SlipperySlope's Bubble Collapse Journal

[notme]

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.

Trading is certainly slowing and the range is narrowing, but you haven't seen anything until you see the volume that is traded when this triangle breaks.

[SlipperySlope]

30 days after the April 10 peak

At this important 30-day milestone, note that although at the current price of $118.78, bitcoin has fallen 55% from its peak at $266, it remains 8.8x higher than back in January, when a bitcoin was priced at $13.50.

By way of comparison, at 30 days after the June 8, 2011 peak, prices had fallen to $14.2, also a drop of 55%.

Although obviously not aligned with respect to the timing of their capitulations, they remain consistent with regard to overall pace of collapse.

Bubble 1 at 30 days ...



This bubble at 30 days ...

[SlipperySlope]

The upward movement from $97 has broken through the up-to-now primary bubble collapse trendline. This weakens the case for the bubble collapse to continue, but there is another distinguished line of resistance nearby.

[Frozenlock]

 

[notme]

 

[SlipperySlope]

32 days after the April 10 peak

Diminishing volume over the last three days is narrowing the trading range, and sideways price action is more common than earlier in the bubble collapse. There has been a slight downward trend from the recent peak at $125. By the end of this week, the illustrated support line intersects the resistance line at $120.

If the price fell through the indicated support line, e.g. below $110 by the end of this week, then that outcome would strengthen the case for continued bubble collapse. Conversely, if prices rally and comply with the indicated support, then that weakens the bear case, especially if recent peaks at $147 and $160 are surpassed.

[SlipperySlope]

33 days after the April 10 peak

Here is a closer look at the recently completed bearish wedge. The bitcoin rally significantly reversed direction at the indicated resistance trendline. This is the sort of pattern that could initiate the next leg down. Note the very high relative volume.

[Frozenlock]

Yup, down we go.

Should have shorted. 

[dandirk]

Looking at volume... not sure what to think...

My first thought is a massive sell off (I think was pumped 2-3 days ago when it hit 122)...  The volume after is so far holding the price steady so either they are already trying to buy back or everyone else is jumping on the cheap coins (I know I did, got in at the bottom 110.00010 thank you).

I don't yet see a down turn, it has been slow lately so I sort of discount the sell off... waiting for a more lasting tend to appear.

It is entirely possible though this single sell off could of broke what ever support we had the last few days.

Lets keep things into perspective... all those market sells dropped the price less then 10%.

[SlipperySlope]

There was a major post-peak support trendline breakout to the downside on news of Dwolla/Mt.Gox account seisure by DHS. Note the relatively high, bid-wall-busting volume in the last 12 hours.

To some extent the support trendline represents the trading belief that the bubble can be re-inflated. With the breakthough to the downside, that trading belief will be weakened, and belief that the bubble may have more collapsing yet ahead will, in contrast, be strengthened.

[RationalSpeculator]

SlipperySlope, how many chances in 10 do you give it that prices will hit $50 or lower for some weeks, the coming half year?

[fitty]

SlipperySlope, how many chances in 10 do you give it that prices will hit $50 or lower for some weeks, the coming half year?

What's lower then zero?

[SlipperySlope]

57 days after the April 10 peak



Nearly two months after the peak at $266, it is increasingly evident that this bubble may have completed its collapse. Price action for May was bullish/neutral - not bearish - even in the face of bad news events. The May low of $80 has not been surpassed on the downside, and the early May high at $125 was surpassed later in the month. The post-peak highs of $166 on April 23 and $149 on April 28 still stand.

The bubble collapse pattern now looks less like the June 2011 collapse and more like a damped oscillation consolidation centering on $120.

In the illustrated chart, I circled the mild August 2012 bubble-correction. Note that prices did not crash back to levels of June-July, but rather proceeded sideways and upwards.

I now believe that bitcoin prices could progress sideways for much of the rest of the year until the long term support line approaches. Observe that the long term trendline I drew suggests that bitcoin prices are generally increasing 10x every 14 months. Accordingly, I expect sharp pullbacks towards the support and slower recoveries upwards as is typical of a long term rally.

[BitSmile]

57 days after the April 10 peak
The bubble collapse pattern now looks less like the June 2011 collapse and more like a damped oscillation consolidation centering on $120.

In the illustrated chart, I circled the mild August 2012 bubble-correction. Note that prices did not crash back to levels of June-July, but rather proceeded sideways and upwards.

I now believe that bitcoin prices could progress sideways for much of the rest of the year until the long term support line approaches. Observe that the long term trendline I drew suggests that bitcoin prices are generally increasing 10x every 14 months. Accordingly, I expect sharp pullbacks towards the support and slower recoveries upwards as is typical of a long term rally.

Do you believe we could go below 100$ again in the medium term?

[SlipperySlope]

Sure, we could go below $100 as the long term support is much lower than the current price. My original analysis was that the price would decline to meet the long term support at $40-50 six months after the April 10 peak.

[oda.krell]

It has happened! The rapture has occurred before our very eyes!

SlipperySlope has turned bull (or at least non-bear)....

That can only mean one thing: Time to sell all the bitcoins!







I'm kidding, of course. As always, I appreciate your updates. Funny enough, right now I'm more sceptical than ever that we've reached the end of the slide. The low volume looks to me like biding time, as if the market is waiting for a signal that the fundamentals of bitcoin went from "promising" to "actually relevant"... and I think it'll take another year or two before that will be the case.

That said, I don't expect we'll reach a new absolute post-crash low (like lucif does, for example). The very worst I can see is approaching 50 again, and more realistically, that we'll test 100 a few more times in the coming month(s).

/gut feeling

[SlipperySlope]

It has happened! The rapture has occurred before our very eyes!

SlipperySlope has turned bull (or at least non-bear)....

That can only mean one thing: Time to sell all the bitcoins!

Indeed. Although I bought back in at $131, I have 20% still in fiat in case the bubble collapses further.

An important test will be at $104. The bear case becomes stronger should that be broken through on the downside.

[Rampion]

It has happened! The rapture has occurred before our very eyes!

SlipperySlope has turned bull (or at least non-bear)....

That can only mean one thing: Time to sell all the bitcoins!

Indeed. Although I bought back in at $131, I have 20% still in fiat in case the bubble collapses further.

An important test will be at $104. The bear case becomes stronger should that be broken through on the downside.

I think we will go through $104 like a hot knife through butter. Next real support is $80ish. If that's broken too tye the real test will be $50.

I don't think we will go below that. And in my book a bubble that bottoms at 1/5 from the top is quite good, it would be healthy signal for BTC.

If $50 is broken, I would expect despair, gloom and doom as per 2011, where we bottomed at $2 (that's 1/16 from the top).

To put things in context, a 2011 scenario translated to 2013 would mean to reach a bottom of $16ish. That would be a textbook bubble burst, but as I said earlier I doubt we will ever see again that kind of prices.

[oda.krell]

It has happened! The rapture has occurred before our very eyes!

SlipperySlope has turned bull (or at least non-bear)....

That can only mean one thing: Time to sell all the bitcoins!

Indeed. Although I bought back in at $131, I have 20% still in fiat in case the bubble collapses further.

An important test will be at $104. The bear case becomes stronger should that be broken through on the downside.

I think we will go through $104 like a hot knife through butter. Next real support is $80ish. If that's broken too tye the real test will be $50.

I don't think we will go below that. And in my book a bubble that bottoms at 1/5 from the top is quite good, it would be healthy signal for BTC.

If $50 is broken, I would expect despair, gloom and doom as per 2011, where we bottomed at $2 (that's 1/16 from the top).

To put things in context, a 2011 scenario translated to 2013 would mean to reach a bottom of $16ish. That would be a textbook bubble burst, but as I said earlier I doubt we will ever see again that kind of prices.

I agree with most of what you write, but you, as many others on this forum are just so damn... impatient.

No, I don't believe we will approach 80 during this down trend. It rarely happens that such huge drops happen anyway, and the momentum to go there in one round just isn't there.

I think testing 80 again is a real chance. But not today, or tomorrow.

[True___Blue]

Thanks for this very informative thread. As someone who is still learning basics of how markets work this has been very helpful.