Bitcoin Forum

I recently decided to go through some of the posts from the 2011 bubble, so here is some of what I found. Feel free to read the threads to get a better understanding of what people were thinking.

June 11, 2011
"Heads up! Market Bottom? You can buy now for under $22/BTC..."
"...this is a high reward / somewhat low risk time to buy"
https://bitcointalk.org/index.php?topic=14914.0
I needn't tell you what happened next, but this was where we dropped below $13 and stabilized around $20, dropping to around $17 by the time MtGox got hacked.

July 18, 2011
"There are no rallies. There are no crashes.  There is just a slow, steady slide."
"I dont think its gonna go down to 7"
https://bitcointalk.org/index.php?topic=29900.0
It stayed stable at $14, but...

August 03, 2011
"I think we could nick $6 short-term, but looking at $8 in the mid-term"
"I can't help but feel we haven't seen the bottom yet"
https://bitcointalk.org/index.php?topic=34053.0
Both statements were right-on.

August 15, 2011
"...a reversed Head & Shoulders bottom formation has developed"
"...a target price of around 13,5 USD/BTC can be expected"
https://bitcointalk.org/index.php?topic=37296.0
After bouncing between $11 and $12 dollars the next few days, we dropped to around $8.

September 07, 2011
"We have seen the bottom. $6.12 will be the starting point for a long road upward."
"We will never see $6.12 again."
https://bitcointalk.org/index.php?topic=42094.0
A few days latter, the price dropped to just over $4 and stabilized between $5-$6 for about a month before dropping further.

September 09, 2011
"It is following the trend perfectly, now is the time to get in"
"If it drops below $4 today ... will you shut up?"
https://bitcointalk.org/index.php?topic=42495.0
"Bitcoin is over. If you're not out, get out."
https://bitcointalk.org/index.php?topic=42514.0
Stabilized between $5-$6 for about a month before dropping further.

October 22, 2011
"buy, buy, buy!!11111"
"The $3 wall: the gift that keeps on giving."
"We're not going to make it beyond $3.  Go ahead, watch."
https://bitcointalk.org/index.php?topic=49389.0
We broke above $3 and later dropped back to $2. But, if you bought at this time, you were golden.

Anyway, I hope you guys enjoyed this. I encourage more of you to go back and check the old threads out!

maged thanks for this,

I somehow think there is much difference from now and back then.

Price can go down I suppose, but the world economy awareness is just picking up.

shortly after bitcoin's 2011 crash the media really stopped reporting on it.

This time we dropped 80% or so and media is still covering it.

I honestly think this is the beginning of media attention phase.

The public hasn't woken up to it yet.

Just my take.

Bitcoins are hotter than ever. I don't think what happened in 2011 can really apply to what's going on now.

This time it's different.  ;D

That whole 6/11 thing was an endless, godawful grind.

Compared to that, our current situation is a walk in the park.  So it goes down to $50 and stays there for awhile?  So what.  We know better now - it would be a buying opportunity, nothing more.  That's not going to happen, anyway.  We go to a hundred and I'll hock one of my kidneys to buy...

Everything is faster now - crashes and recoveries both.  We're heading up - maybe it'll take awhile.  But 'awhile' is measured differently these days.

I don't disagree, if you look at the larger picture. If you're planning to be invested in bitcoin for 5-10 years, now is a pretty good time to buy. Hell, anything under $10,000/BTC is a good time to buy, at that scale. An argument could even be made for $100,000/BTC.

But that's not the scale I'm talking about here. I'm talking about the daily to weekly scale. In that scale, we've clearly peaked in media attention. If you don't believe me, just look at Google trends! Does the fact that you could have made that same argument in 2011 invalidate the fact that a bubble occurred on the daily and weekly scale?

If you're strictly investing long-term, you should really ignore this board in your forum preferences, because all that matters there are the fundamentals. As long as you watch that, you shouldn't even look at the price, since that will only spark your emotions and cause you to deviate from your plan.

it sure looks different this time...

i'm not quite sure it was 'just a bubble' anyway -- there might have a been a 'bubble top' but the market was aching for a regular old correction. and it feels like deflation is kicking in now -- BTC price can't go down without some serious selling if demand is growing. i even doubt we'll see below $100 anytime soon -- too many people think thats a cheap coin :P

--arepo

I keep thinking the same thing, but then I remember that people constantly said your last sentence almost exactly, but about $10 instead of $100 back in 2011. So, I don't know what to think.

It's crazy how far this has come, and will probably be crazy on how far it will go.

I think there is a fundamental difference: at 2011 there were way too many with weak hands holding way too much, for which they got at a way too cheap price, at this moment they are mostly out.

And we should not forget, a billion dollars market is quite a bit more difficult to manipulate than a million-dollars market, anyone remember the pandemonium that was Nov 2011(Bitcoinica, etc)?

the price was only above $20 for about two weeks. that was a serious speculative bubble. this was a serious speculative bubble stacked on top of a serious uptrend. the two events don't seem comparable.

Tend to agree with Maged. Unless we get lots of fresh money quickly and can decimate the Bitcoins from the order book causing a positive feedback loop, we are in for a bleeding.

An important factor during times of historical bitcoin scarcity in the markets (BTC on MtGox's book at the peak has been decimated to an unbelievable 30k, and it is still low with barely 130k): Miners still have unbelievable profit margins, and most probably most choose and chose not to sell most of their profits and speculate instead. As the profit margins go down due to difficulty increase and price decrease, they are forced to sell their Bitcoins to cover their running costs, providing the market with a larger share of the 3600 daily Bitcoins. They will also begin to sell their accumulated coins to take profits if sentiment worsens. Now speculators not only have to compete with other speculators, but miners, and a negative feedback loop can emerge. People find themselves having vastly underestimated both the available and the newly added supply.

The time to buy Bitcoins could be when difficulty begins to deflate again. Admittedly, that could happen much further up if another media hype starts, but the chances in my eyes are relatively small.

Further factors making me more bearish in the mid term: Bitcoin exchanges are being eliminated and MtGox is returning to its monopoly status from years ago. Bitcoin still extremely centralized through mining pools (2 people conspiring can do a 51% attack, and actually have done so during the coin fork), block size limit hindering growth (see SatoshiDice), altcoin popularity rising (LTC soon to be added to MtGox; Ripple emerging as possible alternative). Oh, and of course that there are no popular actually used (ie, by lots of people with lots of volume) economic applications I know of besides SatoshiDice and Silk Road. There is still no Bitcoin economy.

PS: Talking on a scale of weeks/months here, of course. Short term I guess I am mildly bullish.

Yes this time we have held above $100 for much longer than we did $20 in 2011.

Part of what sparked the last bubble in 2011 was the mining race to arms war.

Right now we haven't even bit off a tip of the ice-berg of how much ASIC hardware can and will come online thus reducing daily mining rewards for miners thus making bitcoins much more difficult to obtain through mining.

http://blockchain.info/charts/bitcoin-days-destroyed-min-year?showDataPoints=false&timespan=all&show_header=true&daysAverageString=7&scale=0&address=

What does this graph tell you? Time factor is about twice/thrice as large, yet the days destroyed metric has never been above the 2011 peak.

I guess unlike in 2011, most of the coins are not in the hands of early miners, the majority of whom had long cashed out, other than real core elites/seasoned loyal believers, there is not an abundant supply of bitcoins on the market.

You have failed to read my post. I was talking about how a larger share of newly generated coins is provided to the market as profit margins go down and its effect on the behaviour of dormant supply.

Also, Bitcoin Days Destroyed is a usless metric that is easily manipulated.

I wasn't replying to you.

But I am curious to know how do you manipulate this metric?

great post

all the bulls in denial here make me want to push that sell button

Ok sell all your coins take your monopoly money and go back to your 9-5 job okay? lol  :P

this is not true... bitcoin is finding its niches in many small places, just planting seeds -- no flowers yet, but soon :P

i can also tell you from first hand experience that seals with clubs (bitcoin poker) saw a massive influx of new users over the course of the last 6 months.

i think you're underestimating the amount of media coverage we received... bitcoin was all over reddit, tumblr, etc, in a big way. these kinds of things have a gradual effect.

in other words, i think the bitcoin userbase is expanding at an unprecendented rate, even still, though said figure may have taken a hit after the crash.

The question is, how different is this from 2011, percentage wise? If it's about the same, then our target price is around $30 ($15 (pre-current-bubble) * ($2 (post-2011-bubble)/$1 (pre-2011-bubble)).

this is important, and i don't think it's nearly the same. real growth was much smaller, by my estimates*. i'm not sure how one would go about actually calculating this value, but it seems not only larger, but also increasing. don't we expect a somewhat exponential trend line until the price discovery phase is over?

*estimates based on google trends, /r/bitcoin subscriptions, frequency of first-hand (IRL) exposure, estimates of poker seals userbase growth, estimates of "speculation" subforum userbase growth, growth of the market cap, and other data

Someone large moves his coins to another address of his, destroying lots of days. Manipulation may not be the right word for that. However, even looking at the graph taking it seriously, the current Bitcoin Days Destroyed peak is nearly identical to the one at the end of june in 2011 with 15 vs. 14 million.

The "weak hands, strong hands" thing is a fascinating new thing. You don't know how bearish I became with that sentiment being normal. I particularly liked the spartan 300 submissions on r/bitcoin that got to the top everytime the price declined. The people who most often cry it out are usually the ones to sell at the bottom. And once they capitulate, Bitcoin can resume its rise. Whether that really happened at 50 remains to be seen.

@arepo
Yes, Bitcoin has a great brand awareness going for it. I don't care for seeds that don't bear fruit. I don't think Seals with Clubs is anywhere as popular as SD or SR, but feel free to prove me wrong. Still, this is arguing over details. My main point is that there's no such thing as a Bitcoin economy, and there are only 2 truly successful Bitcoin businesses apart from exchanges, mining pools and other intermediaries like Bitpay. It's a commodity and a payment mechanism for fiat money, but certainly no currency so far.

This sounds quite sensible. Most importantly, the bottom should happen following a period of "despair" with very negative sentiment where every price increase is smacked down. First should probably come a period where pretty much nothing happens as price finds its bounds, and most newcomers get bored and go off to chase the next hot thing.

Only "old coins"(older than 1 year) are counted, that means, you can only play with each coin once per year, so the manipulation would only be effective if you have an exceptionally large holding, at which point I doubt you will try to move your money out of your cold storage just to fool with a metric that not many will check. More importantly, it has nothing to do with my original post as this sort of manipulation increases rather than decreases the days destroyed value.(in June 2011 this statistics didn't even exist)

About the metric value: it has been 2 years since June 2011, so if a similar amount of early coins are moved during the recent crash, the peak value should be 2-3 times as high as the 2011 peak, rather than 80% of it.

I only talked about weak hands, not strong hands, the two don't have to come together, what I emphasized is a lot of lucky guys that joined in the early stage and accumulated an amount of wealth disproportional to their investment and financial management capability must be removed from the equation for us to see the normal dynamics of the market. So the 2013 crash and 2011 crash are not that comparable.

Yes.

A couple other points...

Firstly, I'm not so sure the correlation between the recent spike in media coverage, and Google Trends, is as easy to parse as Maged has indicated.  I've come to think that media saturation is reinforcement to the immediate cohort of fresh bitcoin users - and given that belief, I'd expect a certain amount of decoupling between that and Trends.  The people who are - right now - interested in bitcoin, have already done their Googling.  They are the third wave of bitcoiners, after the early crypto/anarcho geeks, followed by the idealist and speculator bunch (odd that those two should show up at about the same time...).

The fourth wave won't be along until it's considerably easier to buy, sell and spend.  Still difficult, by grandma's standards - but easier than today.

Also, I somewhat disagree with Blitz about miners.  I don't think difficulty will be going down any time soon at all.  I also don't think miners are selling as much as he thinks - or that they will.  Miners are gamblers - they're betting on the come.  I mined at two and three-dollar bitcoin for a long time; at a theoretical loss.  Didn't sell any.  We'll see how many coins are sold by miners, I guess - but I don't think many...

this is ridiculous. this is despair! we're talking about how the coming months will be doom and gloom. don't you understand? the market leads market sentiment, slightly. everyone knows about how bad June '11 was, and now pretty much everyone is expecting a crash. this is the quiet period of consolidation, where most of the money is on the sidelines, and the smart money slowly begins to buy in.

take a look at the all-time price graph, log-scale, again. the pattern we just witnessed looks nothing like the June bubble. it looks more like a small bubble on top of a trend, and then a major correction to the trend.

the June '11 event cannot be compared to this. you can be a bear, but not for this reason.

how can this model account for the recent run-up to $165? nothing like that occurred after the $33 peak, and the proportions are entirely wrong: the run-up was much shorter, and the crash was much longer.

some rough numbers: price collapsed 90% over the course of many months in '11, whereas price collapsed 80% in a few days on April 10.

thoughts?

Yeah, I think this recent crash was totally different than '11.  Aside from everything you've mentioned, I can't help having the sneaking suspicion that there may some Pavlovian grooming going on.  We'll see how the market reacts the next time there's a run-up, huh?

who cares what it is, as long as it's being used? ignoring (negligent) inflation, a 20x increase of the volume of demand of bitcoin since $5/btc is the only thing necessary for $100 to be a stable price.

this is why i said it's finding its niches. it's not really being used in one way (it still hasn't figured out what it is), but it's being used in a large variety of small ways, in a manner which creates demand.

not to mention plenty of evidence that its attractiveness as a store of value has inspired some new big players to enter the market.

it's not even that the fundamentals are improving -- the fundamentals are changing. deflation is kicking in.

--arepo

Boom.

Why I am long term bullish:

1. Digital cash is here to say, face it, the idea itself can be replaced, but can not be killed, the governments/banks cannot just tell people to get back to the old days and live there happily ever after, no chance, no precedence.

2. If someone figures out how to overcome some of Bitcoin's flaws, his best bet of making his idea useful is to try to include it in the Bitcoin protocol/clients, where he gets greatest interest/network support/financial support, as long as it is not disruptive enough to be utterly incompatible.

So if no design exists that can fundamentally triumph over the blockchain, I will stay long term bullish.

Here's an interesting question: What will happen once Litecoin begins to trade on MtGox as they recently confirmed (https://mtgox.com/pdf/20130424_ddos_statement_and_faq.pdf) and share the same pool of USD that Bitcoin currently enjoys? Sure, they already trade on BTC-E, but that is a trivial amount of volume and attention compared to MtGox. Even trivially modified altcoins have grown immensely popular in a way I would have never imagined. What happens once the media starts to report on them?

I don't think I ever owned any Litecoins, but this will certainly be interesting to watch.

@arepo
I thought much the same near the bottom and I agree, we are at a crossroad. One thing to consider is that I believe the risk in Bitcoins is currently far higher than prices justify, in my view.


I'm ready to be proven wrong by the price action. I don't care much missing out here on a measly 20-50% as the immense risk no longer justifies it, I've already played the bottom.

A thought: If you are right and we are at the verge of the next bull market, how much does it really matter if one buys in at 137 at a rather high risk, rather than at 166, 200 or even 266 at a more reduced risk of being wrong?

I acknowledge the possibility, I just think the probability combined with upside is not worth it at the current stage. A good speculator sees that most of the easy money is most probably gone for a while.


Man, what a marketing language/buzzword bullshit, I thought better of you. Perhaps the thing to deflate will be the Bitcoin price.

PS: I hate to do ad hominems, but why are you getting so certain recently + on the verge of spam with the topics? To sell your reports? I remember you were wrong during the whole rally and then barely said anything. It would be too ironic if the same thing happened now.

I just have a question for those that think this will play out like in 2011, with an eventual decline to pre-bubble levels.
Do you think this will still happen if some of the things being worked on right now come through? I'm mostly referring to the projects that will make bitcoins much easier to buy.

These include the ATMs, Coinlab, Coinsetter, and several other exchanges.

Coinlab and the first ATM are coming out next week, and there's plenty of other projects being worked on. Some of these fundamental improvements seem too important to support a decline back to $30. They would also bring back media coverage and increase the user base.

these are all good points to temper a bullish attitude.


this is a more serious point than it sounds, i admit, but i've been talking about this (https://bitcointalk.org/index.php?topic=142280.0) since February, and i dare say that i was expecting the kind of event that happened on April 10. it wasn't really a bubble, it was growing pains in response to the market cap growing two orders of magnitude in size, quite suddenly.


... which brings me to this point. i was a bear when the rally started, and it was a spectacularly bad call, i'll freely admit. after three or four calls of 'tops' i realized that there was something terribly wrong with my methods. i took a break from posting publicly and turned a critical eye to my assumptions and methods.

i realized a large part was misreading the 'overbought' signals on the oscillators, because they really only work ideally when the influx of money is small comapred to the market cap, which was not the case during the rally. this recent push to $160 also completely defied the 'normal' behavior of these indicators, but this time i accounted for this fact, and anticipated the movement.

but this large influx of money is exactly what i'm talking about -- i'm not sure we're going to see the same kind of 'depression' that occurred last time because i do not think that the market contracted by the same magnitude in percentages as it did in '11.

[this is a bit OT, skip if you want]

as for a personal note, i apologize for seeming so self-assured.. sometimes i get a little too excited about my projections :D i know that my models are fallible, but the improvements i made during the rally i missed (which included better techniques for quantifying error, and the development of a brand new hypothesis supported by data i had been collecting) should reflect the fact that i was determined to never make so bad of a call again :P

i don't mean to spam, and i'm certainly not trying to 'sell my report'. i only published the report because of requests from users in the first place. i am really only motivated to continue improving my methods and models, as i did not know much about speculation at all 2 years ago, before i discovered bitcoin, and now (as a BS in physics), I am utterly fascinated by the complexity of finance and economics. also i've been a tutor for many years, and i tend to retain that mind set in everything i do. i love to teach.

and i hope you can agree that i'm learning a little more every day :)

--arepo

Don't sweat it, nobody is constantly right. Or else that person could be infinitely rich. ;D

I think in the end, this is all that counts, will the market be extracting BTC or USD in the coming weeks, or will it be doing not much of either? So far, it is hard to say because both USD and BTC levels have risen since 266. It'll be interesting to see whether it can establish a new high >166 next week, or if it has found a trading range.

It's my conviction that things are simply undetermined. A large USD player or a large BTC player or any large event can change everything at the current juncture. So to me, it's most prudent to wait with longer term positions until things crystalize.

Great, exactly what I felt about you, Arepo. ;)

I think one fundamental difference between a real prediction/analysis and a FUD is you always post a target in a real prediction and stand by it, so admitting your wrong call is very important.

And you know what, your TA assumption is starting to make some sense to me(though I still think it's too broad a generalization): it's funny to see people on this forum start to feel uncertain and doubtful when price becomes stagnated, yet remain polarized during the rally/chainfork/DDOS+crash etc, as the price may effectively be reflecting their emotions.

it is true that anything could happen at any time, of course :D

my main points were that fundamentals are still net bullish, and while i'm having difficulty determining an up/down percentage at this point based on my analysis, a continuation of the still-intact mid-term trend is definitely possible, if not likely.

i'm thinking the negatives you mentioned (exchanges closing, blockchain bloat, etc) are actually less important than people using it for things like purchasing reddit gold, or porn, or beer, or pizza (all of which you can do in a few places, at least), because these guys are not going to care or even know about technical crises and i'm confident that the community and the dev team can maneuver around any such obstacles relatively smoothly.

this is a new age of distributed, small-scale use -- we're moving out of our 'niche community' status.

--arepo

i come from a background in science, i know this -- just like your signature -- falsifiability is key ;)

i've started to really stress rigor in my threads, now, too (partly because if i didn't, ichthyo and others get on my back in two seconds flat :P)

but not to hijack this thread.. sorry Maged, it is an important one.

--arepo

Bearish scenario to $30 (let's entertain this):

1. Price crashes to $30

2. Media starts saying "SEE WE TOLD YOU IT WAS A BUBBLE"

3. Most start buying like crazy (buy ASK side is super thin) because they realize shit I get a second chance to ride the BTC train! CHOO CHOO!

4. Back to $150 in 48 hours lol

5. Profits

** This is what all the so called "bears" are masterbating about on this forum.  :P

I think it could have happened, but it didn't, through various means, buyers somehow reached a kinda Byzantine General style consensus that the battlefield would be $50-$100.

But anyway the particular price point isn't irrelevant, had the support been moved to $32, it could do very little to change people's perceptions about the crash, but the more than 200 million dollars spent on $50-100 could instead buy....7 million bitcoins, so good luck bears with finding so many bitcoins to sell. :P

It couldn't be more true.

Maybe, maybe not. But every fool who bought at $10 in July or August 2011 because he thought it was a bargain has been proven right. 1300% gain is pretty good compared to everything else. If this time is the same, everyone who buys at $130 will look pretty good in 2 years. If this time is not the same, he will look good in a few months.

+1 this

Back in 2011 the sentiment was a bit "well maybe bitcoin is really a fad and now price will just drop to 0 and no one will use it, after all you can't use it for a lot of things..." wich is why it slowly dropped from 30 to 15 to 10 to 5 to 2.
But today??? After bitcoin went from 2 to 266 instead of dying? With Bitpay reporting millions of $ of transactions each month? Now people are looking to buy cheap bitcoins!

These are really excellent. Great OP, I'd love to see a storyline with quotes and linked threads along the way following the history of bitcoin sentiment since early 2011.

Best statement on this board ever.

Very good point!

Just give it 1 year...let alone 2 years.

Next april I wouldn't be surprised if we are in or above the $500-$800 range.

I think this summer will be mindblowing...

All the mainstream media news, Cyprus bank issues (remember Cyprus is just a little island)

You wouldn't listen.

How are things now, arepo? ;D

this isn't the beginning of any long, slow, slide, i'll tell you that. we are very close to a market bottom, we just had to let off some steam.

-===-

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=30&i=6-hour&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=1&i1=RSI&i2=&i3=&i4=&v=1&cv=0&ps=0&l=1&p=0&

-===-

RSI as low as our second visit to $50, yet the price is more than double. can you say bullish divergence?

A usual bullish divergence would be a lower low on price and a higher low in the RSI reading.

Very well, we'll talk again in a few weeks. ;D

The run-up to $165 can be explained by the recent sentiment we've had of "It's different this time!". That caused a feedback-loop of more and more people thinking that things are different now, running up the price. Once the market comes to the realization that things really aren't different this time, that's when things will stop being different.

this quote was a little ambiguous. i meant the run-up from the last ATH to $266. the first bit about $165 was pretext.

the run-up was completely different (1000% over months?), and the crash was completely different (80% in days?). this is a completely different price pattern. almost like a reverse-June-bubble, who's run-up was as short as our crash, and whose crash was as long as our run-up.

2/32*266=16.625

For perspective. 80% is very large indeed in the short term. That's why I bought the rebound, as it was near certain to retrace a lot. But over the long term?

Many people are still sitting on huge unrealized profits. A too bullish sentiment is well displayed by upvote ratio and abundance of posts like this one (http://www.reddit.com/r/Bitcoin/comments/1dhw5m/whered_the_floor_go/c9qgeqr). "Just hold, it will go up again".

Make no mistake, the Great Dollar Extraction is here, and it has come to consume us.

there will be a bear market, but it will (necessarily) end before most people think it will :P

Of course. Sentiment will have to be very bearish after a long period of the downtrend, and ideally, shorting will get popular somewhere and bring us a nice short squeeze to form a real capitulation bottom.

@Maged

This recollection is so awesome!

I think I get where our misunderstanding is here. Where are you saying each bubble started, ended, and collapsed? The way I see it, the 2011 bubble started at $1 (mid-April 2011) and lasted about 2 months with a 3000% increase, crashing 70% over a few days, and 95% over several months. This bubble started in January at around $13.50, and saw a 2000% increase over four and a half months, crashing 80% over a few days. Tell me, how is that different?

I'm not one so bold to assume that the fundamentals will remain unchallenged within a new bear market. I don't know if Bitcoin really will emerge as #1 Digital Cash out of this, because it appears that xyz crapcoins are actually gaining in significance, and at least two of them will be trading on MtGox. Then, there is the tx/block scaling issue and there's the "cp in blockchain" thing.

Basically, I have no idea if Bitcoin is MySpace or not. I'll let the market point that out as the Great Dollar Extraction proceeds.

AFAIK, there is no consensus whatsoever amongst developers whether it should be done at all. We will likely hit the ceiling before anything is done.

Judging from your account date, I'll just assume you weren't here in 2011. Back then, following the MtGox hack and some other exchanges failing, there have been good news all along with cool stuff being built. People just didn't care about them, in the same way they didn't care about bad news during the parabolic rise. This market likes to alternate between positive and negative feedback loops. It's not based on "fundamentals" but almost exclusively psychology.

That's about right. But I would say it's 100% different (more people understanding BTC, better news post-burst), so our target price is around $60. And long term, BTC looks stronger than ever - but still needs real businesses around it.

I think crypto-currencies are a long way off if bitcoin doesn't make it, so I'm really hoping it doesn't play out like that. It would to be hard to get people to put money and trust into an idea that already failed.

I don't believe slightly better versions of bitcoin, like the alt coins there are now, are enough to overcome that.

Agreed. It would be problematic if an alt that didn't have greatly superior properties succeeded at large scale at the expense of bitcoin. Such success would likely be short-term, as it would erode confidence in non-gov-backed crypto-currencies in general. We just have to trust the market to be rational in aggregate over medium/long timescales.

 That said, if alts that fill different niches succeed, or an alt that IS much better comes along and succeeds, that's cool. It just has to make solid sense.

This really is the primary long-term threat to bitcoin and non-gov-backed crypto-currencies in general. This reminds me of Fred Wilson's blog post (http://www.avc.com/a_vc/2011/11/bitcoin.html) from November 2011 where he noted:

"The question remains if the Bitcoin algorithm or some other algorithm (possibly a derivative of the Bitcoin algorithm that deals with some of Bitcoin's weaknesses?) will ultimately win out. That's an important issue that has a lot to do with when this space becomes investable."

Wonder what his thoughts on alts and the investability of the space are now...

This time is different than 2011.

This time it's worse.

The Great Dollar Extraction is upon us.

Yeah, I'll need a little more argument than that.

Blitz

what do you mean by the Great Dollar Extraction?

I think that bitcoin will slowly slide to a fall as non-believers despair easily that the price doesn't go up to fast, and they didn't make their promised easy millions. Personally i would sell all my coins and wait to pick them back up at 70. But I didn't. Cause I invested everything I had in litecoin. I believe the currencies are pegged, but due to the fact that I cannot anticipate when mtgox will begin support I'm just waiting it out. oh and the rise in ltc value covers my btc loses, so I'm basically breaking even

Investing in LTC is like saying "Bitcoin is too safe for my taste... I want more risk/profits".  :D

Umm no cause the risks are identical, while the profit are much larger. I say identical because Litecoin is the only viable crypto-currency for long term success at the moment. so if you believe in bit coin why wouldn't you believe in a coin that fixes centralized mining, better wealth distribution, and faster transaction times?

I thought faster transaction times for LTC was a misconception?

Because transaction times are a wash.
Reduced to 2 min? Well that's still too long for a coffee transaction.

The same complementary services required to deal with transaction times are necessary for Litecoin.
Except that now you have more blocks to deal with. And you have a higher risk of orphan block.

Oh, also it doesn't fix centralized mining at all. (Which was foreseen anyway, by the way. Bitcoin was never intended to be mined by everyone.)
If litecoins really become valuable, they will also have ASIC.
Remember when Litecoin claimed it was GPU proof? Well we all know how that turned out...

Better wealth distribution?
Ah yes, you mean to litecoins early adopters, rather than bitcoiners.
When I was born, I had 0 dollar and everyone else had plenty.

So Bitcoin/Litecoin are essentially the same, except that Bitcoin has the first mover advantage, plenty of businesses accepting it and a team of developers to improve it.

That's what I mean by more risky.

Best of luck in your investment.

and also litecoin will end up producing more coins than bitcoin.

I am beginning to think there is a chance I was wrong. It would be great.

Either way, I believe we will get a very clear signal at the end of this stagnation.

That means that you weren't wrong. This is why crashes hurt so badly. You end up thinking that you were wrong, end up buying, see the price go down a bit, immediately realize that you weren't wrong, then sell at a loss. If you aren't thinking that you were wrong, that's when you should be worried.

Because the Humble Indie Bundle people have finally accepted Bitcoin thanks to Coinbase. ;D

No, just a hunch based on the continued high activity I'm seeing still in the Bitcoin community. I would have expected people to get bored. Same goes for the money on MtGox.


Yes, I realize that. I'm only holding a small part. I don't think there is a way to know which direction this market is headed until we see an actual breakout. And even then, we might be simply headed for a huge bull trap.

It's true, the bear market is still a strong possibility. It's only been one month, and so we might be in July 2011 where after weeks of stagnation, the price broke down. I'm going to keep my eyes open and see if if this is the beginning of the "long, slow slide".

You know guys, it would take less time if you just said "I don't know".  :D

Guess I have my answer now:

"The Most Important Early-Stage Investor Of The Last 10 Years Just Made A Huge Bet On Bitcoin" http://finance.yahoo.com/news/2-years-twitter-zynga-investor-121935658.html

This price behaviour is certainly reminiscent of July 2011 now.

You mean the nothing's-happening part?

Next step is off-a-cliff, right?

Yeah reminds me of that time too.

But is it different this time?

I think there are some differences in development/infrastructure.

Just that I still think the price can dip below $100.

I'm looking at it relatively that $100 is a psychological barrier just like $10 was.

Is this the beginning of The Great Dollar Extraction? If the Dollars drain out of the system via international wires and people deposit more reluctantly than they used to (and of course, they will not be able to any more via Dwolla), it might very well be.

Still awaiting confirmation on the charts, however.

super informative thread especially for those not involved way back when...

I still think that if we see some major (50k+) dumps, it's insider information in re the whole DHS Dwolla thing.  There could easily be more information/restrictions to come on that: and the earliest we'll hear about it is through obvious insider trading, like on April 10th, by those who are actually getting 'lettres de cachet' from the government.

One big dump and I set my buys around $50ish...

Who received those notes from the government on April 10th? I missed that.

Different situation - same result.  The insider info that wasn't shared was the CoinLab/Gox deal falling apart, and the attendant lawsuit.

The recent news adds to the evidence.

Awaiting confirmation on the charts.

Source? Proof?

Breakout.

I concede this is going differently than 2011. :)

VICTORY ;)

(choo choo motherfucker!)

LOL.  I had to google that Jynx card to make sure it wasn't photoshopped.  I bet they've taken some flack for that one...

Seems that it has only taken a different initial path in order to fool some of us. ;D

I'm fortunate enough to have actually come out with profits since I posted this as I reversed my position early at minimal loss and had a nice daytrading move immediately after (a week ago). Back to holding the Bernanke Bux until we see <50, probably.

We broke horizontal support levels of 103 and 97 recently. Next one would be 79. I predict that after a possible initial bounce beyond $100, we will be trading in the double digits for a long time.

The Great Dollar Extraction is ON.

Rampion jynxed it.  :D

Haha, maybe so. :D

I'm still bullish for the long term. I think below 50, Bitcoin will be a good play again in that one can buy some, throw them on a paper wallet and lock them away for 2 or 3 years.

Excellent post, much appreciated!

Still, I don't see the price crashing as low as in 2011... In 2013 terms, that means having a bottom of $16ish (2/32 - 16/266). I would be surprised if we go below $50, and very very puzzled if we go below $30.

I don't see that happening either. There's definitely a long-term up trend. Bitcoin will become a good play once it halves again (the price).

If the crash isn't painful, it likely hasn't completed. Take a look at sentiment today: the price that people are saying would be painful, "the end of Bitcoin", and that there's no way that we'll go below is about $20. Keep this in the back of your mind.

That being said, getting in at around $50 with a good amount (but not all) of your Bitcoin investment funds is a good idea long-term. Save a small amount for the $20 level, but don't depend on it happening.

Thanks for the time machine always interesting to see how far its going and where its been :)

I think exactly the same, what puzzles me is that we all agree. Everybody is waiting for $50 to "load the truck", while saving a little in case we go lower.

Real bottom is when few or rare threads talking about price. I shall wait when it goes down to 30USD.

Miners' margin profits have made a new low due to the recent difficulty adjustment: http://blockchain.info/charts/miners-operating-profit-margin?timespan=500days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

As this continues, it will take longer and longer to pay off an ASIC and miners will be forced to liquidate a larger perecentage of the 3600 daily BTC to cover their expenses.

Miners speculatively holding Bitcoins is not the usual state of things. They are a business, and soon they will have extremely tight margins like in the past. I give it 1 or 2 more doublings of the difficulty.

Interesting, thanks for sharing.

Any ideas what is the cause of Dec'12 sudden drop ? Right after that drop, the 2013 rally began. I wonder if there is a relation between those two events and whether this could happen again now.

Your statement is entirely contradictory: "They don't normally hold" and "They will sell more now". You can't have it both ways. I suggest you re-examine your logic/biases to ensure your thought process is at least internally consistent.

Selling cheap is a race to the bottom that puts you out of business. If businesses are not making a profit selling cheap... they will sell at a higher price, or hold until the price rises.

TBH, this is just another proof point that we are oversold.

Where is the contradiction? When miners have huge profit margins, they can begin speculating with those. Normally, profit margins are not huge, but currently they still are.

"Selling cheap" or "selling expensively" is nothing of concern for a miner. Their job is to sell periodically to cover their bills and pocket a small profit, they aren't speculators.

I'm describing just this progression.

Hmm I see, sorry I misinterpreted "Miners speculatively holding Bitcoins is not the usual state of things." as "they are not holding now or normally".

Regardless, I still think your logic is off. It is very much a seller's business to set the price. It is every bit their concern, as it is for any business, to set a fair price for the commodity they are selling. If you're not making money selling at your current price, and have fixed and/or increasing costs, "selling more" at the current price is not the solution. That just digs your grave faster. You would do better to switch your rigs off and wait.

Furthermore, I'd also venture that the average ASIC owner CAN afford to pay their bills... It would be a pretty foolhardy investment to mine BTC if you are struggling to make ends meet. I don't doubt that some are mining on the breadline, but I think extrapolating this persona to the overall miner population is a bit fanciful.

Finally, there has been increased supply lately with ASICS coming online prior to the difficulty increase. This will now decrease somewhat.

The pain of a crash is relative to where one starts from. Someone who bought at  $250 is definitely feeling the pain.

I think its an all or nothing kind of issue. As in either bitcoin is worth a lot or nothing at all. So the real issue here is game theory, take for example the prisoners dilemma. We see a parallel between the prisoners dilemma and the bitcoin dilemma. Where the best outcome is for bitcoin to go up, and it is a possible outcome. if no one sells bitcoin the value will rise, but then the question is since people will sell, shouldn't you be the first to do it? (the same does not apply to the stock market as bitcoins added utility does not come from its ability to produce revenue, rather the utility is derived from faith)

In other words we would all be better off if no one sold, but we are all to greedy and self centered to realize it. STOP SELLING!!!!
I propose people disclose their public key, that way we can monitor selling during critical periods. We could use that to form a union of some sort, and control the price fluctuation. The question is why join a union when you are self centered and here for profit rather than idealogical belief? Well the reason is cause you are here for more than a small quick buck in a month and want to make a big quick buck in 3 years. Almost everyone understands that the price now is inflated by speculation, but if we can stabilize the price we would get more merchant adoption, increased merchant adoption=higher price.

So... price collusion?

You are proposing something that is illegal, highly immoral and completely disruptive to the market to boost your personal wealth.

But the sellers are all to greedy and self centered.

Yeah, right...  ::)

That doesn't mean anything. Because bitcoin serves a store-of-value function, if it's successful at all, it'll always trade for more than is necessary to support the current transaction volume.

If the price doesn't regain and maintain triple digits, I would see the bear market as confirmed.

priced must go up quickly, i have to 15k to unload tonite but only if somebody make me wall to eat  ;D


/jaroslaw impersonation

The bear is on since the April crash, which was deeper and faster than the one we had in 2011.

On the contrary, it looks like this time the bear will last longer. In 2011 we had 5 months of slow decline prior to the bottom. The "bitcoin is a ponzi" sentiment spread quite quickly, it didn't take so long for the people to unload. Now we are having more traps, the money is taking longer to vanish, we are even having some new investors here and there. But the bear is on.

In 2011, the sentiment was "hacks&ponzis"

In 2013, the sentiment will be "regulation&money stranded at Gox" :D

Don't forget the scamcoins.

This time it's different. This time it's worse. :D

You wouldn't listen. :(

Since when do XRumer spammers talk to themselves?

I don't see it like this.
For a looooong time the outcome of this crash was uncertain.
It looked like the mother of all consolidation triangle.

Unless I'm mistaken, even Blitz was kinda confused.  ;)

Everything accelerating in bitcoin
Legal Revenue Providers Support Structures Development Advertising PR News
My duration is a lot shorter as a result  I'll go with December as an interesting month  ;)
Even Boldly October
Just so I can say
Wake me up when September ends

k, LOL!

Yes, we were all confused. I said "the bear is on" just after the crash, and I got some arguing with long time members (I remember organofcorti, who I respect much, asked me: "do you have any empyrical proof or are you just bullshitting?", or something like that). I based that conclusion just on common sense, I was sure we had a major speculative bubble (who didn't see that?), and logical thing was bubble deflation.

Then, the sucker rally to $166 started, and it really confused us all. We were uncertain between the "bubble deflation" case, and the "correction" case. Did you remember that? We had all this "higher lows" trend which was a very different pattern compared to 2011. We were pretty much all uncertain, apart from Lucif, Bright Anarchist and Evolve. The first two never had a single doubt about we were in a roaring bear market, while the last one had some light doubts, while still consistently defending the most likely outcome was a bubble deflation.

For me the tipping point was the ridiculously low volume rally to $130 the last week of May. There I sold most of my coins (at $129ish if I remember it correctly), and I realized the "correction" case was less and less likely, and that gambling on it was definitely -EV.

Fun and profitable ride nevertheless, with respected fellow travelers in this journey, like yourself, IAS, Blitz, Adam, Oda.Krell, Evolve, etc. etc. etc.

I completely agree. I don't really care who had the right intuition before anyone else. I care about how they arrived at their conclusion, so I can decide if their methodology is worth a damn or not. There are relatively few early bears that I took serious in that respect, slipperyslope and Rampion are among them (Blitz would be among them as well, if he wouldn't have a bit of a prosectilizing tendency about it occasionally :D).

Anyway, I was (and to a degree, still am) undecided how this will play out exactly, but there were several breaking points at which my sentiment changed.

(a) when we broke throught the last of the (increasingly lower) exponential growth trends that started in 2013

(b) when we broke the daily SMA100 (not that I see a deep meaning in that indicator, but I know people rely on it, so it matters after all)

(c) and finally, and that's the biggest one, when the "higher lows" series broke a few days ago.

I still trade exclusively on a short-to-medium-term basis, from day to day, week to week at most, and I'm mostly agnostic about how far we are into the correction/deflation, but I do somewhat adjust over time my expectation of the absolute bottom. And after each of the events above, that value went down.

That argument is very much known for its idocy inside. Not the man but the argument ;)

based on OP timeline, we should hit bottom in september.

There is no time, only price.

We're moving much slower than last time. I've predicted in the past that this deflation from the bubble would last about 1 year from the pop, based on our slow progress. I might be willing to revise that to 8 months, but that's as far as I'd be willing to go right now.

We've got a long road ahead of us...

Thanks Maged, always good to hear your opinion. :)

I'm not sure how long it will take, but generally I don't think we are going to reverse before around Halloween. Either way, before we make a bottom <50 on high volume (capitulation), we're not done yet in my view.

We're tracing out yet another bull trap right now to clear off the negative sentiment that has built, and then we're ripe to go down and challenge 50 imo.

You're welcome  :)

Agreed. Any heavy volume has always been on my short list of things that would invalidate my earlier prediction. Until then, I constantly have to force myself not to look too much at charts in order to avoid accidentally re-evaluating my prediction using emotion. That is why, although I did doubt myself earlier, I never actually changed my trading strategy.

Agreed. Remember, in Bitcoin there is almost always a bounce when you hit areas of support/resistance.

True, but we went through what were supposed to be "crucial" support points ($88 and $79) very easily and very quickly.

This makes me expect at least 1/2 quite big and long bounces before the bottom, with moments where things slow down for as much as a couple of weeks. This need to cool off and sentiment to build.

This last bounce at $66 looks uncertain, I think it will be interesting to see if the price goes again above the 200 day EMA (which is at $80ish) with decent volume, that could trigger an epic trap.

Whats your ETA on bottoming out? at what price?
When do you think we will surpass the 266 high?

My guess is bottom in 5 months at around 30 and all time high in a year and a half

Considering that the initial crash was very deep and fast, while the following deflation is being slower, I'd also bet for a slow deflation.

I like to think the bottom will be on September/October, but I don't discard at all a slower decline that lasts more. Also because from September to December we will see a huge increase in hashrate, ROI will be very difficult for miners, and a negative cycle can be triggered if prices are down, so the miners rush to sell to recoup their investments before the price goes down further, which obviously brings the price down, wash rinse and repeat...

Many people do not realize that the game changed with ASICs, the majority of hash rate won't be in the hands of tens of k's of amateurs miners like when mining was done with CPUs or GPUs, now the hashrate will be concentrated among few biggish "mining startups" that will function as a business as they have to pay for significant fiat costs - those businesses cannot mine at a loss while hoarding the coins hoping for the price to go up, so I expect some continuous selling throughout the year.

About ATH: breaking it in one year and a half seems too optimist to me. I won't be surprised if the next bubble doesn't happen for 2/3 more years. Next halving could be a nice point for it, it's the kind of "tipping point" where the miners get nervous and start hoarding in the fear they won't be able to cover costs of their operations, which is something that effectively cripples supply and triggers a coin shortage in the market.

We will see...

We'll be needing this again.

Of course looking back I should have said November :) and supportive bump

wow I didn't see this thread: great work OP!

...and the ATH was broken in less than 4 months  :P


Anyway, what is clear from this thread is how hopelessly wrong people are when trying to time the market (not talking about you specifically Rampion). It doesn't matter if you lived through 2011 and April 2013 bubbles and you think you know the markets inside out. You might get lucky and catch a falling knife (or call the top) successfully, but that's just gambling.

That was quite a fail indeed :)

I do think that 2011 won't happen again. Things changed, people knows BTC is here to stay for good while in 2011 Bitcoin could have very well disappeared. The sentiment and the level of awareness are completely different than in 2013.