SlipperySlope's Bubble Collapse Journal

[SlipperySlope]

28 days after the April 10 peak

A bubble collapse should be characterized by successfully lower peaks. This is a weaker bearish claim than the current bubble collapse trendline - that might still hold if the trendline is broken to the upside for a while.

Here are the current candidates of yet unsurpassed peaks ...

• April 9 - $266
• April 23 - $166
• April 28 - $149
• May 5 - $125

The longer time passes without these peaks being surpassed, I think, the more sentiment turns away from the notion that the bubble can indeed be reinflated.

[smoothie]

Thought to quote this. Interesting...

[edited to add new posts and to reflect current events]

My principal comments regarding the short term bear case, and its potential for literally multiplying the number of bitcoins you sold to raise cash.

• Day 4 post peak - Compare two bitcoin bubbles.
• Day 5 post peak - Price dropping 10 times faster than back in 2011 bubble.
• Day 7 post peak - How many more seller capitulations before the bottom? ....[this bubble has at least one now]
• Day 11 post peak - Does the recent dramatic recovery from 50 to 136 USD/BTC negate the case for a short term bear market? ....[turned out that it did not]
• Day 12 post peak - Long term chart is awesome
• Day 13 post peak - Sucker's Rally ....[indeed it happened]
• Day 20 post peak - Resistance at $160 ....[and yet unsurpassed]
• Tickets Purchased for the Bagholder's Ball
• Day 21 post peak - 24 hours of selling ....[indeed just the beginning, starting at $145]
• Alert - Perhaps the first, and largest, capitulation is at hand     ....[this was an actionable alert]

• Day 22 post peak - Second day of the Great Capitulation ...[reached a low of $80]
• Day 23 post peak - Third day of the Great Capitulation of 2013
• Day 24 post peak - 24 hours of buying - are we past the bottom? ... [yes, on our way up past $120
• Day 27 post peak - Reversal at $120 confirms primary collapse
• Does resistance trump support at $105? ...[yes, moving higher and looks more like a trend collision within 18 hours at $115]
• Day 28 post peak - Yet unsurpassed peaks at $266, $166, $149, and $125 conform to classical bubble collapse

Here [was] the short term bear case in a nutshell ...

• There will be no more enticing and greed-inducing news stories from the media. Now the benchmark is the crash and how speculators lost so much.
• Investor sentiment, especially new investor sentiment has reversed. Impatience to buy has been replaced by caution
• What is the correct valuation of fiat/bitcoin given what we know now? Certainly while the price doubled four times from January, the bitcoin economy did not do as well in percentage growth. Correct valuation depends then mostly on just how much of the run up since January is emotion, e.g. greed.
• If the downtrend continues, then coin holders are tempted to sell coin expecting to buy back for less fiat.

It happened, so now let's discuss ...

Question 1: what is the expected duration of the down trend? My rough guess as argued here is until September 2013.

Question 2: how far down does the trend go? My rough guess looking at the price chart is that the bubble started in January at about 13.50, which gives a downside target.

Bitcoin Bubble 1 Peaked June 8, 2011





Bitcoin Bubble 2 Peaked April 10, 2013

[SlipperySlope]

Thank you Mr. Smoothie.

Folks reading this should know that I index my part of the thread from the first page. Recently I added a properly scaled comparison between the 2011 bubble and this one.

[zby]

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...

The 2011 bubble broke the long-term trend on the way down.  I remember how S3052 was so sure that it would not - but it did and all hell broke lose.

[SlipperySlope]

The 2011 bubble broke the long-term trend on the way down.  I remember how S3052 was so sure that it would not - but it did and all hell broke lose.

Great point to remember. The April 2011 low was used to establish the support trendline before we reached the actual bottom - leading to great debate here at bitcointalk, but it turned out that April 2011 was part of that bubble.

[Frozenlock]

If I may, I would like to add some of my own analysis.

Many "bears" here believe the support line will break under the resistance line, pointing to the 2011
bubble and the long and excruciating crash that followed. (Both lines should collide in the next 2 days, at around $115.)
They might be right. Both charts kinda look similar.

Let's look again:



Here we see the peak, with the inevitable collapse, the rebound, the second crash... and so on.
I think we all know this chart by heart now.


Oh wait...
Wrong chart.

This is our chart:




What the hell did I just show then?

The gold "bubble" chart.

Here is how it deflated:






Now, obviously the timescales are different. But take a closer look.
Observe how the "popping" is similar. And by similar I mean frikking identical.



Everything is in log scale, so what we see really are relative changes.


Contrary to gold however, our support is ascending.
Notice how both support points occurred at almost the same places.




The full gold chart:



Disclaimer: contrary to 2011, I'm ready to drop a good chunk of my coins at a moment's notice.
I will not simply hold all of them and miss a golden opportunity like the one that arose when BTC reached $4.

[RationalSpeculator]

Great post Frozenlock!

When will you dump part of your coins?

Why not now?

[smoothie]

Yup totally different time scales. Gold went into a 20 year consolidation after it peaked.

[SlipperySlope]

If I may, I would like to add some of my own analysis.

And thank you!

[SlipperySlope]

29 days after the April 10 peak

A bubble collapse should be characterized by successively lower volume until the collapse is complete.

Here is the June 8, 2011 bubble volume chart ...



And for comparison, here is the correspond April 10, 2013 bubble chart ...



Although the recent bubble's volume is 10x higher, it diminishes from its peak in a manner very similar to that of bubble 1.

[David Rabahy]

And just about the time we've nearly perfected the technical analysis something different will come at us from the fundamental side of the house.

Is that a troll-like observation?

[ElectricMucus]

Although the recent bubble's volume is 10x higher, it diminishes from its peak in a manner very similar to that of bubble 1.

Also the gox api downtime coincides with the post "hack" shutdown period.

[RationalSpeculator]

And just about the time we've nearly perfected the technical analysis something different will come at us from the fundamental side of the house.

Is that a troll-like observation?

I would say it's an expression of hope

[SlipperySlope]

Does anyone get the feeling that the market is slowing down as we near the apex of the biggest triangle ever seen?

[RationalSpeculator]

Does anyone get the feeling that the market is slowing down as we near the apex of the biggest triangle ever seen?

You bet!  Bitcoin is so full of extremes. Sometimes volatility that I can't believe me eyes, other times, like now, the market seems almost dead.

[N12]

29 days after the April 10 peak

A bubble collapse should be characterized by successively lower volume until the collapse is complete.

Here is the June 8, 2011 bubble volume chart ...

https://i.imgur.com/Wqgpcu2.png

And for comparison, here is the correspond April 10, 2013 bubble chart ...

https://i.imgur.com/X3C2OOp.png

Although the recent bubble's volume is 10x higher, it diminishes from its peak in a manner very similar to that of bubble 1.

Good job, very clean comparison. It will be very interesting to observe if we are indeed in July 2011.

[Frozenlock]

Does anyone get the feeling that the market is slowing down as we near the apex of the biggest triangle ever seen?

Isn't that what is expected?

Volume: As the symmetrical triangle extends and the trading range contracts, volume should start to diminish. This refers to the quiet before the storm, or the tightening consolidation before the breakout.

[SlipperySlope]

Does anyone get the feeling that the market is slowing down as we near the apex of the biggest triangle ever seen?

Isn't that what is expected?

Volume: As the symmetrical triangle extends and the trading range contracts, volume should start to diminish. This refers to the quiet before the storm, or the tightening consolidation before the breakout.

Yes, it is expected but it something to actually feel it.

I now believe that the highest volume weeks of 2013 are behind us.

[Frozenlock]

Eh... more than 6 months remaining in the year... I would wait a little. 

[RationalSpeculator]

Eh... more than 6 months remaining in the year... I would wait a little.  

SlipperySlope puts lots of thought in his posts.

You can wait before recognizing that but it will likely come with a bill attached.