TL;DR: I won't be surprised at all if the bottom is at $30ish, and I consider it a sweet spot where to place consistent bids. I don't discard a bottom of $50ish, and I'm sure we will have a huge bounce from there, but each day that passes the case for a lower bottom is stronger.
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During the bubble inflation, I speculated about a very bottom of $30ish after the burst. Why? Most of it common sense, plus some TA.
Some context: the 2011 bubble peak was $32, and then the price adjusted for a long time to $10-$15.
The situation was more or less stable (for BTC standards) until we hit $20 in January 2013, when Bitcoin made headlines in all mainstream media. I remember it clearly:
"the hacker currency is now traded at $20", and thorough articles about how this currency worked followed.
Things started to get more steam, the hype machine started to move, and as soon as we broke ATH with almost no resistance the shit hit the fan:
"Bitcoin broke ATH and its going up uP UP" was a big headline everywhere, economic supplements in mainstream newspapers took it to their frontpages, and the speculative madness broke through.
The week before the crash the price doubled, and the forum was bloated by both maniacs predicting $300k per BTC this year, singularities and so on, and people writing about how imminent was the crash.
A copuple of examples from the day before the pop:
So, from this graph, if I extrapolate, I can see that by next week-end we'll hit 500
Exactly.
And we won't.What we are seeing is a speculative bubble, pure and simple.
That's the reality. The sooner it pops, the better for everybody.Of course we were slaughtered and called trolls, but that was short lived as the day after (April, 10th) things went back to reality.
During the bubble inflation, I saw the following:
- People was buying like maniacs just because the price was going UP - the more it went up, the more they bought
- We were in a parabolic growth trend that was completely unsustainable
- Nothing had fundamentally changed in Bitcoin, apart a huge media exposure, which led to the speculative mania
Taking into account the above, I believed that the media exposure brought
some people that is going to invest in BTC long term, but they are an obvious minority. Most of the "new people" is here for the get-rich-quick thing, and as soon as they see the price going down, they sell, which triggers more downtrend and the downtrend causes panic, more sell offs, etc - and there you have a contrarian, negative cycle that won't stop until the bottom is reached and a sustainable growth trend is resumed. Don't forget this was a bubble, and the same psychology that inflated the bubble will deflate it.
Then, there are some technicals like Elliot Waves analysis that support a $30ish bottom:
4 (bottom of second bubble) is usually very close to 1 (top of 2011 bubble). Plus, common sense indicates that once the speculative mania fades, we will benefit from an expanded user base that came following the media exposure, and this expanded user base could support $30ish as the pre-bubble user base supported $14ish.
After the pop I've been trading actively, looking at the short term (days/weeks). That made my "bottom prediction" dynamic, and for many months I was convinced the most likely scenario was a bottom of $50. Why? Because we had two consecutive ATH volume days just after the pop, hundred of thousands of BTC were sold, and this did not happen in the 2011 bubble, in which at the beginning the sell off was moderate. This was not the case for the current bubble, in 2013 the post-pop action was the highest we have ever seen in this market with two consecutive days with record volume. Therefore, we could argue that pigs has already been slaughtered, and the big sell-offs already happened.
Nevertheless, the more the time passes, the more I think that the cold-minded, pre-bubble analysis I did while I was just holding and not trading may still be valid. We had absolutely no support at $88 and $79, and bubble bottoms are always lower than most people think.
