Recognizing the Top

[freebird]

For traders looking for a short-term top, here's my thoughts on what to look for:

1. China just broke their all-time high at 7000. Expect them to go parabolic over the next 2-4 days, just like last time they broke their ATH.

2. China price will diverge from the price on other exchanges, just like the last huge rally to the previous ATH. Expect to see China a couple hundred bucks above Gox and Stamp. The non-Chinese exchanges will be reluctantly dragged along in this "blow-off top" phase of the rally.

3. When you start to feel manic as you watch the price go up, and you've got thoughts of "$5,000 per bitcoin by the end of the year!" stampeding through your head, that's when to sell.

This analysis has nothing to do with my long-term belief in the technology and growth potential of bitcoin, but there will be short-term tops along the way. If you like to trade, trade wisely. Good luck to all!

[XXthetimeisnowXX]

actually I do like this post. thanks, i told my self i would sell at 880, I did not. but looking at the last thirty days i do think that, though I may loose out on a little bit of money going to the top, I am going to sell the rest. seep better at nights. set my buy traps at my special little price and see what happens. sure that some one will not agree with what your saying and hate even more on what im typing. its just a given. love me some of that haters hate.

[shmadz]

I am going to sell the rest.

You're gonna sell everything?

[Kleptoid]

I just imagine I'm a whale with lots of BTC looking to take profit. I'm not, but if I was I'd be wanting to dump when market confidence is looking a bit shaky in order to provoke a panic so I can buy back lower. In the current environment that probably means I'll be dumping at the point a sustained uptrend stagnates, or to put it another way: at the point greed turns to fear. Psychology is everything, the trick is extrapolating market sentiment from numbers and news. Of course you need to get in before the whale. The last couple of corrections I managed to spot ten minutes or so before they happened, but judging the scale of the correction is much more difficult, it's easy to think you're catching a falling knife only to discover you're holding a dead cat.

Disclaimer: I'm no expert.

Edit: You need lots of information to do this. I have tickers for multiple exchanges open all the time, am constantly reading these forums and all other bitcoin and general economic news I can get my hands on. Going by the gox/USD ticker one may think a correction in imminent, but looking at the btchina ticker shows me this isn't the case. Of course now I've said this it's going to crash just to punish my hubris

[aminorex]

The problem for such a whale is that fiat is burning so fast, and there's a lot more fiat than coin.  I can easily imagine Barry Silbert swallowing a whale or two, because he's backed with OPM.

[freebird]

I just imagine I'm a whale with lots of BTC looking to take profit. I'm not, but if I was I'd be wanting to dump when market confidence is looking a bit shaky in order to provoke a panic so I can buy back lower. In the current environment that probably means I'll be dumping at the point a sustained uptrend stagnates, or to put it another way: at the point greed turns to fear. Psychology is everything, the trick is extrapolating market sentiment from numbers and news. Of course you need to get in before the whale. The last couple of corrections I managed to spot ten minutes or so before they happened, but judging the scale of the correction is much more difficult, it's easy to think you're catching a falling knife only to discover you're holding a dead cat.

Disclaimer: I'm no expert.

Edit: You need lots of information to do this. I have tickers for multiple exchanges open all the time, am constantly reading these forums and all other bitcoin and general economic news I can get my hands on. Going by the gox/USD ticker one may think a correction in imminent, but looking at the btchina ticker shows me this isn't the case. Of course now I've said this it's going to crash just to punish my hubris

Congrats on spotting the recent corrections right near the top. Yeah, you pretty much have to watch the tickers around the clock to have a chance of doing that. And, as you said, it's important to watch multiple exchanges.

The last couple hours, BTCChina is rocketing up fast, while Gox and Stamp are barely going up at all. This is exactly what I expected. I'm sure there will still be some more upside on all exchanges, maybe a lot of upside, but it will be more in China compared to the others. And I'd give this rally 3 or 4 more days, tops. My best guess is actually 1-2 days. We'll see.

[freebird]

The problem for such a whale is that fiat is burning so fast, and there's a lot more fiat than coin.  I can easily imagine Barry Silbert swallowing a whale or two, because he's backed with OPM.

The question is, how high can the price go and be sustainable at this phase of bitcoin's development? I'm expecting only $3-5k by the end of next year. I don't think it's going to go straight to $10k in a few months. That wouldn't be sustainable growth, and it actually wouldn't be healthy for bitcoin, IMO.

I also think as the price of bitcoin keeps rising, more investors will diversify into some of the best altcoins. This will mean that the market cap of all cryptocurrencies together could rise extremely fast, whereas the growth of bitcoin may start to taper off in 2014. (I mean in relative terms. It may still double or triple next year, but that's nothing compared to what it did this year.)

[Kleptoid]

The last couple hours, BTCChina is rocketing up fast, while Gox and Stamp are barely going up at all. This is exactly what I expected. I'm sure there will still be some more upside on all exchanges, maybe a lot of upside, but it will be more in China compared to the others. And I'd give this rally 3 or 4 more days, tops. My best guess is actually 1-2 days. We'll see.

Broadly speaking I agree with that analysis, but it's difficult to have any confidence, things are a lot more complex now than they used to be. Bitcoin is getting a _lot_ of exposure in the mainstream media, and it seems there are multiple overlapping cycles in play. I can see another 20-40% correction in the timescale you suggest, but I can also see the market recovering from it in a couple of weeks and new ATHs being made before Christmas. The rise of the Chinese bitcoin complicates things as it seems there is a partial disconnect between Chinese market sentiment and that of the more traditional (predominantly western) markets. I expect this disconnect will diminish over time as the current madness dies down.

Food for thought: we all know the current global financial system is broken and on life support, what if TPTB are beginning to think of bitcoin as an exit strategy? It seems crazy I know, but some of the news I read suggests it's worth considering.