 19-23 ongoing - more stability in the 90s.

I also believe that the reward halving at the end of Nov 2012 was the key driver in the appreciation of the BTC fxrate to a new level. Markets always discount known data with a future effect. So for four years the market lived with the information that the 21 million cap probably would be effective. The reward halving proved that it will be effective. This is an important distinction, and a successful reward halving paradigm is now properly priced in.

The repricing likely coincided with large acquisitions (such as the Winklevoss holding being accumulated), coupled with news-frenzy and feedback from the telegenic but BTC-irrelevant Cypriot bank crisis, likely caused over-compensation, so the fxrate ran 150% higher than the fundamentals warranted.

That 150% surge has now dissipated.

Any takers on this reading?

If the "bubble-burst" is done, any speculation on where we go from here?  Will it be a gradual climb or a crazy spike or series of spikes?  I suppose a nice gradual climb would be more stable and perhaps "better" or with less risk of another "bubble" to burst.

I think we saw strong buying sentiment in the $60s which suggests it was either the bottom or close to it. I don't know if comparing to 2011 or 2012 is particularly valuable -- the Bitcoin market has grown so fast that the market looks utterly different with each passing year. The sell-offs were no less rash than the bubble inflation, and each took roughly the same time. The market has a long memory though -- we're still a fair way off from sustained panic buying.

(By my own calculations, BTC can't depreciate much further than mid double-digits appreciable amount of time, if the available BTC is to have sufficient carrying value for buying goods and services, so I've always disagreed with the 'single digits' folks)

There is a risk of going down again -- but it strikes me as less risky to buy below $100 rather than sell -- I am sure the next peak will be higher than the last.

Right now I see a big mess though. Why buy on Gox when you can buy on BitStamp for $7 cheaper? But if you arbitrage and sell on Gox, BitStamp price follows the Gox price direction and depreciates further. Without putting too fine a point on it -- it's fucked.

We have billions of such threads, I beat $1 trillion - $10 trillion as the new norm!

You lost me here:


So you are saying that because BTC was priced in the low 90s for 12 days in the past 4 months, that that price is the new norm?

That's quite a stretch.

Second, I can't even find the so-called stability you mention on the dates cited. Take a look at the chart and point me to the "stability" in the low 90s at the end of March? It looks more to me as it was just zipping past that price point on its way to $240.

Third, again, look at the chart! There is no indication yet that a bottom has formed. You only know that after the bottom is formed once you move to a new trend with higher highs and higher lows.

http://bitcoincharts.com/charts/chart.png?width=939.76666&m=mtgoxUSD&SubmitButton=Draw&r=360&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=0&l=0&p=0&

I think I saw threads like "$X is the new $Y" for almost any values of X and Y  :)

Numbers seem to put a psychological attachment to what the price of something should be. It is amazing that when we were at $7 that was the "NEW NORM". Now a year later and $90 is the "NEW NORM".

Next year $1200 will be the "NEW NORM"?  lol...just saying

Nope, it looks like a bull trap to me. Small spike to (maybe) 95, then a massive drop to 70 or lower.

When you realise this, it will be too late to buy back without losing 30%-50% of what you could have by buying now (or at 60's that are long gone).

I am buying every bitcoin i can below $100 and i don't think i will regret this.

Yet another "permanently high plateau" prediction. It is bound to fail.

The simple truth is that the current bitcoin price is supported less than 10% by traders, who actually use bitcoin to pay for goods and services, and over 90% by speculators, most of them of the get-rich-quick kind, the trend followers, their girl-friends and mothers. They buy bitcoin because they believe its price will rise.

As the price is now falling, we are seeing a sawtooth pattern of upward trend-following and downward panic-selling, a sequence of bigger and smaller bull traps. This will continue through the rest of the year and quite possibly deep into the next.

So where is the bottom? It will be reached when all short-term get-rich-quick speculators have lost their "investment" and only traders and long-term speculators still hold bitcoin. My guess is $20. But since the bottom price depends on factors we do not know yet and is anyway difficult to predict with any precision, I will be surprised neither at $30, nor at a single-digit price.

What may also happen is that the bitcoin market widens, and new, stupid "speculators" start the third bubble. But this will most likely not happen this year, but perhaps later in the next.

Exactly. By the time the higher highs are obvious to everyone the edge for traders has gone. I agree that selling at this level is riskier than staying in.


Assuming $90-95 is a medium-term level like $12-13 was then an occasional visit to $85 or $100 at least is expected. But news will trump stability. I am still concerned that MtGox is seriously wounded by its USD problems and that a "run on the bank" may occur with a temporary spike to 130 or even 150 if people want to convert to BTC and exit at once. The retrace after that will not be pretty.

Wagner. A whole year squished into a chart is always going to show the big picture, but it eliminates seeing the smaller clues which the market leaves behind. Unless one subscribes to the random walk, and TA is meaningless - then there has to be useful information at smaller scales. Please zoom into the 4-hour views. Yes, it has been stable elsewhere, like $47, but the market has shown no appetite for a repeat of that level.

http://farm4.staticflickr.com/3751/9347217363_89a74ed3f3_b.jpg (http://www.flickr.com/photos/93641348@N04/9347217363/)

this is my belief as well

I have to admit, this is what im planning for aswell.
maybe not a drop to the 70's but more than likely low 80's, then a gradual climb back upto 100

Nah.

http://oi40.tinypic.com/2a9wklv.jpg

heh, I'd guess the bottom will be 60

Look at your data more closely. Everyone says final capitulation in a bubble should be on high-volume. The high volume in 2011 was at the end, in 2013 it was at the start, when it got to the 50s. Even allowing for more coins in 2013 the April volume was absolutely huge, dwarfing all but the very last days of the 2011 dip when it is arguably comparable.  Is anyone expecting a million coin trading day soon?

If coins go down in price then the same amount of USD trading volume could indeed move around more BTC.  But I think the dynamic to watch for is the hash rate, the bubble isn't over until the hash rates 'capitulate' and miners realize they have over built mining capacity and the ones with the highest electric cost need to shut down.  In 2011 this hash peak preceded the market bottom by about 3 months and I'd project a similar pattern here because the capitulation of miners creates relentless downward pressure on prices.

I don't feel confident to comment on trading or economics, but regarding the hash rate I believe the situation is very different now than it was in 2011.  Namely with the ASICs now in use, electricity cost is only a small fraction of the actual mining costs, since the balance has shifted heavily towards the initial investment capital cost.  Before someone who bought an ASIC is going to stop mining because it is unprofitable from the electricity cost, the difficulty will have to go much, much higher still and I'm not sure whether we reacht his point soon.  (Although on the other hand it is already probably unprofitable to mine with some ASIC devices if you still have to buy them because ROI is not likely to be ever reached.  But that will only slow the hash rate growth but not lead to a drop.)

The key difference between this recent price spike and the previous spike, is that in the case of the recent spike, there has been a similar situation in the past and bitcoin survived. The human mind looks for patterns, and everyone can see a pattern forming here.

Remember in school? 1,3,5,7, which number comes next? In this case it is 1,30,5,260,??? the logical answer is 25, 2000.

    These are linear patterns. Bitcoin will not behave linearly for the following reasons
1) demand for drugs
2) fear of regulation
3) the believers

    These are elements that exist in no other investment vehicle. There is no way to gauge how many iron willed believers are hokding bitcoin. Many have been steeled by the previous price drop against the jitters in this price drop. There is no telling how many believers with piles of cash are out there who have not yet heard about it or are thinking about it.
   There is no telling how much volume will be generated as more and more people start buying their regulated medications with bitcoin and street dealers become less available.
     There is no telling what regulatory events or geopolitical events will influence price. There is no chance of bitcoin being killed by regulation, firstly because Russia will never outlaw it as long as it is taking market share from the dollar, and secondly because poorer governments will stand to profit hugely by becoming bitcoin havens.

       Sometimes when watching the price I think, a watched pot never boils, but I tested that, and it does. Just the perception of time dilates... so here I am on this forum.

I'll believe it when it hits 120.

At 100 it was so shaky that all it took was news of the Satoshi Dice sale to drop it by a sawbuck. It's still recovering from that.

When It's galloping up as it was in March, even a fork in the blockchain only caused a dip that lasted a few hours.

It's a little early to declare victory, but it's certainly looking better.

LOL, there will be many false calls that the 'new bottom' is in on the long journey to the real long term bottom.

Gee, someone else who's noticed that even if you have a valid prescription, the Silk Road price is the same as Wal-Mart, and no sane person actually wants to go to Wal-Mart.

Google trend for "buy bitcoins" looks like it hit the bottom:
http://www.google.com/trends/explore#q=%22buy%20bitcoins%22&date=11%2F2012%2010m&cmpt=q

Note how the influx of people interested in buying Bitcoin kept relatively high even after the bubble.

im witnessing a spike in price and buys. will it continue is the question. IMO it will be 120  in a few weeks. 3-4 but who am I to say, just a speculation. if we keep seeing these negative things and problems ie- SD sell then ya it could not get that high.  If things get left alone and the markets just goes on its natural course I do believe that 120 is very probable.

but im just a loan wolf  :P

Experience tells us that a bubble has only collapsed completely when nobody is calling it.

Therefore the decline will continue for a while...


ya.ya.yo!

What an odd assumption. Curious as to what possible argument you could make in favor of this. I mean, is your argument basically that we won't see high volume again, until we do? And when we do, it won't be capitulation? Why? I don't see it.

If we saw capitulation, as you say, why the downtrend after the wave up from 50? Looks a lot more like a dead cat bounce then, doesn't it? If you cater to the theory that capitulation = bottom (only buyers left), then it's pretty unlikely that capitulation happened over 7 days, followed by an 8-day bounce, followed by a 3-month downtrend which has not ended.
Yep.  :D

Perhaps the capitulation did happen immediately by the whales.  Now they are buying and will let it go as low as the selling pressure can push it.

Lol all the whales are still holding on to their 100$+ bitcoins

They're waiting along time for those promised profits... losing against inflation and other opportunities...

how long will they be able to take it?

In retrospect it is always easy to identify trend reversals...

I think we have yet to see true capitulation. Still too much optimism for my taste.


ya.ya.yo!

Many years, probably. If you invest that much money, you're probably quite rich to start with.

+1

How many of the long term Bitcoin holders/miners ever thought $90 would be the norm?  I am relatively new so I would assume that people would have laughed at the thought a year ago.

You'd be quite right in this assumption. I started looking at BTC when they were 4-5 USD......I was in disbelief as it rose from 12-50. Go back further and people would have been in disbelief as it passed $1

In other words, don't believe any bold predictions on what the price of BTC will do. No one can predict something as complex as the long term relationship between USD and BTC...

11M bitcoins

Listen to semaforo. He knows his stuff. Re-read his whole posting. I came to the same conclusion too.

I don't understand the (mathematical) pattern, plz teach. The rest I understand and in complete agreement with, I've been arguing the same points for awhile.

  In the case of 1,3,5,7 the pattern is always adding 2. The next in the sequence would logically be 9,11,13,15. Or with 1,3,7,15,31 the next would be 63, 127, 255 and so on, because the number being added is doubling each time. First was 1 added to 2, then 4 added to 3, then 8 added to 7, then 16 added to 15 and so on. So you can determine a pattern of what will come next based on the available data, the basis of all speculation.

  In the case of bitcoin, if you were to apply linear reasoning to the chart you see two price spikes. First, there is stability at around 1 dollar, suddenly spiking to 30 dollars, then crashing and stabilizing at roughly 5 dollars for about 10 months, before beginning the gradual run up that culminated in the rally to 260. So the pattern is stability at 1, rally to 30, profit taking to 5, rally to 260, profit taking to...
  30 is 30 times 1. 260 is 52 times 5. There are two ways you could see this- the next rally will be either 22 times higher than the previous, or 73% larger. In other words, either 74 or 90 times higher than the bottom of this downtrend.
    To determine the downtrend, we see 5 is 1/6th of 30, and 5 times 1. 1/6th of 260 would be 43, and 5 time 5 would be 25. This would mean if this were a logical, linear process, the next rally off of a stable low between 25 and 43 will be to somewhere between 1850 and 3870, with profit taking then crashing the price to a long term low between 125 and 645.


   But this is not a linear or logical process.

This is very interesting. Thank you for bringing this up, semaforo.

Hopefully it is not that linear.  I would prefer the stable low to be the 80's and 90's we have been in.  I am totally find with the rally being between 1850 and 3870 though!  ;D

Bulltrap keeps occurring... until it doesn't

Many were talking about thousands and even millions of dollars per BTC last year and the year before that (2011). 2010 and earlier I don't know because I wasn't invovled.

And yes: many laughed at the thought of even "bitcoin parity" "dollar parity" (EDIT) when I joined in early 2011, let alone $100 dollar bitcoins.

Nowadays people laugh at rpietila (who will be correct with his 300$/mBTC prediction, just not with the timing).

Yes indeed, 2 whale buys proved me wrong. If it weren't for those 2, price would be around 91-92 right now, heading towards a panic sell. I can't predict whale buys.

I like talking about thousands and millions of dollars per BTC.  We need more of those posts again!  ;D  Maybe I am a dreamer? 

But if it was beyond people's expectations for 1 BTC to be worth $100, what is stopping it from going to $1000?  I honestly feel it is just a matter of time.

That's funny, because strong buying was exactly what my analysis predicted.

What can I say? Congratulations!
Would you mind predicting another whale buy?

Currently we have a standoff: nobody wants to breach the invisible sell wall at 97.xx, and at the same time
the buy wall at 96 seems solid (this may change in seconds though). I won't get much sleep tonight... >:(

Edit: corrected stupid 72.xx to 97.xx

How useful is predicting whale buys anyway?
Strange how the colossal 40,000+ coin "blue" whale buy on June 25th barely dented the downtrend, but two much smaller "fin" whale buys this week somehow manage to reverse the market.

No, I don't mind.  In fact, I see it as 70% likely we will breach the recent $97.48 high within 12 hours.  I don't know that we will go very much higher than that though.

I agree with your prediction, but the 1.2k required is not a whale buy, by my standards. Make it 6,000 - 7,000 BTC or more, that's a whale buy.

Ignore the order book.  It is not representative of the actual volume required for a move.  Orders disappear and some pop up as soon as there is movement.

I get your point and agree, there is an invisible wall at 97.xx, and sell orders may pop out of nowhere once that is reached.
So yes, probably another whale buy would be needed to breach that invisible wall, if the wall doesn't move.
I mean, it's kind of stupid not to let the market move higher so they can sell at a higher price, doesn't make sense to me.
Unless they know there are many who would sell at 97.xx and just want to sell first.

Bears who aren't prepared to give up their thesis will attempt to defend their position.

Get ready for the next bubble, it's slowly rising beneath the surface. People are starting to realize that we are nearing the end of the era where you can plug in a device and get bitcoins from it. Well, more bitcoins than it cost, anyways.

It's now difficult to keep track of all of the companies manufacturing ASIC hardware, or currently in the design process ahead of mass production. The existing players have already said that they have next gen products in the pipeline as well. Preorders are rolling out at a pace that suggests that people are already getting left behind, but we can't know for sure. All you can do is speculate to when that will happen (or happened).

As more and more people come to that realization, The percieved risk of loss in hardware investment will greatly outweigh that associated with simply buying up bitcoins right now, and seeing the price take a dramatic and long term fall.

I know that I'm a hyperbull, and everything I say should be tempered with some rational thought on your part, but this is the first time I'm calling for an uptrend based on fear instead of exhuberence and excitement. Fear is far more powerful, and doesn't go away quite as easily. Ask your grandma why she has so much canned food.

Sounds likely.  I am all for another bubble.  ;D  The question will be, how high with this one go before it pops?  Hopefully we get up to $500 this time.  We will see though.

  I don't understand your point. Are you saying that when people realize increases in difficulty are going to ultimately make ASIC purchases unprofitable that they are going to start buying bitcoin? Do you mean the price of ASIC hardware is going to take a dramatic long term fall, or the price of bitcoin?

   My feeling says that the current upturn is shallow. I think it's going to peter out pretty soon and that the overall downward trend is going to continue. I think better buy opportunities are on the horizon. Of course, I know trusting your gut works in business, but I don't know about with trading.

The hard truth is mining Bitcoins is pretty much guaranteed to be somewhat profitable over the vast majority of the time, while investing in Bitcoins isn't.
The former constitutes a service of some sort, which by it's nature is profitable to do, the latter can only be profitable about 50% of the time because it's a zero sum game.

What "upturn"?

If you see an "upturn", you must be looking at a very small time slice.

I mean the recent climb from the high 80's.

IMO, OP is right. The bubble is over and we're seeing a stable BTC rise again. Bitcoin will climb well above $200 by year's end. Stay aware of economic collapse signals; when they hit (even if they have nothing to do with Bitcoin) they will cause spikes and troughs; if not we're in the middle of one on New Year's, I predict somewhere around $275.

I agree we ought to be talking about Bitcoin in 4, 5, 6 digits. With enough fiat printing, possibly 7 digits. With proper hyperinflation -- which the Fed might be able to avoid but might well not -- more digits. Cryptocurrency will be the primary form of money everywhere with mobile internet in the 2020s. Fiat will be the government-issued trash that gov't employees and companies contracted by them immediately convert to crypto. If you think this will eventually make it infeasible for the gov't to hire anyone, you're right. Eventually, central bank fiat currencies will be taken out of the money supply (due to unspendability) and replaced by small-circulation, specialized backed currencies. Which also won't be easily spendable.

This is one of the mechanisms by which bitcoin empowers the people. It drains blood (power) from the centralized government(s) (who have ceased to act in the interest of their people).

Fantasy. Pure fantasy. Fiat will be fiat. Cryptocurrencies will still be stuck in minor supporting role.

Over the years I've found the most reliable indicator of price direction to be the imbalance of bids/asks on the Mt. Gox charts.  Such an imbalance (bid heavy) has formed fairly rapidly of late.  I know (or suspect) that there are various manipulation schemes which can color this indicator, but as I say 'I've found', and I'm not interested in TA much beyond such a primitive structure...in Bitcoin at this time.  It'll be personally interesting to see if this portends a leg up, or better yet, the start of the next bubble-like thingie.  If there is a next one.

I'm pretty sure there is a next one. It's too early for steady growth and complete failure seems unlikely to me in the medium term.

hopefully i can  pass the test and pick the top of that one.

picking the tops of those irrational bubbles is inherently hard.

I've been waiting for a nearly universal loss of hope to mark the bottom.  Like last time.  As far as I can see we are not anywhere near such a marker.  Maybe I'm simply wrong that such a signal will portend a turn-around.  Time will tell.

Very true. The best strategy is to sell early, because it may be impossible to sell into a bursting bubble. We know how Mt. Gox becomes unreachable or stops trading in such situations.

But what we currently see is not yet a new bubble. It is merely a bull trap. Prices will go a lot lower this year and probably next.

On a bigger scale, I guess we can consider this too

No, if we want to use this strange nomenclature, we are still in the middle of Wave 4.

so we're going lower than 65?

Yes. It is difficult to guess exactly how low we will go, but my best guess is $20. I would be surprised neither about $30, nor about single-digit prices though.

What we are seeing now is caused by the get-rich-quick pseudo-speculators. They still believe that the price can only go up, even though they have just seen the opposite. But every time the price goes down, some more of them go into panic-selling mode.

This will continue until the price hits bottom. It does that when only long-term speculators and actual bitcoin users, i.e. those who pay for goods and services, are left in the market. And these two groups do not support a price of $65.

We will only get new get-rich-quick pseudo-speculators back into the market after the price has hit bottom, and they will start the third bubble. The price will hit bottom late this year or some time next year.

You can still make some money through short-term speculation, but it is difficult to profit from a falling market by buying. Short-selling would be easier, but there is no reliable way to do that these days. So you have to be careful and be content with a 10% gain between each buy-sell pair of transactions.

I do know we have a decent chunk of lost, hoarded, or Satoshi's coins that are not going to be sold at $200 let alone $20. Considering that, the supply of coins actually being actively speculated upon is likely somewhere from 0.5m to ~6m, which really isn't much at all, especially if the amount of people wanting to hoard forever is even ever slightly increasing at a minuscule rate.

i guess the order books can still be crashed though

You mean speculators as stupid as we are?

Selling early can end up bad, too. Some people sold everything at 30 (in the second bubble) - they are still weeping. At least it is smart to hold on to half your coins for 10 years or so.

So far the Bitcoin price increased by a factor of 10 (+900%) per year on average.

The supply of new speculators is still high.

This sounds good to me.  What would you guess the peak over the next 6-8 months?

The best I can offer is this chart which I have updated as of today. It indicates that $200 is a reasonable expectation within 6 months. I am being a bit more conservative and consider that $130-150 is a top range within that time. The current $102 is close to trend.

An observation which I just noticed is that after the $266 peak the double-bottom (measured by daily average) was first at $68.30 in April and the secondly at $68.50 in July. Both very close in value. The market does not want to go lower than $68 anymore.

http://farm3.staticflickr.com/2813/9397996341_3e94eb5bb2_b.jpg (http://www.flickr.com/photos/93641348@N04/9397996341/)

You're a quality poster, solex, so don't take this as criticism, but what is your method for the above projection? Doesn't look like you used points of contact to draw the line, so that would leave us with (linear) regression (on a log scale). I remember that [statistical modeling guy who's name I can't remember] did that, and got a substantially lower value, but he was "massaging" the data quite a bit, so that could explain the difference :P

EDIT: or, of course, the line is drawn "by intuition" alone. nothing wrong with that, but would be good to know.

Not so different from my fit curve... (orange dotted line)

http://www.blockchained.com/chart_large_log.png

"The fit curve is an exponential percentual to the chart least squares fit - in other words: I played around until it looked good."

I think hgmichna is pretty much spot on here. Still tinkering with my projections for the bottom, but I doubt it is 65.

oda.krell, thanks for the feedback!

Yes it is simple linear regression (least squares fit). 1100 datapoints with slope projected 300 more. The data is presented raw (from bitcoincharts.com with no massaging).

I don't take this as gospel, just a rough guide. We are in the speculation forum and the best we can do in speculating is to make use of the data we have. There is no doubt that Bitcoin is on an exponential adoption phase, which has been seen with other technologies such as the take-up of mobile telephony. It will plateau at some point and skew level on charts such as the one I posted. We can have confidence that the regression line has short-term future relevance because of inertia within the Bitcoin ecosystem which is building all the time as more money and people get involved in many different countries.


I'm not seeing your image...

Should work now....  it's the same as on http://blockchained.com

Ah, yes. And great site. Very interesting.

Governments act today, as they always have throughout history, in the best interests of their people.

Anyone who thinks something has changed recently has just been excessively gullible when it comes to the question of exactly makes up "their people".

Uh, what? Governments have been known to kill and oppress their own peoples for millenia.

He is drawing a distinction between the well connected elite and the labor stock.  The elite are "their people", not the common man.

Yes. And normally these people merge into society so it is difficult to spot them (apart from their late-model mercs), but occasionally they come to light in a spectacular manner:

http://www.ft.com/cms/s/0/dd63f9c2-ee02-11e2-a325-00144feabdc0.html

If you allow, one more comment, the same one I made to [statistical modeling guy whose name I still can't remember but who has a carricature of Darwin as an avatar]: I don't object at all to regression analysis, and even extrapolating from it, but I am a bit suspicious of the underlying assumption of this particular analysis...

(aside: got into a huge discussion with the guy about whether it's an "assumption" or not. dude don't know his axioms.)

... the assumption that there is *one* underlying function generating the data. I find it hard to believe that traders' sentiment, btc fundamentals, number of market participants, bitcoin protocol related hard facts, etc. would all be identical, or in theory at least perfectly predictable, over the years, which in principle would have to be the case for the same growth function to generate the data in 2011 and in 2013.

I know, it's all simplifying assumptions. I'm not really objecting to using your method to predict the price. My own methods are in fact less sophisticated. I just like to soapbox a bit about my pet belief that a number of functions (perhaps only slightly) greater than 1 governs the btc price.

Simple function works fine for Moore's law, no?

Yeah, I just meant for approximating LT trends.

Yes and no. Actually, a single exponential growth function could be used to paint a pretty little picture of btc/USD development until now. Or Apple's stock. Or bacterial growth. However, that doesn't mean that in each of those cases only one function actually is behind that data -- in fact, it is extremely unlikely, given my argument (identical parameters, or perfect predictability of them) above.

In the end it's all about precision. If you want to predict whether, all things going mostly alright, btc/USD will be up a lot from where we are now within 3 years, then yes, the single function model is most likely good enough. If we want to decide whether we're in a weekly slump of a mid-term trend reversal of a mid-to-long-term bear market, then maybe the same simplification is a bit too much.

Even if applicable, the simple function is of course a result of various subfunctions, like you said.  And it's clear that this exponential growth (with its value appreciation) can't last forever.  However, as bitcoin is still relatively small, it currently remains my price guidance for the rosy scenario.

actually, that's exactly my point. That's the often heard objection "price growth can't be exponential, because such growth becomes unsustainable quickly". Which is absolutely true. But only if the rate of growth is constant.

Say we have a function characterized by:

"Beginning with a monthly growth rate of 20%, this value continuously decreases s.t. it is halved every 12 months"

(which would be a sigmoid function of some sort, I guess)

Simple linear regression performed on data plotted on a log chart, i.e. what solex did, is not able to model such a function. to my knowledge at least, someone please correct me if I'm wrong.

I'm not saying that this is the most likely candidate for the btc price function, but it's an example of what is outside the realm of linear regression.

This is correct. A simple linear trendline on a log chart will plot constant acceleration, but not account for a second-order rate of change in that acceleration. If there is a slowing in the Bitcoin price (fx rate) acceleration then the data should evidence a curve or banana-shape over a longer timescale. What is very interesting is that in the last three years the curvature in the data is quite small. It is not obvious, to my eye anyway.

This was probably different in the past. If we divide Bitcoin into the nascent (pre-Mt Gox) phase Jan 2009 to May 2010, and the growth phase of May 2010 onward, then the price acceleration from the first sale above zero, then to $0.50, was different. Trace Mayer, on runtogold, has the growth rate in 2009 at 4,867%. I have no idea where is the data is for that number, but it is way above anything seen since. Having proper exchanges has stabilized the rate of price acceleration. The current acceleration definitely has a rate of change inherent, but it is not significant yet, although in a few years it will be apparent.

So did you ever regress over the data starting from a different assumption, say, assuming two (or three) independent (exponential) functions generated the data, and search for the optimal splitting point of the data, then compare the total error. (I'm lazy, I know. Why ask others to do the work that you could do yourself. My apologies.)

listen to this man, he is correct.

Says one early gpu miner about the other.

As predicted, this prediction has failed.

says one early gpu miner to another who both managed to hold on to their coins through at least 2 bubbles because they knew the fundamentals were strong.

I've just today met a guy I had met in early 2011. We were both mining at the time. He sold everything he had in late 2011. Now he's dealing in mining chips and shit trying to regain some bitcoins.

huh? In what way exaclty has solex' prediction failed?

right. Solex concluded the same thing i did. based on its similar behavior to Aug 2012's decline and progression into the new year, this bubble is done deflating and very likely about to do the same thing. time is all it needs. i'm guessing the next big correction won't be as severe, but who knows at that point. depends how quick we go up.