November 2013 Bubble Analysis

[SlipperySlope]

Countdown to the peak - China doubling faster

Using BTC China data presented by BitcoinWisdom, I observe these price doubling times ...

400 ¥ on  July 5
800 ¥ on August 31 - 57 days to double
1600 ¥ on November 5 - 66 days to double
3200 ¥ on November 16 - 11 days to double

More convincing evidence that the peak is at most just days away.

Here is the logarithmic chart, which clearly looks parabolic ...

[Tzupy]

If within 6 hours we'll see a head and shoulders pattern, then IMO the peak was today.

[NUFCrichard]

But where will we land? Back to $150 or a new level like $400?

[Tzupy]

So far, significant support seems to be at 210$ - 250$, but those could be pulled if 100k coins flood the market, like in April.

[SlipperySlope]

But where will we land? Back to $150 or a new level like $400?

Your very important point is worthy of time-is-short discussion.

I think that the months-long resolution of this peak will be similar in shape to the April peak - that is a damped oscillation, technically a triangle pattern. The initial crash will be characterized by a flood of sell orders beyond the capacity of exhausted buyers to counter, with an extreme bid/ask spread. Support will be found at much lower levels with an immediate rebound off the bottom. Indeed, if the comparison with the April pattern holds, then the price should bounce around for weeks and settle at a price approximately halfway between the peak and crash price.

[Tzupy]

If comparison with April holds, then we'll have several capitulations in the 120$ - 150$ range, and several intermediate highs in between.
But in April there were about 40k coins for sale when the 100k flooded. Now with only 12k coins, a 100k coins flood could crash comparatively harder.

[InwardContour]

If comparison with April holds, then we'll have several capitulations in the 120$ - 150$ range, and several intermediate highs in between.
But in April there were about 40k coins for sale when the 100k flooded. Now with only 12k coins, a 100k coins flood could crash comparatively harder.

$120? yes please, but my hopes aren't high for that. maybe if this right here is the top. maybe. i don't think this is the top though.

[SlipperySlope]

Imagine a bell curve of expectations for the date of the peak price. Given what I am feeling now, my expectation is that Friday is the most likely date. The price always seems to go higher than what most traders expect.

[True___Blue]

Interesting thread. After rise we've had today, I would assume we are due for a correction (at least historically)

[Damnsammit]

Great analysis... very good to read this thread after only being involved in Bitcoin for a few months.

Wish I would have got more in April when I first discovered it.

[SlipperySlope]

Looks like 901 was the peak on MtGox, Monday, November 18

Half of 901 is 450 and that price was reached on November 14, yielding a doubling time of 4 days at the peak. This is consistent with the previous two bubbles and becomes a very important indicator when guessing the peak of future bitcoin bubbles.

I expect the resolution of this bubble to be a damped oscillation from a high of 901 to a bottom of 502 as of now. If this bottom holds the midpoint of the resulting technical triangle pattern would be 701 and that is where I believe prices are headed.

Because the low of 502 is higher than much of the sentiment on this forum, I suppose that this bubble collapse is milder than the one in April and perhaps will recover to a new bubble soon. The length of my expected triangle pattern will give some idea of when the next big rally will occur.

[SlipperySlope]

If 502 is the bottom of the November 18 bubble, here is the sort of resolving technical triangle pattern that I expect ...



I drew the horizontal length of the triangle to reflect my observation that this bubble so far is milder than the previous two great bitcoin bubbles, and may indeed turn out to be a big correction on the path to a greater bubble.

[Zangelbert Bingledack]

So far it's been amazing how accurate the general sentiment on this forum (I mean the general sentiment of the relatively oldtimers and some other astute ones) has been been on this surge. Between the markets' shrugging off the SR shutdown, plus China, plus the BIT, plus intense and way more positive media coverage, a big rise was very very predictable and many were predicting it (including me myself).

On October 14th I posted the following reasons why the price was about to surge:

14 big reasons:

• China
• Second Market Bitcoin Investment Trust delayed effect
• SR had 100,000 users engaging in active commerce, proving Bitcoin is a very real medium of exchange
• SR shutdown caused only a flash crash, proving the current price level is solid*
• SR shutdown generated a lot of Bitcoin publicity, the trial guarantees more, plus feds have Bitcoin wallet
• DPR's huge cold wallet is reportedly untouchable; off-shore account holders' ears are perking up
• SR shutdown proved SR was not a critical part of the Bitcoin ecosystem, not even for price support (see above)
• SR shutdown cleaned the image of Bitcoin up in many people's minds, even though others like it will sprout
• Global financial market turmoil coming to a head; Jim Rogers: "this Fall is probably the beginning of the end"
• US government shutdown silliness, people are worried and the US is showing serious signs of imminent meltdown
• China-EU agreement to cut out USD in trade, a huge blow to USD reserve currency status - one of many
• Ultra-loose Janet Yellen appointed as next Fed chief, QE to infinity!
• 6 months since last bubble, dust settled, now finally clear to people that it was a legit price correction (upwards)
• Talk of more Cyprus-style "haircuts" on depositors, taking the Keynesian "hoarding=bad!" to its logical endpoint

*Remember March 11? Slow orphan blocks, hard fork, double-spend --> FLASH CRASH --> price ultimately unaffected, proving in people's minds that the growth from January through March 11 wasn't just silly speculation and vapors but real support, so then people threw caution to the wind and piled in without reservation

To me it was the easiest call ever, and I said as much. Many people who I recognized from the early 2013 bubble were similarly confident in an imminent price rise.

Surging up toward $1000 was considered quite bold but many here predicted it nonetheless, with a correction back toward around $500 then settling in between, and that looks like exactly what is happening.

Then now, by looking at the log charts and seeing when the moves look exponential even on the log chart, when they start curving upward, most of these same people have been able to anticipate the imminent correction this week.

One thing about a market with more mature, experienced investors is that it is less volatile. They are waiting to damp the tops and catch the bottoms. Now with the newbie China investors here it still gets dicey, but I feel like the oldtimers are doing pretty well holding the fort down.

As to where we'll go from here, since we had a nice big correction now it seems we'll do the familiar dragon/alpaca pattern, which is basically oscillating in the triangle SlipperySlope drew above and then maybe some steadiness before going higher. I think there is yet more steam in this run-up, but double exponential growth cannot be tolerated, not even in Bitcoin. Bitcoin likes exponential growth, which is insane enough already.

[SlipperySlope]

So far it's been amazing how accurate the general sentiment on this forum (I mean the general sentiment of the relatively oldtimers and some other astute ones) has been been on this surge. Between the markets' shrugging off the SR shutdown, plus China, plus the BIT, plus intense and way more positive media cover, a big rise was very very predictable and many were predicting it
. . .

As to where we'll go from here, since we had a nice big correction now it seems we'll do the familiar dragon/alpaca pattern, which is basically oscillating in the triangle SlipperySlope drew above and then maybe some steadiness before going higher. I think there is yet more steam in this run-up, but double exponential growth cannot be tolerated, not even in Bitcoin. Bitcoin likes exponential growth, which is insane enough already.

Agreed. I too look for the remarks of old timers on this valuable forum. You nailed it.

Regarding the exponential growth rate, it works out to about 0.59 % per day - awesome.

[bitrider]

+2 to all the above. And thanks for the thread.

The bubble and consolidation pattern now seems somewhat familiar. And I would tend to support the observation and expectation that with more sophisticated players in the market, the bubbles may be less violent or damaging with faster consolidation. Looks that way on the log chart. We will see.


also just want point out that the bollinger bands worked outstandingly as an additional confirming/timing signal for bubble topping (both on the daily and hourly charts) - same as back in April. When more than 50% of the current bar is beyond the 2nd Dev, we are done and can not sustain. Between that and the curving up on the log chart, we have two strong tools to navigate. ..of course until the market tells us different.

[donjoe]

with more sophisticated players in the market, the bubbles may be less violent or damaging with faster consolidation

They already are, in a way.

* June 2011 peaked at 7x the value it had 1 month before and then dropped by 90% at its worst.

* April 2013 peaked at 5x compared to 1 month before and bottomed at 70% less.

* November 2013 I would've expected to see peaking at about 4x, but China helped it do 5.21x again, so another -65%, -70% movement is possible now.

[NUFCrichard]

with more sophisticated players in the market, the bubbles may be less violent or damaging with faster consolidation

They already are, in a way.

* June 2011 peaked at 7x the value it had 1 month before and then dropped by 90% at its worst.

* April 2013 peaked at 5x compared to 1 month before and bottomed at 70% less.

* November 2013 I would've expected to see peaking at about 4x, but China helped it do 5.21x again, so another -65%, -70% movement is possible now.

These sophisticated players have messed up the world markets time and time again, I expect they would happily take 90% drops

[SlipperySlope]

with more sophisticated players in the market, the bubbles may be less violent or damaging with faster consolidation

They already are, in a way.

* June 2011 peaked at 7x the value it had 1 month before and then dropped by 90% at its worst.

* April 2013 peaked at 5x compared to 1 month before and bottomed at 70% less.

* November 2013 I would've expected to see peaking at about 4x, but China helped it do 5.21x again, so another -65%, -70% movement is possible now.

A new post bubble low of 475 was recently reached on MtGox, so the bubble is not yet fully collapsed.

[jojo69]

how have I missed this thread

lots to agree with here

[Spekulatius]

Great thread with good accuracy! Respect you called it right.

we might expect one more doubling with the peak very roughly around $1000

Here is some contribution of mine. I would say your approach is better because it is universal, while I was trying to make out indicators of the final stages of a bubble by looking at it graphically. The disadvantage of it is that you have to accomodate bubbles you want to compare in the same image to keep the ratio. Read all about how I did it here: https://www.tradingview.com/v/sptX03Sf/


https://www.tradingview.com/v/sptX03Sf/

Update: The Final trend line (not in version of upper picture) turned out exactly 83.0° and is typical for the last slope increase before collapse. It started from 498$ and was finally crossed by the falling candle body at 706$. The candle closed below the trendline, which is, if you read my methodoligy beyond this link cryteria for calling the burst. I have to admit anecdotely that I sold at 580$, not going all the way with my method. I could have gained another 20%.