SlipperySlope's Bubble Collapse Journal

[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.

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.

I agree with you. It won't happen fast. There will be no huge sell outs like we had after April 10th, where we had two almost consecutive days in which 500k coins were traded.

This is one of the reasons I don't believe we will go below $50. During 2011 bubble burst, we didn't see huge, ATH volume sellouts during the decline. The huge sell out happened at the bottom. The volume we had recently around $50 was higher than ever, and we had that kind of huge ATH volume two days, not only one.

Thus, IMO panickers already did their job finding out the very bottom. Now we will slowly adjust to a lower level before the next growth period. And in order to break $266, we will need a significant improvement on infrastructure.

I speculate that by the time we break $266 (which won't happen this year IMO), MtGox will have less than 25% of market share, probably less.

[SlipperySlope]

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

You are welcome. I try hard to separate evidence from my opinion of it.

[richgene]

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

You are welcome. I try hard to separate evidence from my opinion of it.

I just caught up on this thread between yesterday and today and it was a great read. Really enjoyed it. Thanks for the work and please keep it coming!

~richgene

[rpietila]

Thank you for your effort to update this one. Pity I was too busy with my own during the time, yours would have provided insight.

[ElectricMucus]

Thank you for your effort to update this one. Pity I was too busy with my own during the time, yours would have provided insight.

Hahaha he's back!

[Crypt_Current]

Thank you for your effort to update this one. Pity I was too busy with my own during the time, yours would have provided insight.

Hahaha he's back!

Back, from doing Something.  As opposed to you, who is always here...

[ElectricMucus]

Thank you for your effort to update this one. Pity I was too busy with my own during the time, yours would have provided insight.

Hahaha he's back!

Back, from doing Something.  As opposed to you, who is always here...

Basket weaving? Ever been to a mental institution?

Something, capitalized.

[SlipperySlope]

91 days after the April 10 peak



Clearly this bubble collapse is becoming more similar to the 2011 collapse than was the case a month ago.

Speculative financial bubble theory says that a collapse takes about the same time as the speculative inflation. Initially, I believed that this bubble started in January, but another interpretation of the price chart allows for the bubble to start last October - a six month inflation. A six month collapse would end in the September - October timeframe. I drew the long term support trendline in green, and added the support line of the June 2011 peak, and drew a black trendline extrapolating the current decline.

Evidence and experience drawn from the comparison of this bubble with 2011, and bubble theory makes me believe that the bottom will occur in September or October. The price then should be above $32 and below $50. The lines intersect at approximately $40.

Assumptions include the continuation of the two year long term support rate of growth. If the bitcoin economy rate of exponential growth has decreased, the the collapse could well undershoot the target. The previous peak of $32 should provide support according to Elliot Wave Theory. Bubble theory, on the other hand, allows for prices to collapse back to pre-bubble levels, e.g. $10.

[afbitcoins]

Awesome thread! Kudos SlipperySlope, you've called this pretty well

[RationalSpeculator]

He certainly did! I admire his rational unemotional approach very much.

Thank you SlipperySlope for sharing!

[Spekulatius]

Hi,
RationalSpeculator above me just pointed me to this great thread! Most of your observations align with my own.
Here is a cross post from another thread that i think fits in here just as well, what do you think?

This could of course break out to the upside as well, triggering another rally if the price can hold above the resistance for 2 or 3 days but I think chances are higher that we go down once more to test the bottom, looking at the low volume in outbreak attempts, the percived timidity of the crowd, while some big buyers almost trade by themselves, RSI being overbought on so many scales and a much too fast recovery from recent lows to be sustainable (if you ask me). Add to that the similarity with the last chart and you got a case. What do you all think? Be warned, that we will see in a couple of days so choose your predictions wisely

[BitPirate]

Hi,
RationalSpeculator above me just pointed me to this great thread! Most of your observations align with my own.
Here is a cross post from another thread that i think fits in here just as well, what do you think?

I saw this in your other thread too: But why is your red line doing that? What are you 'connecting' with it? Looks cooked.

[Frozenlock]

Looks cooked.

It is cooked.

The trendline was broken.

[notme]

Looks cooked.

It is cooked.

The trendline was broken.

Don't worry, his will break too.

[Spekulatius]

I saw this in your other thread too: But why is your red line doing that? What are you 'connecting' with it? Looks cooked.

You can draw supports/resistances in different ways. One way is to only connect tops or bottoms of candles which gives you an outer bound of where you can expect the price to go or you draw an "internal trend line" by which you connect only closing/opening prices of candles. The second method gets rid of the variance that some outliers produce with big orders by shooting up or down only to return to the mean within the same candle.
The trend line would be considered broken if 2 or 3 full candles close outside of it.

[notme]

I saw this in your other thread too: But why is your red line doing that? What are you 'connecting' with it? Looks cooked.

You can draw supports/resistances in different ways. One way is to only connect tops or bottoms of candles which gives you an outer bound of where you can expect the price to go or you draw an "internal trend line" by which you connect only closing/opening prices of candles. The second method gets rid of the variance that some outliers produce with big orders by shooting up or down only to return to the mean within the same candle.
The trend line would be considered broken if 2 or 3 full candles close outside of it.

Agreed on eliminating outliers, but the issue is the 24/7 nature of bitcoin.  There is no open and no close, and one can easily shift the candle definition to show different bodies.

[Spekulatius]

The same can be said about any other market because you can define custom intervals everywhere. The only thin Bitcoin doesnt have is gaps between trading hours. I think this actually makes for a better representation of the market "will". Open and close prices are by definition (maybe yours if different?) the price at which a candle opens or closes (hence starts or ends).

[notme]

The same can be said about any other market because you can define custom intervals everywhere. The only thin Bitcoin doesnt have is gaps between trading hours. I think this actually makes for a better representation of the market "will". Open and close prices are by definition (maybe yours if different?) the price at which a candle opens or closes (hence starts or ends).

My point is that other markets have naturally defined gaps for their days and weeks, so it makes more sense to look at the open and close for those markets.

[molecular]

The same can be said about any other market because you can define custom intervals everywhere. The only thin Bitcoin doesnt have is gaps between trading hours. I think this actually makes for a better representation of the market "will". Open and close prices are by definition (maybe yours if different?) the price at which a candle opens or closes (hence starts or ends).

My point is that other markets have naturally defined gaps for their days and weeks, so it makes more sense to look at the open and close for those markets.

notme has a point. In traditional markets time passes and stuff happens between open and close. Using this on a 24/7 market is arbitrary (which timezone to use)?

That red line is intentionally drawn in a misleading way. Even a noob like me can see that.

[Spekulatius]

Maybe I dont understand you correctly, but gaps dont exist in a 24/7 market so they dont matter. The time zone is also irrelevant, you can pick any time zone you like!

Again, the red trend line is not misleading. It is a valid way to draw trend lines. In this case not the extremes are connected but the bodies of the candles, which gets rid of variance and produces a more RELIABLE indicator that is not influenced by intraday fluctuation. It would be considered broken if a candle closes above it and produces trading signals just as well as the other method but instead more "solid" ones.

Watch the last example on this page:
http://www.candlestickwarrior.com/candlestick-chart-patterns/5-technical-analysis-trend-lines-keep-it-simple.php