Bitcoin Forecast, Bitcoin Speculation & Bitcoin Technical Analysis. Up or DOWN?

[Technomage]

S3052 is right on, from a common sense perspective at least. There is bound to be a reversal very soon that will change the game, simply because the worth of the whole Bitcoin economy is less and less every time it goes down and at the same time we have in fact seen a massive transaction and merchant growth, in the long-term. This sets a strong limit to the price decline, for example a price of $1 would put the maximum worth of the whole currency at $7.4 million, which I think most of us can agree is a very low number even for something as small as Bitcoin.

I do agree that a "new all-time high" won't happen simply because there is potential for that to happen. Bitcoin needs to expand to fulfill that potential. But that will happen if people keep believing in Bitcoin itself and keep working on it. Bitcoin is there, and it works. It's up to the merchants to create the services and brands to support it and make it more known, and easy to use. How big it'll grow remains to be seen. I wouldn't be so quick to call an all-time high yet, but it's certainly possible.

Regardless of how big Bitcoin can go, it's very likely that there will be a trend reversal and a significantly higher price than now. The big question is will the price make one final dip before a reversal, or will it start climbing from $4. I don't think a heavy dip is very likely because the support at $3.x is super strong, but it could go down a bit before it goes up.

[1714215149]

1714215149

[1714215149]

1714215149

[S3052]

It just needs to be suggestive.  It fails on me - because of the inconsistencies - if the line is drawn once in one way next week in another way - it loses credibility.  The question is if I am a common case - maybe not.

Thanks for your feedback. Sometimes the way the line is drawn has minor variations, which I try to avoid. At the same time, the BIG PICTURE is what counts:

I have done a new chart here that uses a thicker trendline and this is quite clear. When doing this sort of analysis, the big trends are broad, and hence, too detailed views may lead to false signals.

http://www.bitcoinbullbear.com/index.html
http://chart.ly/dc4tqrw

The line is not broken in the grand scheme of things. The more often a market touches, and briefly even breaks them before jumping back above, the stronger they will become.

[nmat]

S3052 does a great job on technical analysis (I even follow him on twitter to keep up with all the updates) and yes, he considers other things beside the charts, such as the community thoughts here at this thread. I was just saying that every prediction must be taken with a grain of salt.

Regardless of the bitcoin price, volume in currency is an indicator of how much people are trading. Investing $1000 in June means that I can move around 33 BTC. In October it means that I can move 250 BTC. So the BTC volume should be 7 times higher now, but instead it is more or less the same. Either we have the same amount of people investing 7 times less money, or we have 7 times less people. Either way, I don't believe that we can support $30 prices.

[2112]

I have done a new chart here that uses a thicker trendline and this is quite clear.

The scientific equivalent of this is the following theorem:

You can draw a straight line through any three points provided that the line is thick enough.

Q.E.D.

[S3052]

smile. there are 5 points, though :-)

[molecular]

smile. there are 5 points, though :-)

You can draw a straight line through any number of points, provided it's thick enough

[fivebells]

http://chart.ly/dc4tqrw

"Will the major bitcoin charts trendline hold? if so, this could be a strong buy"

  That is a tautology.  If the line held, bitcoin price would increase at least exponentially from then on.

[molecular]

http://chart.ly/dc4tqrw

"Will the major bitcoin charts trendline hold? if so, this could be a strong buy"

  That is a tautology.  If the line held, bitcoin price would increase at least exponentially from then on.

A tautology is always true... do you maybe mean the opposite (called a "falsum", I believe)?

[2112]

You can draw a straight line through any number of points, provided it's thick enough

In geometry, the corrolary was: a wannabe Euclides with the dullest pencil can prove the highest number of theorems. 

[alexanderanon]

Just out of curiosity S3052, do you at all follow Clive Maund? I just found him recently and noticed that he also likes using Elliott waves and was also one of the few analysts I read that predicted the recent commodity crash. I don't think he writes anything on bitcoin though...

[S3052]

No I do not follow him (yet). Let me find out more about him. Thanks for the suggestion. I know Robert Prechter well (not personally, but read all his books which helped me to predict the stock market declines and commodity declines over the past 5 years)

[grod]

S3052 does a great job on technical analysis (I even follow him on twitter to keep up with all the updates) and yes, he considers other things beside the charts, such as the community thoughts here at this thread. I was just saying that every prediction must be taken with a grain of salt.

Regardless of the bitcoin price, volume in currency is an indicator of how much people are trading. Investing $1000 in June means that I can move around 33 BTC. In October it means that I can move 250 BTC. So the BTC volume should be 7 times higher now, but instead it is more or less the same. Either we have the same amount of people investing 7 times less money, or we have 7 times less people. Either way, I don't believe that we can support $30 prices.

May I suggest an alternate theory?  The money the "7 people" invested in June has been collected and used to pay for hardware and power by a small % miners.  My estimate is 15-20% cash out, the rest are happy looking rich on paper and/or speculating "long term."

The remainder of original investment is being traded by a smaller (but not 7x smaller) group.

[zby]

S3052 does a great job on technical analysis (I even follow him on twitter to keep up with all the updates) and yes, he considers other things beside the charts, such as the community thoughts here at this thread. I was just saying that every prediction must be taken with a grain of salt.

Regardless of the bitcoin price, volume in currency is an indicator of how much people are trading. Investing $1000 in June means that I can move around 33 BTC. In October it means that I can move 250 BTC. So the BTC volume should be 7 times higher now, but instead it is more or less the same. Either we have the same amount of people investing 7 times less money, or we have 7 times less people. Either way, I don't believe that we can support $30 prices.

May I suggest an alternate theory?  The money the "7 people" invested in June has been collected and used to pay for hardware and power by a small % miners.  My estimate is 15-20% cash out, the rest are happy looking rich on paper and/or speculating "long term."

The remainder of original investment is being traded by a smaller (but not 7x smaller) group.

I cashed out my bitcoins back in July and have withdrawn about 2/3ds of the money, since then I tried to play with the rest - but only managed to reduce it a bit.  I wonder how many people did a similar move.  How much cash left MtGox?  How much is still there?  It is very tempting to be back in the game if you have some cash left at MtGox - that's why this bubble deflation goes very slow.  If you were an early investor that decided to cash out - how much did you leave on MtGox just in case?

[grod]

I cashed out my bitcoins back in July and have withdrawn about 2/3ds of the money, since then I tried to play with the rest - but only managed to reduce it a bit.  I wonder how many people did a similar move.  How much cash left MtGox?  How much is still there?  It is very tempting to be back in the game if you have some cash left at MtGox - that's why this bubble deflation goes very slow.  If you were an early investor that decided to cash out - how much did you leave on MtGox just in case?

Only MtGox and Dwolla know how much of the original investment is still in circulation.  What is certain beyond all doubt is people aren't depositing enough new money to keep pace with even a small portion of current operating costs.  Thankfully 80%+ of the mining power is content to mine-and-hold, if they started cashing out enough to pay for power (never mind hardware) it'd be a bloodbath.

[zby]

I cashed out my bitcoins back in July and have withdrawn about 2/3ds of the money, since then I tried to play with the rest - but only managed to reduce it a bit.  I wonder how many people did a similar move.  How much cash left MtGox?  How much is still there?  It is very tempting to be back in the game if you have some cash left at MtGox - that's why this bubble deflation goes very slow.  If you were an early investor that decided to cash out - how much did you leave on MtGox just in case?

Only MtGox and Dwolla know how much of the original investment is still in circulation.  What is certain beyond all doubt is people aren't depositing enough new money to keep pace with even a small portion of current operating costs.  Thankfully 80%+ of the mining power is content to mine-and-hold, if they started cashing out enough to pay for power (never mind hardware) it'd be a bloodbath.

The trial in France might reveal some info about the cash in the European MtGox accounts.

[dree12]

S3052, in your "bullish divergance" chart are you measuring the change of the divergence of the MACD, a measure of change in trends?! Why is this a useful measurement?

[ineededausername]

http://chart.ly/symbols/BCOIN
bullish for 3 months 

[grod]

To be fair, the September 15 breakout above moving averages after a double bottom was definitely a bull signal.  You can't argue with that.  I was a bit surprised we didn't have at least a minor rally myself.  And by surprised I mean I kept a bunch more mined coins than I should have which I later sold for less $.

[ineededausername]

To be fair, the September 15 breakout above moving averages after a double bottom was definitely a bull signal.  You can't argue with that.  I was a bit surprised we didn't have at least a minor rally myself.  And by surprised I mean I kept a bunch more mined coins than I should have which I later sold for less $.

Problem is, some guy keeps selling 10k BTC into these rallies and they just die
How the hell can technical analysis predict that?

[log0s]

S3052, in your "bullish divergance" chart are you measuring the change of the divergence of the MACD, a measure of change in trends?! Why is this a useful measurement?

In my opinion the only thing s3052 is saying is that the market could go up because it's not going down as fast as it was before.  A slower decline or sideways trend is really all the MACD and RSI show, and s3052 calls this a "bullish divergence", which I disagree with.  The market is currently in the second significant sideways trend since the peak in the $30s.  During a sideways trend, all 3 parts of the MACD (the two lines and the divergence between them) move towards the center line (0.0).  So if MACD was low because of a previous down trend, and then the market starts moving sideways, the MACD will start to move upwards, and the divergence between the two MACD lines will be positive.  The reverse is true if the trend was up before it starts going sideways.  I think a more relevant thing to consider is that sideways trends are typically followed by the previous trend again, which in bitcoin's case is a down trend.

Two more things that I would consider when interpreting the MACD:

First, the MACD is distorted near the beginning of s3052's "bullish divergence" line due to 6 days of no trade data from mtgox being shutdown after it got hacked.  If those 6 periods are taken out of the measurement, the divergence between the MACD lines would go into the negative more sharply, and come back up a little quicker as well, and in my opinion would be more accurate than pretending the market price was constant during that volatile time period.  This removes s3052's nice straight line across the bottoms of those MACD divergence lows.

Second, I don't think the big decline and recovery just over 2 months ago (which didn't even recover all the way back up to the previous sideways trend) is very relevant to the general trend and to current and future prices.  It's deviation from and return to the trend doesn't have much meaning for the short term or the medium and long term.  The context of the market was much different then than it is now.  The lack of that trend deviation's meaning today implies that the larger moves in the MACD during that time are not very meaningful today, either, when interpreting the larger trend that is more meaningful to us today.  My day trades don't take that period into consideration now, and neither do my long term expectations at this point (however, a few weeks or so ago it was much more relevant to me for both the short and long term...the market context my decisions were based in were much different back then as compared to now).  As far as I am concerned when looking at the last 4 months of the market declining, putting a lot of consideration into that big drop/recovery doesn't provide much more meaning than considering the 6 days of no price data at all.  s3052's line drawn from the the second MACD divergence low to the third seems to be almost meaningless in today's market.

I think it was just a convenient place to draw a line.

I focused on MACD in this post, but the RSI is obviously based on the same market data and likewise contains similar distorted effects that would likely affect s3052's line drawing.  This suggests, at least to me, that the idea of there being a "bullish divergence" isn't very well supported by the data.  I think this current sideways trend is just another consolidation before prices start to drop more (the end of the last sideways trend wasn't pretty, either...if that big drop a couple months ago is of any relevant meaning at all, it's that it suggests the possibility that the current sideways trend could end the same way before continue back on the normal slow decline).

Just sharing my opinion.