Yesterday we broke the "higher lows" monthly trend with no resistance whatsoever, but still these forums are bloated by bulls in denial. Fear is nowhere to be seen, which is a bad omen for those hoping in a fast deflation followed by a quick recovery. Still long road ahead before despair and final capitulation.
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I'm not really going to disagree with the practical conclusion of your argument -- I think it's very much possible prices will drop another 50%, and then maybe another time. But I do disagree with the rationale behind your argument, the one that you (and many others here) have been posting a number of times. I'll try to explain what I mean...
I'm sure there are loads of "bulls in denial". But I don't think they are the major force that keeps the price relatively high ("relatively high" in the sense that you mentioned yourself: that the correction you hope for doesn't happen fast enough).
My own explanation is slightly different: I don't believe in the absolute necessity of a "natural" deflation of a bubble, as an event completely independent of external factors. So I think the reason why the correction/deflation is proceeding relatively slowly is not because of bullish delusion (at least not if the word "bullish" is supposed to carry any real meaning, and not just intended to mean "not completely pessimistic about the prospects of bitcoin"), but because of the largest part of investors in bitcoin not being quite sure where we are in the bitcoin adoption event, and as a result taking a "conservative" approach of deflating the former high, but only slowly.
Not sure if I made my point very clear, but what I'm saying is: price
will continue to go down
if nothing happens, simply because the market will take it as a sign that we're still in a very early stage of the adoption event. But I also believe that
(a) there is no deep psychological motivation to let the bubble "deflate all the way before we can go up again". If there is a big enough event that signals we are further into the adoption than previously thought, the price will appreciate from whereever we are at the moment. And,
(b), that what constitutes a "big enough event" to signal that is rather unclear. Could be that it needs to be of the size of amazon.com switching to btc entirely, could be that it's enough that google play suddenly accepts btc besides USD.
Very good points. My position is that different bubble phases are just a description of recurrent market psychology, and BTC is not different in that sense.
Of course I agree with your final assumption - if a "big enough event" happens, price will just raise from that moment. But IMO a "big enough event" is not yet to be seen on the short term horizon. I would discard amazon.com switching to BTC (I cannot imagine Paypal supporting a "Paypal killer"), and I don't see Google play accepting BTC. I think its much more likely that in the mid term (+6 months) big wall street players launch BTC trusts and other derivatives "a la Winklevoss", which would trigger bigger adoption between mainstream speculators.
I also think it is more likely for a big wall street player to buy MtGox or just to create its own BTC exchange, than Amazon or Google embracing BTC. These two companies like to be "in control" and like to "centralize", thus Bitcoin is kinda a dead end for both, despite of what their CEOs might say publicly.
