Stephen Reed's Million Dollar Logistic Model

[Voodah]

Very nice post, thank you !

[zavtra]

What do you guys think would happen to altcoins in such a scenario?

I'm curious, because I'm all in on StableCoin 

[Wilhelm]

What do you guys think would happen to altcoins in such a scenario?

I'm curious, because I'm all in on StableCoin 

Altcoins are vessels to mine and dump.
Probably there will always be altcoins since people like trading.
I do believe many will go out of existence and new ones will be created.

Only a few altcoins will remain like Litecoin, probably the ones with good devs, marketing and adoption by consumer services.

I myself have Emerald, Spots and Hobonickels waiting to be sold in the future

My BTC0.02

[Hideyoshi]

This will be interesting to follow as time progresses. Am I to understand correctly that timing of vertical of S curve is correct based on fitting to prior history, and only part under question is whether it will level off at $1 million, or above/below?

[Biro Bob]

Very interesting post. Thank you.

[Ed4252]

Can someone do the same for litecoins?

[BitDreams]

Price appears to be coping with adversity quite well. Though fears grab headlines, word of the knock-on effect surrounding early Bitcoin adopters and their successes is just starting to spread. Next year there should be demonstrations of economic advantages for Governments learning to co-exist with Bitcoin - probably could word that better... step aside maybe? 

Thanks for fixing that link Bagatell.

Two charts: choose your worst fears using these lines for near term bearish price targets and extend that line out into 2015 for a pleasant surprise.

live chart link: https://www.tradingview.com/e/M1ZPd859/

https://www.tradingview.com/v/oc3YX0JB/ 

[SlipperySlope]

This will be interesting to follow as time progresses. Am I to understand correctly that timing of vertical of S curve is correct based on fitting to prior history, and only part under question is whether it will level off at $1 million, or above/below?

Yes, I simply guessed at a plausible high maximum price for bitcoin. We are still in the exponential growth phase of the S-Curve, doubling on average three times per year. The growth slowdown will occur, according to theory, when 50% of the population of those who will ever buy bitcoin for speculation - have done so.

[wachtwoord]

I'm curious, for things where this model applies. Do we expect the overshoot that will happen at the saturation point and the following overcorrection be relatively larger or smaller than the overshooting/overrcorrectios along the growth path?

I'm asking because no-one will ever really know when we've reached the saturation point (and no further exponential rise is coming) until it happened.

[bitrider]

Good question. I've been trying to think through that same issue myself. ?

[SlipperySlope]

I'm curious, for things where this model applies. Do we expect the overshoot that will happen at the saturation point and the following overcorrection be relatively larger or smaller than the overshooting/overrcorrectios along the growth path?

I'm asking because no-one will ever really know when we've reached the saturation point (and no further exponential rise is coming) until it happened.

I agree with many here who think that the bitcoin price bubbles are becoming less severe percentage-wise - so perhaps the final overshoot will be smaller than those that preceded it.

[bitrider]

I'm curious, for things where this model applies. Do we expect the overshoot that will happen at the saturation point and the following overcorrection be relatively larger or smaller than the overshooting/overrcorrectios along the growth path?

I'm asking because no-one will ever really know when we've reached the saturation point (and no further exponential rise is coming) until it happened.

I agree with many here who think that the bitcoin price bubbles are becoming less severe percentage-wise - so perhaps the final overshoot will be smaller than those that preceded it.

Yes, I have noticed the same thing, and that is a possibility (less volatile bubbles over time for what I will call your "speculative adoption" logistic curve)

But I'm getting at a different question. As I understand it, your model is tracking "speculative adoption" for lack of a better word. I understand why you are doing this, as the first "ultimate ATH" for BTC will almost certainly be driven mostly by speculation - as we are seeing now. This will take us quickly to some maximum price (eg. $1M). I/we expect that this "speculative adoption" will be far ahead of "utility adoption" which will probably lag significantly. Most new technology adoption models (I've posted a few here over the years) suggest that when the "speculative adoption" gets far ahead of the "utility adoption" a massive speculative correction often takes places over many years to bring the price back into alignment with current fundamental value. This is a different phenomenon than the mini bubbles on the way up the logistic curve. This seems to me would indicate the underlying model stops working at this point. This might suggest that once hitting $1M btc (for example) will drop back tremendously to perhaps 1/10 while "utility adoption" catches up. It might be then several more years before price climbs back to close to ATH - if ever.

As I'm writing, my question becomes more clear.. "How will we know when the logistic "speculative adoption" curve has run its course and a much bigger - long-term, fundamental - correction has begun.?" Several answers spring to mind, but would appreciate your thoughts.

[kdrop22]

I'm curious, for things where this model applies. Do we expect the overshoot that will happen at the saturation point and the following overcorrection be relatively larger or smaller than the overshooting/overrcorrectios along the growth path?

I'm asking because no-one will ever really know when we've reached the saturation point (and no further exponential rise is coming) until it happened.

I agree with many here who think that the bitcoin price bubbles are becoming less severe percentage-wise - so perhaps the final overshoot will be smaller than those that preceded it.

Yes, I have noticed the same thing, and that is a possibility (less volatile bubbles over time for what I will call your "speculative adoption" logistic curve)

But I'm getting at a different question. As I understand it, your model is tracking "speculative adoption" for lack of a better word. I understand why you are doing this, as the first "ultimate ATH" for BTC will almost certainly be driven mostly by speculation - as we are seeing now. This will take us quickly to some maximum price (eg. $1M). I/we expect that this "speculative adoption" will be far ahead of "utility adoption" which will probably lag significantly. Most new technology adoption models (I've posted a few here over the years) suggest that when the "speculative adoption" gets far ahead of the "utility adoption" a massive speculative correction often takes places over many years to bring the price back into alignment with current fundamental value. This is a different phenomenon than the mini bubbles on the way up the logistic curve. This seems to me would indicate the underlying model stops working at this point. This might suggest that once hitting $1M btc (for example) will drop back tremendously to perhaps 1/10 while "utility adoption" catches up. It might be then several more years before price climbs back to close to ATH - if ever.

As I'm writing, my question becomes more clear.. "How will we know when the logistic "speculative adoption" curve has run its course and a much bigger - long-term, fundamental - correction has begun.?" Several answers spring to mind, but would appreciate your thoughts.

Bitrider makes a great point. There are two values,
a) Peak value of Utility Adoption
b) Peak value of Speculative Adoption
Peak value of Speculative Adoption = (Approximately) 10 * Peak value of Utility Adoption

SlipperySlope's S-Curve model (which is a great model and one I like very much), can only be used to model the adoption rate/ relative appreciation of price over time. It does not tell you what the final price will be.
The key insight this model provides is that if you are planning on investing in Bitcoin, you should do so in the next 3 to 6 months. Ideally you should invest all now, however given the fact that we have had a run up and might be consolidating for quite some time. We can dollar cost average or invest during pullbacks, till the middle of 2014.

[2017orso]

Considering the price repeatedly returns to the log line, or even an MA, would either one of those be a good indication for the final "bubble" to fundamental adoption vs speculative?

[thebanker28]

If the projection is correct my miniature Bitcoin holding will no longer be so miniature. LOL.

Just want to take the time to thank you for spending your time in putting this together. =)

[SlipperySlope]

I'm curious, for things where this model applies. Do we expect the overshoot that will happen at the saturation point and the following overcorrection be relatively larger or smaller than the overshooting/overrcorrectios along the growth path?

I'm asking because no-one will ever really know when we've reached the saturation point (and no further exponential rise is coming) until it happened.

I agree with many here who think that the bitcoin price bubbles are becoming less severe percentage-wise - so perhaps the final overshoot will be smaller than those that preceded it.

Yes, I have noticed the same thing, and that is a possibility (less volatile bubbles over time for what I will call your "speculative adoption" logistic curve)

But I'm getting at a different question. As I understand it, your model is tracking "speculative adoption" for lack of a better word. I understand why you are doing this, as the first "ultimate ATH" for BTC will almost certainly be driven mostly by speculation - as we are seeing now. This will take us quickly to some maximum price (eg. $1M). I/we expect that this "speculative adoption" will be far ahead of "utility adoption" which will probably lag significantly. Most new technology adoption models (I've posted a few here over the years) suggest that when the "speculative adoption" gets far ahead of the "utility adoption" a massive speculative correction often takes places over many years to bring the price back into alignment with current fundamental value. This is a different phenomenon than the mini bubbles on the way up the logistic curve. This seems to me would indicate the underlying model stops working at this point. This might suggest that once hitting $1M btc (for example) will drop back tremendously to perhaps 1/10 while "utility adoption" catches up. It might be then several more years before price climbs back to close to ATH - if ever.

As I'm writing, my question becomes more clear.. "How will we know when the logistic "speculative adoption" curve has run its course and a much bigger - long-term, fundamental - correction has begun.?" Several answers spring to mind, but would appreciate your thoughts.

Bitrider makes a great point. There are two values,
a) Peak value of Utility Adoption
b) Peak value of Speculative Adoption
Peak value of Speculative Adoption = (Approximately) 10 * Peak value of Utility Adoption

SlipperySlope's S-Curve model (which is a great model and one I like very much), can only be used to model the adoption rate/ relative appreciation of price over time. It does not tell you what the final price will be.
The key insight this model provides is that if you are planning on investing in Bitcoin, you should do so in the next 3 to 6 months. Ideally you should invest all now, however given the fact that we have had a run up and might be consolidating for quite some time. We can dollar cost average or invest during pullbacks, till the middle of 2014.

This is also my view.

The dot-com stock bubble price of Amazon vs the later business driven price of the last few years is an apt expectation for bitcoin. We could monitor the growth rate of bitcoin transactions and other measures of the underlying bitcoin economy and see if they too are increasing at 10x annually. If not then perhaps the relative divergence in growth rates would suggest the degree to which speculation gets ahead of the underlying bitcoin economy.

[bitrider]

Yes, that would be excellent additional research to add to your work. I'm not sure I have the skills to pull it off (I'll think it through), and perhaps someone quicker here will pick up the challenge.

[knightcoin]

The Logistic S-Curve



The logistic function F(x) = 1 / (1 + e^-x) was developed to model the growth of a population that multiplies until constrained by exhausted resources. It has the property of exponential growth to the midpoint, followed by exponentially slowing growth.

In my application of the model, the population consists of all speculators who will ever buy bitcoins. That population grows as bitcoin knowledge spreads to new speculators, and that population is eventually limited by the finite number of available speculators. The price series of bitcoin is subject to bubbles and crashes that are ignored by the model, rather the model addresses the price trend.

The S Curve is plotted on my chart using a logarithmic price axis, and thus does not directly resemble the Sigmoid graph above.
  

check,
http://b-gat.es/1cnazWY

[ZephramC]

The Logistic S-Curve



The logistic function F(x) = 1 / (1 + e^-x) was developed to model the growth of a population that multiplies until constrained by exhausted resources. It has the property of exponential growth to the midpoint, followed by exponentially slowing growth.

In my application of the model, the population consists of all speculators who will ever buy bitcoins. That population grows as bitcoin knowledge spreads to new speculators, and that population is eventually limited by the finite number of available speculators. The price series of bitcoin is subject to bubbles and crashes that are ignored by the model, rather the model addresses the price trend.

The S Curve is plotted on my chart using a logarithmic price axis, and thus does not directly resemble the Sigmoid graph above.
  

check,
http://b-gat.es/1cnazWY

Well. This might be true for credit-driven debt-based cyclic economy. Nevertheless Bitcoin is (among other things) deflatory currency. This video is interesting, but basically promotes classical economic view, "important role" of central bank and government, necessity of robbery forced wealth redistribution, etc.

[knightcoin]

The Logistic S-Curve



The logistic function F(x) = 1 / (1 + e^-x) was developed to model the growth of a population that multiplies until constrained by exhausted resources. It has the property of exponential growth to the midpoint, followed by exponentially slowing growth.

In my application of the model, the population consists of all speculators who will ever buy bitcoins. That population grows as bitcoin knowledge spreads to new speculators, and that population is eventually limited by the finite number of available speculators. The price series of bitcoin is subject to bubbles and crashes that are ignored by the model, rather the model addresses the price trend.

The S Curve is plotted on my chart using a logarithmic price axis, and thus does not directly resemble the Sigmoid graph above.
  

check,
http://b-gat.es/1cnazWY

Well. This might be true for credit-driven debt-based cyclic economy. Nevertheless Bitcoin is (among other things) deflatory currency. This video is interesting, but basically promotes classical economic view, "important role" of central bank and government, necessity of robbery forced wealth redistribution, etc.

I do agree that the video is more related to Keynesian economics point of view  ( government should intervene every time the economy went wrong hence opened to abuse but he also said that deflation can be generated by an aggregate supply lower than of potential output and hence can earn their own pace to establish themselves in the economy by creating expectations of deflation demand for future years. ) and not exactly the view of Chicago school of economics

but what really caught my attention was the function $ curve ... witch can be used for a broad types of analysis