Stephen Reed's Million Dollar Logistic Model

[BitDreams]

Click on the big gray arrow to add the candles from the bottom call.

(if this were a trade, the bottom call is done, I'd set stops and either price would continue to run or it would fall a little and close out - this is not a trade for me so I still hodl so there's still risk going forward)

https://www.tradingview.com/v/bnBph6N0/

[BitDreams]

Interesting that the pin from today's low price (so far) tapped the -.382 (fibonacci) handle of the Andrews Pitchfork. Price appears to be acting 'in tune' with this technical analysis tool.

The median line is black, yellow is .236, purple is .382, green is .5, gray is .618 and blue is .786 with the bold dark lines being 0 and 1 with negative values below the median line and positive above. Price reversals at any of these fib lines implies that the median line continues to be 'in tune' with the long term price trend. A break below today's low, and the -.5 fib becomes the next lower target. Keep in mind that these trend lines are rising over time so any specific price point is paired with a specific date as well.

[SlipperySlope]

The Logistic Model is now revised to use mainly Bitstamp prices

With the shutdown of Mt.Gox, I revised the Logistic Model to use Bitstamp prices starting January 1, 2012. I also manually re-fit the logistic model parameters to the new price series. To the extent that this model is a valid representation of the adoption of bitcoin by the population of possible speculators, the predictions remain the same. Prices will fluctuate around a logarithmic growth curve averaging about 10x increase per year until growth inevitably begins to slow down. I performed sensitivity analysis of the model using a variety of hypothetical maximum bitcoin prices and observed that the 10x growth rate is common regardless of the maximum price.

Considering the November 2013 bitcoin price bubble, it is remarkable that Mt.Gox again plays a major role in the recent collapse as it also did in the collapse of the greatest bitcoin bubble back in June 2011. 

Inspecting the model log chart, I suppose that prices will remain below the log trend line for a few more months and then rally above it in a manner similar to the price rallies of April 2013 and November 2013.

https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c

[BitDreams]

 As fictitious as we might believe mtGox price performance was over this past month it still played well with technical analysis. The green trend line was drawn back to the one-penny low on mtGox in October of 2010 (also coincides with 2.382 fib on the andrews fork I have tried to center on the chart). Even under all but total collapse that green dashed one-penny trend line, hinted at in an earlier post as 'your worst fears', that one-penny trendline held.

Traderview has Bitstamp exchange listed so I'll update this chart using the new symbol but for now, so long Gox charts - http://ponziunit.blogspot.com/2013/11/btcusd-using-traderviewcom-charting-tool.html :

[BitOnyx]

I'm afraid this graphs might be a bit optimistic when it comes to this 4 years distance . In reality it might be much bigger. Also the price would go up forever, we can be sure about it, problem is when. 4 years or maybe 400 years. Price, even though at some point placed inside mathematical algorithm, still can be speculated in different ways.

Base on price from few years ago 10k for bitcoin sounds about right, problem is when.

[skivrmt]

I'm afraid this graphs might be a bit optimistic when it comes to this 4 years distance . In reality it might be much bigger. Also the price would go up forever, we can be sure about it, problem is when. 4 years or maybe 400 years. Price, even though at some point placed inside mathematical algorithm, still can be speculated in different ways.

Base on price from few years ago 10k for bitcoin sounds about right, problem is when.

The beautiful thing about charts, and statistic for that matter, is that generally you can manipulate them in almost anyway you see fit.  Someone posted we're in a bear run now based on X chart with X lines drawn in and X times frame.  10 minutes later someone posted Y chart showing bull run.  How long is the chart?  How "wide" on the lines and/or moving averages.  All these factors are huge when it comes to charts.

[SlipperySlope]

March 2014 Logistic Model Status

Here is the log chart for the logistic model covering 2013 and 2014 . . .



Presently the bitcoin price of $575 is significantly below the model value of $856. I share the conventional wisdom on this forum that the next Bitcoin bubble will begin in a few months as illustrated below, assuming that the next bubble is similar to the last two bubbles  . . .



The shared spreadsheet is https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c
 

[skivrmt]

March 2014 Logistic Model Status

Here is the log chart for the logistic model covering 2013 and 2014 . . .



Presently the bitcoin price of $575 is significantly below the model value of $856. I share the conventional wisdom on this forum that the next Bitcoin bubble will begin in a few months as illustrated below, assuming that the next bubble is similar to the last two bubbles  . . .



The shared spreadsheet is https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c
 

I still think you're kinda nuts, but it's fun to keep dreaming with you during this fun ride, up, down, up, down...

You can manipulate charts/lines almost anyway you want to make a point.  I'm not saying you specifically are doing this, but you are certainly "reaching" a bit.

[SlipperySlope]

I still think you're kinda nuts, but it's fun to keep dreaming with you during this fun ride, up, down, up, down...

You can manipulate charts/lines almost anyway you want to make a point.  I'm not saying you specifically are doing this, but you are certainly "reaching" a bit.

I use a simple, widely applicable, mathematical model to explain historical bitcoin prices and to characterize the circumstances in which exponential bitcoin exponential price growth eventually slows down. Fitting the model requires me to guess at a maximum bitcoin price, and I selected 1 million USD per bitcoin as explained earlier.

I figure that 2014 is the last year in which ordinary persons will be able to afford a whole bitcoin, because the logistic model suggests prices next year will range between 10000 and 100000 USD. Glad that you are along for the ride.

[Dr.Zaius]

As fictitious as we might believe mtGox price performance was over this past month it still played well with technical analysis. The green trend line was drawn back to the one-penny low on mtGox in October of 2010 (also coincides with 2.382 fib on the andrews fork I have tried to center on the chart). Even under all but total collapse that green dashed one-penny trend line, hinted at in an earlier post as 'your worst fears', that one-penny trendline held.

Traderview has Bitstamp exchange listed so I'll update this chart using the new symbol but for now, so long Gox charts - http://ponziunit.blogspot.com/2013/11/btcusd-using-traderviewcom-charting-tool.html :

You've just proved why technical analysis is akin to magic and tarrot card reading. You managed to draw up a chart that fits trend lines on an absolutely dead and not functioning exchange, and still come up with a price prediction. Chart's are nothing more then past last sale reference points. Staring at one long enough will eventually convince one of "patterns."

https://en.wikipedia.org/wiki/Apophenia

TA practitioners and sages eventually all suffer from Apophenia. They can't even help themselves at some point, they will chart a cockroach running up a wall to  look for patterns.

Understanding why the bitcoin price was unsustainable is pretty basic, 3600 coins are created daily out of thin air. In November and December those coins were worth $5million a day, miners just couldn't resist hitting the bid. When you realize 80% of the supply is held by some ~200 individuals, you quickly comprehend how easy it is to manipulate the price. Mt. Gox had no issues paying fiat out to insiders when they wanted to cashout, but everyone else was held up by compliance/funds shortage. Same thing that Bitstamp does.

The Slippery Slope Million Dollar Logistic Model, is based on the fallacy of what occured in the past must continue in the future.

[SlipperySlope]

The Slippery Slope Million Dollar Logistic Model, is based on the fallacy of what occured in the past must continue in the future.

To a certain extent, the past bitcoin price series does suggest a prediction for the future. Namely that there were bubbles and there will be more bubbles.

You misunderstand the mathematical nature of the logistic model when you state that it assumes that what occurred in the past must continue in the future. Eventually, the exponential growth of bitcoin prices must end. The logistic model is the simplest way to explain that phenomenon - that eventually future bitcoin prices will not have the exponential growth observed in the past, as we pass the 50% adoption rate by the population of possible bitcoin speculators. For a maximum bitcoin price of 1 million USD, the model predicts the halfway adoption point at year end 2016.

[BitDreams]

As fictitious as we might believe mtGox price performance was over this past month it still played well with technical analysis. The green trend line was drawn back to the one-penny low on mtGox in October of 2010 (also coincides with 2.382 fib on the andrews fork I have tried to center on the chart). Even under all but total collapse that green dashed one-penny trend line, hinted at in an earlier post as 'your worst fears', that one-penny trendline held.

Traderview has Bitstamp exchange listed so I'll update this chart using the new symbol but for now, so long Gox charts - http://ponziunit.blogspot.com/2013/11/btcusd-using-traderviewcom-charting-tool.html :

You've just proved why technical analysis is akin to magic and tarrot card reading. You managed to draw up a chart that fits trend lines on an absolutely dead and not functioning exchange, and still come up with a price prediction. Chart's are nothing more then past last sale reference points. Staring at one long enough will eventually convince one of "patterns."

https://en.wikipedia.org/wiki/Apophenia

TA practitioners and sages eventually all suffer from Apophenia. They can't even help themselves at some point, they will chart a cockroach running up a wall to  look for patterns.

Understanding why the bitcoin price was unsustainable is pretty basic, 3600 coins are created daily out of thin air. In November and December those coins were worth $5million a day, miners just couldn't resist hitting the bid. When you realize 80% of the supply is held by some ~200 individuals, you quickly comprehend how easy it is to manipulate the price. Mt. Gox had no issues paying fiat out to insiders when they wanted to cashout, but everyone else was held up by compliance/funds shortage. Same thing that Bitstamp does.

The Slippery Slope Million Dollar Logistic Model, is based on the fallacy of what occured in the past must continue in the future.

Some people will never find value in technical analysis and I'm not going to try to convince you it has any value either. I believe people often look deeper into technical analysis than they should. I'm dealing in facts, current price relative to previous price. I can make projections which is certainly not a fact, but each moment a new price posts, I can re-evaluate my position based on being more on target or more off target and then I may adjust my positions accordingly.

The only question I have for you Dr.Zaius is do you set stop losses and profit taking targets?

[Skaterdiejosh]

So according to your chart this next bubble would put us over 10 k by the end of the year !! That's seems hard to accept as even close to possible !! But who would of thought bitcoin would go from the 100"s last October to 1200$ in December . So that same increase this year would put us close to 10k by end of December this year !! Great logistic model makes one think twice about spending there bitcoin Im thinking you might of been more close putting the top of your model in the 500k range but its hard to tell with bitcoin and how much adoption we are seeing in the market ....

[dave00]

In this case i remember words like: "there won't be the need for more than 100 computers in the entire world"
"internet won't spread"

[gnode]

As fictitious as we might believe mtGox price performance was over this past month it still played well with technical analysis. The green trend line was drawn back to the one-penny low on mtGox in October of 2010 (also coincides with 2.382 fib on the andrews fork I have tried to center on the chart). Even under all but total collapse that green dashed one-penny trend line, hinted at in an earlier post as 'your worst fears', that one-penny trendline held.

Traderview has Bitstamp exchange listed so I'll update this chart using the new symbol but for now, so long Gox charts - http://ponziunit.blogspot.com/2013/11/btcusd-using-traderviewcom-charting-tool.html :

You've just proved why technical analysis is akin to magic and tarrot card reading. You managed to draw up a chart that fits trend lines on an absolutely dead and not functioning exchange, and still come up with a price prediction. Chart's are nothing more then past last sale reference points. Staring at one long enough will eventually convince one of "patterns."

https://en.wikipedia.org/wiki/Apophenia

TA practitioners and sages eventually all suffer from Apophenia. They can't even help themselves at some point, they will chart a cockroach running up a wall to  look for patterns.

Understanding why the bitcoin price was unsustainable is pretty basic, 3600 coins are created daily out of thin air. In November and December those coins were worth $5million a day, miners just couldn't resist hitting the bid. When you realize 80% of the supply is held by some ~200 individuals, you quickly comprehend how easy it is to manipulate the price. Mt. Gox had no issues paying fiat out to insiders when they wanted to cashout, but everyone else was held up by compliance/funds shortage. Same thing that Bitstamp does.

The Slippery Slope Million Dollar Logistic Model, is based on the fallacy of what occured in the past must continue in the future.

Did you read the first 4 posts in this thread? I don't think so. Maybe you should, before you start commenting. This is not Apophenia.

[pungopete468]

I think this model is wonderful. I agree with the logic behind it.

Nobody knows the future and the market will do what it wants, but this pretty much sums up the mathematical side of the price pyramid...

I hope the market follows the long term trends!

[twiifm]

Technical analysis is always trumped by fundamentals over the long run.

You are making a huge speculative assumption that bitcoin will achieve mass adoption.   The question is what makes it superior to fiat that institutions and govt will support it?   

Whats stopping govt from outlawing it as legal tender?   At some point govt has to take a stance like China.   Whats stopping a better crypto from replacing it?  Did anyone think Facebook would kill Myspace

You don't even know if bitcoin will exist in the future.   

[SlipperySlope]

Technical analysis is always trumped by fundamentals over the long run.

You are making a huge speculative assumption that bitcoin will achieve mass adoption.   The question is what makes it superior to fiat that institutions and govt will support it?  

Whats stopping govt from outlawing it as legal tender?   At some point govt has to take a stance like China.   Whats stopping a better crypto from replacing it?  Did anyone think Facebook would kill Myspace

You don't even know if bitcoin will exist in the future.  

All your points are valid issues but not relevant to my research. I want to understand the circumstances under which the exponential growth of bitcoin prices eventually slows down. So I assume a logistic adoption model. I assume that Bitcoin will replace fiat, and that the existing financial infrastructure will be disrupted.

My assumptions are plausible according to arguments posted earlier in this thread.

Let me address your issues . . .

1. From what I have seen so far, fundamental analysis of the Bitcoin economy supports the notion of exponential growth. The number of Bitcoin transactions, and the number of bitcoin addresses on the blockchain are both growing exponentially. I use some of the techniques of technical analysis, e.g. drawing trendlines through a historical price series in order to illustrate and understand exponential growth.

2. The assumption that Bitcoin will achieve mass adoption is plausible; namely Bitcoin is a deflationary digital virtual currency that avoids the need for a trusted intermediary thus it is much more efficient than existing banking infrastructure, and can plausibly reach vast numbers of unbanked consumers. Furthermore, Bitcoin is a platform upon which numerous value added services are being developed, e.g. Bitcoin is programmable money.

3. Government support of Bitcoin is best exemplified by the US Senate hearings this year in which powerful US politicians heard that existing laws were sufficient to deter virtual currency criminals. The chairperson stated that the US needs a balance between protecting the consumer and encouraging innovation. This point is very important. Bitcoin is innovation. I believe that the Chinese government feels the same way - but they are hamstrung by foreign exchange controls so they need to be sure that these cannot be circumvented by Bitcoin purchases transferred out of China. Bitcoin is currently not legal tender anywhere. Your issue actually could be stated as - under what circumstances would a government permit Bitcoin to become legal tender? Perhaps when a majority of that government's employees prefer to be paid in Bitcoin.

4. Economic network effects prevent an alternate coin from replacing Bitcoin - given that Bitcoin was first, is by far the largest, and is good enough. Any particular altcoin innovation can be adopted by Bitcoin if necessary. Many believe that altcoins provide a gateway into Bitcoin and thus add to its value.

5. I thought that Facebook would replace MySpace. The latter was simply not good enough.

[twiifm]

Your assumption is plausible but its still speculative.   The other plausible specualtive assumption is that bitcoin would go to zero.

1.  You are looking at  bitcoin adoption only.   Not considering its competitor, the fiat.  Its maybe growing exponentially relative to bitcoin.   But has very far for market cap to catch up w fiat.  That is,  if it doesnt go bust first.   Bitcoin is fiat except the govt part.   Its fiat in the sense that it has no intrinsic value.   Except w fiat the demand is guaranteed because we are legally obligated to pay taxes w fiat.   

2.  Deflationary and decentralized currency is inferior to centrally planned currency.   See the history of money.   Banks used to be decentralized and currency was backed by gold standard.   That didn't work well so that's why we have what exists today.   Bitcoin is not an evolution its devolving.

3.  Unless it becomes legal tender its is just a commodity.   But unlike other commodities its value is pure speculation.

4.  First mover advantage is a myth in tech.   Most widely adopted tech come after 2nd or 3rd iteration.  As long as something better comes along and no cost to switch itll happen.  Currently there is a big cost to switch from dollars to bitcoin.   

[podyx]

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.

If you've seen the thread in speculation you know what I mean when I say 'I'm hodling'. https://bitcointalk.org/index.php?topic=375643.0






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

Holy shit, we are at the bottom

Are we in for a rough fucking ride?