Analysis of previous bubble corrections and impending crash

[oda.krell]

Where does your 520 come from?

if you run a line over the highest points of a log chart

Slightly higher by my count, ~530 (mtgox), but that's negligible.

We're right below that line at the moment.

The way I see it, we either break through, then we've officially broken even the most optimistic estimations that were circulated so far, or we bounce off of it. Personally, I expect the latter.

[Walsoraj]

Yup, too many charts in this thread.

/uninterested

[YoYa]

Yup, too many charts in this thread.

/uninterested

Put's down crack pipe....

Now listen here young man, if ya didn't want charts then ya shouldn't have well come in to a speculation forum. That's like going in to a whorehouse looking for a virgin.

Picks back up crack pipe and goes back to work.

[mccoyspace]

Where does your 520 come from?

if you run a line over the highest points of a log chart

Slightly higher by my count, ~530 (mtgox), but that's negligible.

We're right below that line at the moment.

The way I see it, we either break through, then we've officially broken even the most optimistic estimations that were circulated so far, or we bounce off of it. Personally, I expect the latter.

Currently at $542 on Gox, so now what?

[TERA]

$607 now. It looks at least half of what I predicted is true so far. 

[Zangelbert Bingledack]

You gotta have a mania phase or it just ain't a bubble

[laowai80]

It's amazing how similar it is, maybe my $1200 prediction will come true after all.

I tend to agree, $1000-1500 is the range where the bubble is likely to pop this time. Not for long, unless there is no major disruptive development.

[MGUK]

2011


April 2013


Now


Take what you will from this.

[Zangelbert Bingledack]

Log charts, please.

[MGUK]

You can put it on log scale yourself if you'd like. I don't think the pattern is as clear on logarithmic scale, links:
2011: http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-06-03zeg2011-06-03ztgSzm1g10zm2g25zvzcvzl
April: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-04-08zeg2013-04-08ztgSzm1g10zm2g25zvzcvzl
Now: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-11-24zeg2013-11-19ztgSzm1g10zm2g25zvzcvzl
(note: they're also volume in currency. This makes more sense to me. As the price of a BTC goes up, of course volume of movement is going to go down because 1BTC costs more. Same amount of people come onto exchange with e.g. $100, but they can buy less volume in BTC.)

I understand the logic of using log charts - it should supposedly be going exponential on a linear chart, as that's the same as linear on logarithmic, and that's how things grow, in relation to each other (percentage scale and whatnot.)

But it bugs me a little. In 2011, and in April I pointed out the same things and the riposte of most was "nooo we're meant to be going up at this speed, log scales duuuh BTC to the moon $1000 by next hour herp" and low and behold, we crash.

So people suggest we should be going exponential on linear, but if you look at the linear graph history of Bitcoin, it's pretty obvious that when we go exponential on linear, we crash shortly after. Could someone explain why this is?

[sukiho]

you dont need log but the scale of the last chart is not the same as the others, if you flatten out the lead up so its the same as the others then its probably only about half as high and got a long way to go

[Inedible]

I think you're all forgetting the volumes of money required to take valuation up to $30 or $260 is different to taking it up to a valuation of $1600.

[MGUK]

I think you're all forgetting the volumes of money required to take valuation up to $30 or $260 is different to taking it up to a valuation of $1600.

You can't say that without knowing the state of the orderbook which isn't included in the graph. For all you know, there may only be one person left willing to sell Bitcoin and he's holding until $1600 (so $1600 would jump the price right up to $1600) or alternatively, everyone that's holding bitcoins maybe trying to sell them for $1000, in which case it's going to take a shed load more to get about $1000, let alone up to $1600.



One thing I have noticed that is interesting (probably not worth drawing conclusions from, but interesting nonetheless) is the massive sells that seem to happen almost exactly 8 months before the crashes (that is assuming there's going to be a crash any day now.)

2011: start of Nov
April: Aug - Sep
Now: April

If you look at 3 graphs in a vertical line, there's big red bars in exactly the same place on each (or within 2 weeks.) Most likely pure coincidence, but interesting:)

you dont need log but the scale of the last chart is not the same as the others, if you flatten out the lead up so its the same as the others then its probably only about half as high and got a long way to go

What makes you say that? Are you hinting at the bubble in April raised the start price of this bubble, and accounting for that, we have a way to go? Definitely possible. Although given what I mention above about the 8 month pre sells, the same could be said about all the graphs (there's a mini bubble that sets the start higher than the start of the graph.)

[Tzupy]

The crash started on Gox in the usual flash crash manner, but China performs it differently, and eventually Gox followed.
So far, it looks like China is going to perform an April 10th style crash, downward waves of increasing amplitude.

[oda.krell]

The way I see it, we either break through, then we've officially broken even the most optimistic estimations that were circulated so far, or we bounce off of it. Personally, I expect the latter.

And there we go. Uncharted territory :D It'll be a fun ride, I'm sure.


EDIT: interestingly enough, looks like bitstamp refuses to play along.

[painlord2k]

 
The trend of bitcoin exchange value could, in my opinion, be divided in three phases thru now.
The first, up until 32$, the second part from 32$ to 10$, then the current phase caused by the halving of the block reward.

The two forces driving bitcoin prices were and are the internal inflation of Bitcoin (compared with the other fiat currencies) and the adoption rate from actual users that hold bitcoin and must buy them at the exchanges or for goods and services.

The first force (inflation differential) was a negative force up until the halving of the block reward, because the internal inflation of bitcoin was (initially) a lot higher than the inflation of US$, €, Yen, yuan, even of the Argentinian Pesos. But is was a predictable always diminishing force. And after the halving of the reward it become a zero or positive force (the internal inflation of the bitcoin is smaller than the internal inflation of US$, €, Yen, Yuan, etc).

The second force was the adoption rate, that was explosive initially and continue to grow at leaps and bounds. This is something near alway positive , as the network just never shrinked in the past.

In the first part (0.001 to 32$) we had a lot of adoption, mainly for online gambling and selling some internet services. This was explosive and overcome brutally the negative forces of inflation.
When it hit its limits, the negative of inflations took over and moved the price lower.
At some point the diminishing negative force of inflation become to be equal to the grow of the network adoption and demand for bitcoin (when it hit the minimum of 2$).
Some savvy investors could have anticipated the intersection point and bough bitcoin before the actual minimum could have happened (this is the nature of speculation and speculator).

Then, for a "long" period, the two forces was nearly equally matched, when the BTC exchange rate risen from 2$ to 10$.

Then the nearing halving of the reward, the increase size of the network and demand for hold bitcoin kicked in. The halving caused a reduction of the inflation rate of half, making the differential with other currencies positive (even if the network stopped to grow, the increase of bitcoin would be smaller compared to the increase of M1 of other fiat currencies, so BTC should increase in value compared with fiat currencies).

Essentially, it is like the rivers and the creeks the salmons (purchasing power) go back to reproduce instead of staying on higher grounds moved back, so instead of swimming upstream the salmons found themselves swimming downstream. A lot easier. And a lot funnier for the bears (bitcoin holders) to catch a lot of them. The main problem would be in some places there would be more salmons than water to swim.

Essentially, in my opinion, the media line of the trend channel depicted in the OP could be passed like butter, in the right circumstances.

http://bitscanner.blogspot.co.uk/2013/11/btc-update-monday-18th-november.html
(for the OP and the chart)

[painlord2k]

If someone is good at designing charts he could make a chart showing the inflation rate of bitcoin intersecting the inflation rate of M1 of various currencies.
Then we could start comparing it with the USD/BTC chart and see what happen

[GreekGeek]

+1

[TERA]

Bumping my thread for reference.

[Zangelbert Bingledack]

So top out between $800 and maybe $1600? Sounds reasonable, though probably toward the higher end. We haven't even seen any double-exponential growth yet. It'd be a pretty pathetic mania phase if it didn't involve at least one doubling ($1000, from here...but of course there's no accounting for bad news).

I think if we have a mania $266-500 will be support, the new $50 if you will.

Look how earily similar the the last 30 days are to March, even down to slope.



If we follow the same pattern we'll go to $1300 and down to $266-ish, leveling out around $600-700. But history never repeats exactly. Infrastructure is more robust this time, it seems. But to take that into account may be biasing the assumption that MtGox failure ended the April rally prematurely, when it may have just been the straw than broke the back of a severely overheated market.

I'm not the only one who was predicting "go to quadruple digits, crash, then level out in the mid/upper hundreds." Looks like we're getting better. Crash to $266-ish hasn't happened yet, though.