A potential top @ $12.16: the bearish case

[BrightAnarchist]

• Volume has been decreasing on each major move since mid-July
• $12.16 is ~38% of the move to the all-time high, a Fibonacci resistance level
• We could be ending a C-wave move of an a-b-c countertrend that began at the $2 low (which itself is a B wave, making the "crash" the A wave and the C wave yet to come)
• The stability around $5 resembles more a sideways B-wave than a deep 2nd wave retracement prior to a large impulse move
• On a logarithmic chart, the $2 low was still not within the 4-th wave area of the 5-wave bubble move to $32. This 4-th wave area is between 50 cents and $1.

I of course have no crystal ball, and the super-bullish scenario is also possible where we're starting a 3-of-3 up to past $32. But - if there's a bearish case to be made, then here it is, and here's me hoping for a buying opportunity in the future.

Either way, I'm long BTC, but if it gets to the $1 level, I'm buying even more with both hands. Fundamentals are the biggest reason to be bullish, especially with Silk Road growing like it has, so I'm quite curious so see how the next few months unfold.

Log Chart:

http://bitcoincharts.com/charts/mtgoxUSD#ig6-hourztgOzm1g10zm2g25zcvzl

Discuss.

[1714883432]

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[1714883432]

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[Bimmerhead]

Could you label the bullish case on a chart for us?  I'm confused by your description: is the $12.16 price the end of a B wave or a C wave?

[BrightAnarchist]

Could you label the bullish case on a chart for us?  I'm confused by your description: is the $12.16 price the end of a B wave or a C wave?

I haven't really investigated the bullish case, but here's the bearish case in better detail:

Wave I is the impulse to the bubble high of $32. It has a 4th wave in the 50 cent to $1 area.

Wave II is where we may be now.

Wave A of Wave II was the "crash" down to $2, then we began a B wave up

Since then we've done an even smaller a-b-c to form the B wave, which should end eventually with a nice lower high, potentially at around $12 (but there's a wide range here, I'm just making a guess based on volume).

So next would be Wave C down to end the larger Wave II. Then at around $1 we begin the giant Wave III to the moon (i.e. past $100/coin probably).

[Bimmerhead]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

[BrightAnarchist]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

Yeah, and of course the bearish case is actually bullish anyway... it all depends on the time frame!

That's why I said I'm long no matter what, but if we do get a nice drop to these cheap levels, I'm buying way more coinzzzzzzzzzzz

[calian]

Then at around $1 we begin the giant Wave III to the moon (i.e. past $100/coin probably).

$1 isn't going to happen without legal intervention. I would be seriously shocked to see $2 again.

[Stephen Gornick]

• Volume has been decreasing on each major move since mid-July

While trading volume at the top exchanges might not be at heavy levels, there is trading through alternative methods that is gaining in significance.

With individual traders finding ways to trade without going through Mt. Gox or the other top exchanges, there is now less low hanging fruit feeding the traders and bots.  As a result, the reported trading volume can be down with no real difference to supply and demand.

FashCash4Bitcoins (a cash-out service) reports hitting record levels pretty consistently.  Bitcoins can be bought directly from Bit-Pay (minimum $10K USD order size) and Tangible Cryptography (amounts up to $5K USD), for instance:
 - http://bitcointalk.org/index.php?topic=89757.msg996082#msg996082
 - http://bitcointalk.org/index.php?topic=87094.0

Many alternate exchanges show consistently growing volumes.

Now that there is a trust history, there are buyers and sellers who have traded with each other before and now mostly trade over-the-counter directly, without any intermediary.

So the volume at the exchanges can go down but that doesn't mean there is any less demand for bitcoins.[/list]

[Bimmerhead]

• Volume has been decreasing on each major move since mid-July

While trading volume at the top exchanges might not be at heavy levels, there is trading through alternative methods that is gaining in significance.

With individual traders finding ways to trade without going through Mt. Gox or the other top exchanges, there is now less low hanging fruit feeding the traders and bots.  As a result, the reported trading volume can be down with no real difference to supply and demand.

FashCash4Bitcoins (a cash-out service) reports hitting record levels pretty consistently.  Bitcoins can be bought directly from Bit-Pay (minimum $10K USD order size) and Tangible Cryptography (amounts up to $5K USD), for instance:
 - http://bitcointalk.org/index.php?topic=89757.msg996082#msg996082
 - http://bitcointalk.org/index.php?topic=87094.0

Many alternate exchanges show consistently growing volumes.

Now that there is a trust history, there are buyers and sellers who have traded with each other and no trade over-the-counter directly, without any intermediary.

So the volume at the exchanges can go down but that doesn't mean there is any less demand for bitcoins should there be any plateau or downtrend.[/list]

Interesting point.  Is anyone attempting to track aggregate demand across all trading options, to the extent that that can be done?

[RyNinDaCleM]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

Here's a Bull vs Bear visual to go with the explanation given by BrightAnarchist.

[smoothie]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

Here's a Bull vs Bear visual to go with the explanation given by BrightAnarchist.

Nice picture.

[S3052]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

Here's a Bull vs Bear visual to go with the explanation given by BrightAnarchist.

Nice comparison.

The count for the bear case is rather unlikely since the time span for a wave 2 correction would be too long versus the wave 1 advance. It is not impossible but does not look likely.

[RyNinDaCleM]

Thanks, now I get it.  I said 'bullish' but meant 'bearish' which you answered anyway!

Here's a Bull vs Bear visual to go with the explanation given by BrightAnarchist.

Nice picture.

Nice comparison.

The count for the bear case is rather unlikely since the time span for a wave 2 correction would be too long versus the wave 1 advance. It is not impossible but does not look likely.

Thanks guys!

@S3052, Agreed! It is very unlikely.
However, it should be noted that, if we were to have a deep correction, and drop below the wave-(1) ($7.22 high noted in the "bullish" representation), the current situation would be the topping of a wave-(B), and we would be looking at heading toward a new low. This is because, from an EW standpoint, once we passed the January high, and a wave-4 cannot overlap a wave-1 there is now nothing stopping us from seeing a new lower low.
(I know you know this, I'm just clarifying for the EW Newbs.) 

[proudhon]

Awesome.  <gets ready for new lower low>

[smoothie]

Awesome.  <gets ready for new lower low>

LOL

[finkleshnorts]

Fascinating.

Once my loans mature (>75% of my btc), I plan to sell 50% of my btc in hopes of a plunge. If i'm wrong, I still have half my btc, and I'll just keep waiting for a plunge with my other [sold] half.

[adamstgBit]

See now that's what i'm taking about!



I see the bullish chart as not only likely but necessary. The rise has giving new hope for 100$ bitcoins, but before that can happen new money has to come into the market, and for new money to come into the market opportunity must be presented. 7.22 will the opportunity of a life time.

[Bimmerhead]

The count for the bear case is rather unlikely since the time span for a wave 2 correction would be too long versus the wave 1 advance. It is not impossible but does not look likely.

From what point are you counting the start of wave 1, the inception of bitcoin?

[n8rwJeTt8TrrLKPa55eU]

I think fundamentals trump technicals, so I don't see a major correction as long as worldwide economic conditions continue to give people reasons to find alternatives to the traditional monetary system and national currencies.  But I can conceive of some extreme (unlikely) scenarios that might cause a giant correction:

• Major flaw or vulnerability in algorithm(s) discovered. If truly unsolvable, I guess price could go to zero as the whole experiment is abandoned.
• Powerful entity (e.g. a government, the UN, etc) declares explicit war against Bitcoin or affiliated entities (SR, Gox, etc) using some flimsy excuse.  Actions taken through regulatory/legal/cyber channels & arrests are made.  Weak hands would assume the worst and sell, true believers would hold on.  Price could fall drastically to some very low (but nonzero) amount.
• Early miners holding millions of BTC decide to sell all at once.  Stupid, but not impossible, could drive price to low digits.
• Satoshi comes out of hiding and declares the whole thing to have been a giant joke.

Pirate blowing up, exchanges getting hacked, thefts, viruses/trojans, I don't think any of those things would cause a major drop at this point.

[Jointops420]

Awesome.  <gets ready for new lower low>

So from your prediction of $7.20 being 2012 high, I that to be get ready for a higher high. Cheers.

[finkleshnorts]

See now that's what i'm taking about!


I see the bullish chart as not only likely but necessary. The rise has giving new hope for 100$ bitcoins, but before that can happen new money has to come into the market, and for new money to come into the market opportunity must be presented. 7.22 will the opportunity of a life time.

So you bought back in, ay?