November 2013 Bubble Analysis

[SlipperySlope]

Here are my thoughts regarding the November 2013 bitcoin bubble.

To the extent that comparing the two previous bubbles with this one is useful, here is a comparison with regard to price doubling times, using MtGox USD data.

**** Bitcoin Bubble 1 peak occurred June 8, 2011 ****

The way up ...
 0.498 January 31, 2011
 0.997 April 15 2011 - doubling time 74 days
 1.99 April 28, 2011 - doubling time 13 days
 3.98 May 10, 2011 - doubling time 12 days
 7.97 May 13, 2011 - doubling time 3 days
15.95 June 4, 2011 - doubling time 22 days
31.90 The high on Wednesday, June 8, 2011 - doubling time 4 days



**** Bitcoin Bubble 2 peak occurred April 10, 2013  ****

The way up ...
   4.16 December 19, 2011
   8.31 July 16, 2012 - doubling time 210 days
  16.62 January 21, 2013 - doubling time 189 days
  33.25 March 1, 2013 - doubling time 59 days
  66.50 March 25, 2013 - doubling time 24 days
 133.00 April 3, 2013 - doubling time 9 days
 266.00 Wednesday, April 10, 2013 - doubling time 7 days



**** Current Bitcoin Bubble 3 ****

The way up ...
  65.42 July 4, 2013
 130.84 August 29, 2013 - doubling time 56 days
 261.68 November 5, 2013 - doubling time 68 days
 523.36 November 16, 2013 - doubling time 11 days



If the pattern of the two previous bubbles holds, we might expect one more doubling with the peak very roughly around $1000. Likewise we might expect to see the peak next week, doubling from 523.36 in perhaps only 7 days.

Major posts in this thread ...

• Countdown to the peak - Monday.
• Countdown to the peak - China doubling faster.
• Looks like 901 was the peak on MtGox, Monday, November 18.
• Recall that we waited 6 days for the bottom in the April bubble.
• Onward to a new peak.

Your thoughts?

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[dominicwin]

I agree there will be another drop sometime before the end of the year, though how high will it go in the mean time is what I am wondering. I may not be able to buy bitcoin at these prices again even with a drop.

[btcprice]

Sounds good to me! This price is like the Energizer Bunny: "Still going!"

Thanks for the great research.

I was a part of the runup in 2011 and failed to sell when it dropped. Hopefully I'm more the wiser.

[BitChick]

I agree there will be another drop sometime before the end of the year, though how high will it go in the mean time is what I am wondering. I may not be able to buy bitcoin at these prices again even with a drop.

But if this is following the S-curve adoption rate of new technologies isn't there a point in which the price just shoots up without any "correction?"  Bitcoin is not a stock and will not act like stocks do necessarily.

[SlipperySlope]

I agree there will be another drop sometime before the end of the year, though how high will it go in the mean time is what I am wondering. I may not be able to buy bitcoin at these prices again even with a drop.

In the April 2013 bubble collapse, it was possible to buy at under 30% of the peak price - either with great timing or as I did with a spread of pre-positioned limit buy orders. If the peak indeed is above $1000 I believe that prices after the collapse could likely be below where we are now, i.e. below $568.

I am not trading this bubble, rather I may buy a few more coins after the collapse.

[Sukrim]

But if this is following the S-curve adoption rate of new technologies isn't there a point in which the price just shoots up without any "correction?"  Bitcoin is not a stock and will not act like stocks do necessarily.

Maybe the time is now, probably it isn't.

[SlipperySlope]

But if this is following the S-curve adoption rate of new technologies isn't there a point in which the price just shoots up without any "correction?"  Bitcoin is not a stock and will not act like stocks do necessarily.

My logistic (S-Curve) adoption analysis over on rpietila's economics thread is about a multi-year price prediction neglecting, or rather smoothing out the bubbles. I hope, but do not yet expect, that future bubbles will become smaller and more frequent.

[DeeBo]

I'm sorry but I can't take you seriously if you're still using Mt. Gox prices.  It's well known that Mt. Gox has inflated prices (pre-dating the bubble) due to the fact that fiat withdrawals are limited/impossible.  Start using Bitstamp or an average of different exchanges (exlcuding Mt. Gox) for a much more accurate price.

[SlipperySlope]

I'm sorry but I can't take you seriously if you're still using Mt. Gox prices.  It's well known that Mt. Gox has inflated prices (pre-dating the bubble) due to the fact that fiat withdrawals are limited/impossible.  Start using Bitstamp or an average of different exchanges (exlcuding Mt. Gox) for a much more accurate price.

I am sympathetic to your viewpoint, but my analysis back in April 2013 used MtGox prices. I suggest that MtGox has a proportional relationship with USD prices posted on BitStamp. Furthermore, the greater potential error in my analysis is not using BTC China data as that exchange is obviously responsible for the current price action.

[hlynur]

I agree there will be another drop sometime before the end of the year, though how high will it go in the mean time is what I am wondering. I may not be able to buy bitcoin at these prices again even with a drop.

But if this is following the S-curve adoption rate of new technologies isn't there a point in which the price just shoots up without any "correction?"  Bitcoin is not a stock and will not act like stocks do necessarily.

good point.
i'm far from being an expert to get the whole picture, but i read an interesting pdf on zerohedge today that draws a comparison to the longterm gold chart and microsoft shareprice.
http://www.zerohedge.com/news/2013-11-17/bitcoin-rises-over-500
pdf written by Raoul Pal, head of the Global Macro Investor.

[SlipperySlope]

i'm far from being an expert to get the whole picture, but i read an interesting pdf on zerohedge today that draws a comparison to the longterm gold chart and microsoft shareprice.
http://www.zerohedge.com/news/2013-11-17/bitcoin-rises-over-500
pdf written by Raoul Pal, head of the Global Macro Investor.

I saw the original analysis, and I generally agree except to substitute the figure for investment gold bullion for the valuation of the world's total gold, the latter having jewelry and industrial uses which bitcoin cannot match.

[glendall]

I really think this are different this time around. The world of BTC is vastly different, and larger, than where it was at the last 2 bubbles.

I'm guessing a correction is coming but I do not expect this time around that there will be a huge crash, and I don't think we'll go under $200 again. I think the new bottom will be around $350.  Anyone's guess. I do feel pretty confident though that even if you bought it today at 525 or whatever crazy price it's at, and you can be patient, you'll be able to sell it again for this price after this 'bubble' has come and left.

Especially with the Chinese loving BTC these days, and no more shackles to Can't-handle-the-transactions-gonna-crash Gox, the potential for a sharp quick price-plummet is not nearly as there as it was just 6 months ago.

[SlipperySlope]

I really think this are different this time around. The world of BTC is vastly different, and larger, than where it was at the last 2 bubbles.

I'm guessing a correction is coming but I do not expect this time around that there will be a huge crash, and I don't think we'll go under $200 again. I think the new bottom will be around $350.  Anyone's guess. I do feel pretty confident though that even if you bought it today at 525 or whatever crazy price it's at, and you can be patient, you'll be able to sell it again for this price after this 'bubble' has come and left.

Especially with the Chinese loving BTC these days, and no more shackles to Can't-handle-the-transactions-gonna-crash Gox, the potential for a sharp quick price-plummet is not nearly as there as it was just 6 months ago.

Yes, the greatest error in my previous analysis of the April 2013 bubble was comparing it too closely to the one other bubble in June 2011. I agree that drawing comparisons too closely to April will bias predictions for this bubble. None the less, it took only 16 hours to go from $475 to $575 on MtGox. This is very similar in nature to what happened in the week leading up to both prior bubbles.

[SlipperySlope]

Countdown to the peak - Monday

Using MtGox USD daily prices, the Sunday open at 458 and close at 528 yields a daily increase of 15%. Likewise today's 618 high so far yields a potential daily increase of 17% with trading volume increasing.

The 1000 price milestone is only 61% higher from 618.

Using the two previous bubbles for guidance, these are signs that we are only days away from the peak.

[MGUK]

The 3 bubbles:

2011


April 2013


Now


Log & volume as currency:
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.

Stick those in OP if you're making that sorta thread.

[bitrider]

SS I agree with your analysis. I get the same feeling. And if you look at growing volatility with bolinger, that tends to confirm. We tend to drop after daily bars extend significantly outside. Sorry for the big chart.

[SlipperySlope]

Stick those in OP if you're making that sorta thread.

Done! And thank you very much.

[SlipperySlope]

SS I agree with your analysis. I get the same feeling. And if you look at growing volatility with bolinger, that tends to confirm. We tend to drop after daily bars extend significantly outside. Sorry for the big chart.

We love charts in the Speculation forum. I have not paid much attention to the Bolinger technical indicator, and I really appreciate your insight regarding outliers as a signal.

[bitrider]

Excellent. Keep up the good work.

[talnted]

I concur with this analysis.  I see this bubble popping within the next few days to a week