Bitcoin Forum

Has bitcoin bottomed yet? And, what does the aftermath of major bubbles bursting look like and its implications for price?

Thursday, bitcoin had a relief rally in sympathy with most other commodities as the Swiss National Bank (SNB) de-pegged the Swiss Franc from the Euro (http://insidebitcoins.com/news/bitcoin-price-rebounds-and-swiss-franc-surges-as-snb-removes-euro-exchange-rate-cap/28805). This was a surprise move by the SNB but was necessary as being pegged to the Euro has been killing the Franc as the Euro has been sinking against a strong dollar due to Eurozone economic malaise.

https://i.imgur.com/x0N089k.jpg

A previous article written on this subject can be found here (http://cointelegraph.com/news/113013/cracks-in-the-fiat-money-system-the-swiss-gold-referendum-and-currency-pegging). There is a lot of speculation as to why they did this now and the prevailing sentiment is twofold: the SNB expects the European Central Bank (ECB) to launch massive QE and this will further weaken the Euro so they wanted to get ahead of the curve as the SNB has had to purchase a ton of Euros to protect the Franc and their threshold has been reached.

As a result, the Swiss Franc surged (http://www.xe.com/currencycharts/?from=CHF&to=EUR&view=1W) and the Euro weakened, while the USD strengthened. All commodities (gold, oil, copper, silver, bitcoin etc.) also saw a sharp rise in anticipation of QE coming.

Has bitcoin bottomed yet?
The simple answer is no, not yet. As mentioned above, bitcoin had a relief rally yesterday in due to the SNB news in combination with an extremely oversold chart. A relief rally generally occurs in a downtrend, when buyers show up and shorts cover but it is nothing more than a countertrend move and is fleeting at best. As the chart below shows, the downtrend is still intact and yesterday on the daily chart shows a failed attempt to put in a bottom in the form of a Bullish Engulfing Pattern (see here).

As a result, there is more downside. Price discovery is a process, but its looking likely at the very least we get a retest of the 160 level, with an eye on 133, which is the Mt. Gox low as mentioned previously (http://cointelegraph.com/news/113299/bitcoin-price-drops-200-how-we-reached-the-bottom). Volume has picked up along with volatility, so the bottoming process continues.

https://i.imgur.com/GPTaRIj.jpg

Generally, price precedes news. With this downtrend strongly in place, one can assume whatever news comes out will be bad. As we continue to bottom, the bad news can be assumed to be in the price and will not lead to a leg lower. In other words, it will be “priced in.”

What the news will be is anyone’s guess, but certainly something is overhanging Bitcoin. In fact, one sign of a bottom will be when bad news comes out and price doesn’t react to it or reacts in an opposite than most people expect.

What happens in the aftermath of bubbles?
The bitcoin price bubble has burst — that can not be denied. This is a major bubble that has popped as bitcoin has broke through many major support levels on its way down, and is still sinking. Below are charts of other major bubbles and unless one is visually impaired the similarities should be striking. The reason I display these charts is because the aftermath of price bubbles is similar for all of them, and bitcoin should be no different.

This is the Japanese real estate bubble:

https://i.imgur.com/JWL1ZRI.jpg

This is the Dutch East India Company:

https://i.imgur.com/c6c5fsv.jpg

This is the Dot-Com (1999–2000) bubble:

https://i.imgur.com/d9xtq5D.jpg

This is Silver in 1980:

https://i.imgur.com/zdjG71k.jpg

And finally this is bitcoin:

https://i.imgur.com/f8hH5nw.jpg
Let’s all admit that the bitcoin price bubble has popped. But what we can expect as price searches for a bottom?

For now, we can expect volatility to hold up since the bottom isn’t locked in yet. Right now, it looks like we are seeing bottom fishing happening. This is when people are looking for a bottom without being presented of any evidence of such. It’s a sort of front-running for a bottom in anticipation of prices going higher at some point.

Once again, bottoming is a process and takes time. History shows that as a bottom forms, volatility dies off as buying and investment interests wane. Traders also move away from the asset as volatility dies in search of better returns elsewhere. Fundamentals start to matter and price just doesn’t begin a massive upside move.

In fact, it remains range bound for long periods of time. Within this range, I would expect to see large moves, though the price should not to go back to its highs for quite a long time. During this time, companies will continue building on the protocol with the price becoming ancillary as innovation moves forward, which in turn could lead to surges in price as well as many macro economic factors down the road.

In an interconnected global world, things change rapidly and the price is no different. This is a model based on past bubbles and could be different with bitcoin for a variety of reasons, but generally the pattern fits and I would expect a range bound price and a period of low volatility for a while once the bottom is established.

Below is a chart that shows the stages of a bubble bursting and the aftermath:

https://i.imgur.com/FTA5YbQ.png

Written by George Samman, former Wall Street Portfolio Manger and Co-Founder and COO of BTC.sx. BTC.sx is a bitcoin trading platform offering up to 10x leverage to go long or short in bitcoin for bitcoin. (https://btc.sx/r/bubblepop)

Here is the thing. Older users here have seen all this before over and over and over. Pls explain how this time is different from the $30 to $3 crash, the $266 to $60 crash and all the other crashes. Literally everytime there is a crash people start posting those exact same graphs.

It's the first time that price went below the high of the previous cycle.
Elliott Wave followers call that wave A.

This also means that for the first time Elliott Waves can be drawn as such that the price will never ever go higher.

Some of the chart guys predicted it ages ago. They say it might actually precede an even bigger future rally. It's not necessarily a bad thing in the long term.

It's done that before. What about back in 2011 when it went from $15-$30 and then down to $3?

It went from cents to $32, to $2. What happened after didn't create a new high or low until $266.

32 was wave 1
266 was wave 3
1200 was wave 5

everything in-between were sub-waves.

13+ months of bear market ... the longest in the history of bitcoin.

http://bitcoincharts.com/charts/chart.png?width=940&m=bitstampUSD&SubmitButton=Draw&r=60&i=&c=1&s=2013-06-01&e=2015-01-18&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&

The only point of this is to plug his exchange where you could have 10-fold leverage which is equal to financial suicide.
Here is my analysis:
Bitcoin will either be worth a lot of money in 10 years or it will be worth close to nothing. Choose your scenario.
EVERYTHING is pump and dump: dollar,euro, gold, silver, stocks, bonds, currencies, real estate.
Oil dump, euro dump and dollar rise are the examples.
Conclusion: choose your "speculative" poison, but never tell me that your choice is rational while another person's is not.

I hope to see the real bottom level reached where at that point it will never go much lower or further down. At that level, I assume the equilibrium is there, where miners won't be driven to sell their coins as they would be making loss. Low price will make bitcoin become too attractive to buy and that is where price will slowly increase.

Not everything is pump and dump. All those examples you give are boom and bust, cycles that repeat over and over. Examples of pump and dump are the dot com and the tulip craze. Which is bitcoin - boom/bust or pump/dump?

We are far from the bottom, we need to reach $30-60 before its technically even possible to recover.
There is so much dump volume incoming i doubt we can even hold up those prices and we may even drop to single digits shortly in a flash.

I don't think that you can label bitcoin as a bubble. Why? It's really hard to predict it's value in the future. Something that is actually hard with everything in economics. But with bitcoin, things are even unpredictable. There are no limits set by laws or restrictions. I wouldn't find it unlikely if the price went up to 4 figures again, but we could also see two figures this year. The price craze of 2013 indeed seems to be in idle mode for now. But nobody can tell for sure if this is what it's going to be like in the (not so) distant future.

What people don't get is that once the bubble pops like let's say bitcoin goes below 100.  It might take 10 or more years to turn to this level.  Thats what happened to some tech stocks like MSFT and YHOO and Japanese real estate bubble

Actually it's not that hard. With all the 'terrorism' lately bitcoin will soon be outlawed in pretty much every western country, you can bet your coins on that.

Not a single EW analyst thinks that. None.

Thanks, is the post below that states "Elliott Waves can be drawn as such that the price will never ever go higher" wrong too? I never heard any of the chart guys say that before.

Bullshit

It doesn't matter what you or anybody else thinks, if it's a valid count all you can do is see if it turns out to be the right count later on.

It's a valid count, nothing more nothing less. That means it can happen that way, it also means that in hindsight it could turn out differently, and that after wave C where price is around 1.62 times of wave 1 (32*1.62=$51.82)  it can lead to another, larger cycle which means another ATH beyond $1200. Mind you can happen, not must happen, it's also in the realm of possibility that this was it and Bitcoin is a FAD, in which case many analysts will say they have predicted it all along. (Which they will probably do in either case)

There can also be another valid count in which 266 was actually a sub-wave and 1200 was wave 3, but it doesn't invalidate my count, as of now. The thing is bulltards always say we're at wave 3 since it means we will be going up, uP, UP for the longest time. The tardiest of all bulltards even think wave 3 still hasn't ended.

I can't think of any western country that has plans to outlaw bitcoin. Why would they chouse prohibition over regulation when it comes to a financial instrument?

how to know when the real bottom is reached ?

When people compare Bitcoin price to commodities I cry inside a little. Bitcoin is so much more volatile than anything else that it doesn't work in the same way.

So when is the next wave and to what height?

Is the current wave 7? Or do you think it is yet to come ?

We could be at the dawn of wave 7.

You better never tell that a real Elliott follower. There are people who believe in this stuff.

Time for the next bubble. Jump abroad, mateys. :)

Who is this Elliott I keep reading about?

Just good bitcoin has built in high inflation due to socialist distribution philosophy - this way we get them coins extra cheap.

Bitcoin could have become a commodity. It fucked up.

So $150 was the bottom?

What we really need to know is who will be the next MtGox/Willy/Markus.  Clearly that was responsible for the mega $1200 2013 bubble, with speculators piling in to follow the momentum.  I bet Elliot Waves can't predict when we'll next see alleged fraud by an exchange.

http://en.wikipedia.org/wiki/Ralph_Nelson_Elliott

http://en.wikipedia.org/wiki/Elliott_wave_principle

I'm hodling until the end. I have a job. I have a retirement plan. I have other things I can sell if I have unexpected expenses.

And I have a strong belief that cryptocurrencies will change the world. No weak hands shall prosper, hodl tight believers.

But in addition to hodling I do spend and replace. It's important to support the economy whenever possible.

Which bubble? I think we've yet to see the 'real' bubble! We may see prices 100 times the current price. The truth is: No one can know where we're going. But I think the upside is still very wide open. It's highly interesting!

Depends whether we are in for another re-test of $150-ish. That could be an even better opportunity to grab some even cheaper coins. But I think not having any BTC right now to be quite dangerous. Starting to feel really bullish again!

It's been going up lately but I don't think we'll reach $400 yet. I think we'll fluctuate around the $200-$300 levels. There hasn't been a reason for it to go up any higher. It could probably go lower to $150 again but I'm not so sure it'll drop to sub $100 anytime soon.

Looks leike it bubbled, and its forming again. 250 Going strong.

If Bitcoin was a bubble and it popped, the price would have gone sub 2$

Bubbles are good. When deflated, reflate. Ask Krugman.

Bubbles are bad except when you buy before the bubble starts and you sell at or near the top ;)

I was a believer in a double figure correction but thinks are looking good now with the Winklevii new exchange which seems serious, we may see old money coming in.

Plenty do.

DanV for one had that very scenario nailed and predicted Bitcoins bottom coming in the $100 range, back when most people would have considered this to be utterly unthinkable, including even myself. In actually fact, the recent bottom has overshot DanV's forecast as it punched through his long term support line. I would be interested to see what DanV's views on Bitcoin are at this time.

btw...how is your shitcoin portfolio doing? Still 'hodling'?   :D

I agree with this, maybe more flat instead of up like that, except for the very end final capitulation. Why? Because unregulated. This market has proven too volatile time and time again for good traders to ever leave it. And it just keeps expanding. Some will argue it has already gone mainstream. Mainstream in the sense that it is known, yes, but utilized - no. We have to see that. The question is then will that happen? If it does we see new highs.