Bubbly bubbles

[samson]

I took a few minutes to look over historical bubbles.

From my non extensive research I conclude that when a bubble deflates the low isn't reached straight away, it's an eventual thing that plays out over time.

This is an interesting read about various bubbles from a historical point of view :

The Most Amazing Bubbles In History
http://www.businessinsider.com/10-huge-bubbles-2009-11?op=1

[hlynur]

isn't the main problem regarding this that btc is very bipolar in its usage.
commodity (with speculation) and currency.
the market has to decide when and if we will have a balance between these two.
ergo you can only apply these bubble examples to some extent.
or do i have a wrong thought approach?

[samson]

isn't the main problem regarding this that btc is very bipolar in its usage.
commodity (with speculation) and currency.
the market has to decide when and if we will have a balance between these two.
ergo you can only apply these bubble examples to some extent.
or do i have a wrong thought approach?

These examples are all very different so nothing really applies to Bitcoin as it's the first of it's kind the only thing that's the same is the fact that it's bubble popped.

It will be interesting to see what happens in the future and compare it with these historical examples.

The NASDAQ chart above covers a long period of time but the ultimate low before any sustained rise was much lower than the initial 'bottom' after the pop.

I find it interesting that the low after the pop was lower than the point where the bubble appeared to form. It was quite a bit lower too !

[hlynur]

I find it interesting that the low after the pop was lower than the point where the bubble appeared to form. It was quite a bit lower too !

so question would be if we already bottomed out after pop or if ongoing speculation still prevents assimilation phase?
i'm sure we will see some more bubbles in the transition phase from commodity to currency until someday the growing market is ready to balance that out.

[JimboToronto]

i'm sure we will see some more bubbles in the transition phase from commodity to currency

Bitcoin's more of a ball than a bubble. It just keeps bouncing.

[hlynur]

i'm sure we will see some more bubbles in the transition phase from commodity to currency

Bitcoin's more of a ball than a bubble. It just keeps bouncing.

i know this pic made quite its rounds on the forum after the bubble and is sucked dry right now, but i still think it's interesting in sense of the different phases.
the whole bubble behaved a bit like this chart but imo big difference is that we are momentarily still in awareness phase .
as the news change quite fast, btc had a very short attention span by main media during the pop, that could perhaps just scratch the surface of mania phase.
(no big headlines on front page...at least in europe)
right now everything's back to normal besides that value is half of bubble's peak which is quite good.
(so if you'd follow this chart there hasn't been any phase of despair? or was that at 60$?)
perhaps btc needs these bubbles to get more attention everytime and some "heartbeat" going. (trading is easy...growth of market around it takes quite some time)

[samson]

As far as I can see we're in the 'return to normal' phase of this chart.

[lucas.sev]

As far as I can see we're in the 'return to normal' phase of this chart.

Yup

[Miz4r]

We're still at the first sell off phase. Well the second sell off phase actually, the first one was in 2011. The public hasn't run in yet, only geeks and techies so far. We're going to see many more of these bubbles and sell off phases in the future as the general public starts to become interested and see it as an alternative to the collapsing banking system.

[Vandroiy]

I agree @OP. The terms "burst" and "bust" are sometimes used to distinguish these two phases in which a bubble deflates: burst being the initial fast crash, bust the slower, longer descent with recurring partial temporary "recoveries".

In 2011 the analogy you just used worked perfectly. It needed some modifications though:

• Burst and bust work on different time-scales that do not scale by the same factor when comparing to historical bubbles
• There may be psychological delays on market state changes that are a human factor and therefore do not scale with the speed the market has otherwise
• There seems to be an instability before a bust sets in which may be chaotic in nature: bubbles are fed by an absurd behavior, namely a fast positive feedback from price curves to demand. The short-term price development may affect interest and thereby the behavior or onset of the bust.

And there could come the dude with loads of money and just push the identical game to a higher price... remember we got no decent-sized shorting market here. I'm not betting on this, I believe you're right and a bust is too likely to risk holding BTC right now.