How to predict crash?

[miffman]

I think if you see a huge spike, and it continues, there will probably be a buble

[Marbit]

easy - use a crystal ball. 

[cp1]

Read all the news and apply various trend analysis to all the charts.  Then buy or sell based on that.  You'll probably be correct half the time.  You'll at least generate a lot of fees for the exchanges who will love you.

[imrer]

So how do make a well informed guess with probability of happening over 50%?

You are asking the right question.

To make a well informed guess you must be well informed. In order to be well informed you must inform a lot. Reading a lot about bitcoin here, on reddit. Be also well informed about the broader economy, cycles, money, banking, markets, politics, psychology, entrepreneurship, investing, innovation, history etc. Ie: a vivid curiosity for knowledge and understanding is required.

Then your probability calculation will be better informed.

Capital allocation strategy is also crucial. It does not make sense to go all out on a probability of only 60% for a correction. Use the Kelly criterion to scientifically calculate how much you should bet on a certain odd.

And learning from your mistakes. When you end up losing money, was your probability calculation correct looking back on it? And did you scale the capital correctly? Or did greed or fear influence your probability estimation or allocation decision?


After you did all that you may decide it ain't worth it and switch to a simple buy and hold.

Wow, thanks for your post. It looks it takes a lot of time to even have a chance to guess it right. You are simply holding or are you trying to earn something more?

[imrer]

Buy as much bitcoins as possible, then wait a year without looking at charts. After that you will get more profit than those who spend sleepless nights "predicting" crashes and bubbles.

P.S. Even those who bought at $266 in April 2013 will have significant profit a year after if they were patient enough and didn't sell with loss.

I was before a one having sleepless nights but I hadn't enough info about investing. I lost some money and still loosing (I have some LTCs). Now I try to know more and decide if it's worth that time. So you are not trading yourself?

[imrer]

i follow a couple of solid analysts and try to get a feel for the market..... and then since i can't crystal ball, i just do dollar costs averaging and set limit orders up and down to take advantage of price movement.

Do you have some sources you could recommend? Have you read some books or which experts are you checking?

[Elwar]

Figure out all of the things that could go wrong with Bitcoin. Then get inside information from all angles of those that could be involved in such a thing and when that bad thing happens, take advantage of the impending price drop.

For Silk Road all you had to do was track down who the guy was that was running it and monitor him and the FBI to see when they arrest him.

There was the bug in the code early in the year, you could have learned the code and found the bug yourself and waited to see if anyone else found it as well. When they did, sell.

You could have found out who Pirate was and figured out when he was going to start defaulting on all of his promises.

When the government stole MtGox's money you could have had a mole in the government to tell you before they did it.

All very simple things that could be done. Find out the next thing that will drop the price and just time it.

[imrer]

Figure out all of the things that could go wrong with Bitcoin. Then get inside information from all angles of those that could be involved in such a thing and when that bad thing happens, take advantage of the impending price drop.

For Silk Road all you had to do was track down who the guy was that was running it and monitor him and the FBI to see when they arrest him.

There was the bug in the code early in the year, you could have learned the code and found the bug yourself and waited to see if anyone else found it as well. When they did, sell.

You could have found out who Pirate was and figured out when he was going to start defaulting on all of his promises.

When the government stole MtGox's money you could have had a mole in the government to tell you before they did it.

All very simple things that could be done. Find out the next thing that will drop the price and just time it.

So you think only way to predict such thing is only via inside information?

[bigasic]

Slowly purchase bitcoin, as much as you can afford (to lose).. If bitcoin takes a dive for some reason, buy as much as you can, it will recover.. I Plan on using my coins for retirement, so the only time Ill sale any is if its my only option. The one thing that i've learned with  bitcoin is that with every crash there has been a recovery, and vice-versa.

Don't worry about the small dips and gains, over all, btc is cheap right now. Ill keep buying, although the amounts will be less and less as the bitcoin continues to rise.

[imrer]

Slowly purchase bitcoin, as much as you can afford (to lose).. If bitcoin takes a dive for some reason, buy as much as you can, it will recover.. I Plan on using my coins for retirement, so the only time Ill sale any is if its my only option. The one thing that i've learned with  bitcoin is that with every crash there has been a recovery, and vice-versa.

Don't worry about the small dips and gains, over all, btc is cheap right now. Ill keep buying, although the amounts will be less and less as the bitcoin continues to rise.

I think this is a great advice! I always worry about bitcoin where some crash occur but in some time it's recovered.

[Elwar]

Figure out all of the things that could go wrong with Bitcoin. Then get inside information from all angles of those that could be involved in such a thing and when that bad thing happens, take advantage of the impending price drop.

For Silk Road all you had to do was track down who the guy was that was running it and monitor him and the FBI to see when they arrest him.

There was the bug in the code early in the year, you could have learned the code and found the bug yourself and waited to see if anyone else found it as well. When they did, sell.

You could have found out who Pirate was and figured out when he was going to start defaulting on all of his promises.

When the government stole MtGox's money you could have had a mole in the government to tell you before they did it.

All very simple things that could be done. Find out the next thing that will drop the price and just time it.

So you think only way to predict such thing is only via inside information?

It is a way. All you need is all knowledge of everything and you are all set.

[imrer]

Figure out all of the things that could go wrong with Bitcoin. Then get inside information from all angles of those that could be involved in such a thing and when that bad thing happens, take advantage of the impending price drop.

For Silk Road all you had to do was track down who the guy was that was running it and monitor him and the FBI to see when they arrest him.

There was the bug in the code early in the year, you could have learned the code and found the bug yourself and waited to see if anyone else found it as well. When they did, sell.

You could have found out who Pirate was and figured out when he was going to start defaulting on all of his promises.

When the government stole MtGox's money you could have had a mole in the government to tell you before they did it.

All very simple things that could be done. Find out the next thing that will drop the price and just time it.

So you think only way to predict such thing is only via inside information?

It is a way. All you need is all knowledge of everything and you are all set.

Ok, I'll take it as option. You may or may not obtain this kind of information.

Have you heard about Black swan theory? http://en.wikipedia.org/wiki/Black_swan_theory

[Cluster2k]

How to predict a crash:

1) The price of bitcoin starts going up exponentially over a short period of time.  About a week.

2) Coupled with the above, this forum becomes full of posts predicting the price doubling by next week and so on.  See March/April 2013 posts.

You then know it's time to sell.  Knowing when to buy is the harder part.

[maursader]

Hey there, your best bet is to check for patterns, and compare the charts... and monitor them closely every day. Check the news all the time about bitcoin. Little hint though, bitcoin in some way is kind of like gold in the sense that it's defensive. I noticed that when there's fear about the general state of the economy, BTC tends to go up like gold.. and when the economy is doing well, BTC tends to go lower. Just an observation I noticed, not an expert here.

[Zaih]

I've still got the same coins I had at the beginning of this year. Plus a lot more newly bought ones to accompany them.

Still yet to ever sell a coin & I'm well and truly in profit, just hang tight my friend.

[derpinheimer]

easy - use a crystal ball.  

Crystal ball? What is this nonsense?

Just ask the all-knowing one.

It says that the price will go to $240 before diving to $40. Remember, this is what it said. Take it as a mountain of salt.

[Elwar]

2) Coupled with the above, this forum becomes full of posts predicting the price doubling by next week and so on.  See March/April 2013 posts.

Very true...the worst time to buy is when everyone is excited about how rich they are going to be.


The best time to buy is when even you believe that Bitcoin has failed and people should just get out what they can before it falls to zero.

[Zangelbert Bingledack]

When mainstream news pundits are talking about the amazing price growth, that's early warning. So far *crickets*

[Elwar]

When mainstream news pundits are talking about the amazing price growth, that's early warning. So far *crickets*

Mainstream news pundits always include the word "bubble" whenever mentioning Bitcoin and a rise in price.

[Zangelbert Bingledack]

When mainstream news pundits are talking about the amazing price growth, that's early warning. So far *crickets*

Mainstream news pundits always include the word "bubble" whenever mentioning Bitcoin and a rise in price.

It'll be hard for them to say that if we clear $300 when they said the same thing six months ago and it's already left that bubble peak in the dust. People will be thinking, "Shit this thing has more lives than a cat! It's not stopping!" Then we could see a *real* bubble.