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Author Topic: A Future Collapse in Bitcoin's Network, Plus $1175 in The Cards! -magicpoop  (Read 115 times)
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December 08, 2018, 11:58:50 AM
 #1

Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it. Looking at the daily chart , you can see that BTC has recently broken down from the big bear flag that we were covering. If you recall from my last analysis, I gave a compelling argument for why I believe that BTC could be in the process of moving down to the $1175 area, to test the high made in late 2013. If you would like to review that analysis, it is linked below.

Interestingly, the bear flag that we just broke down from, corresponds nicely with the analysis that I gave, calling for the $1175 area. If we use the current bear flag to generate a price target, you can see that it ends up almost exactly at $1175. So, in addition to having a strong argument from the log chart, for why $1175 is in the cards, we now have a bear flag breakdown, with a price projection that puts us around $1175 as well. When multiple technical indicators on a chart, point toward a similar price target, it increases the technical likelihood that the target will actually be reached. In essence, this is due to the fractal nature of market price action.

Now, that isn't to say that we won't see a bounce off of $3000. I am pretty confident that BTC will find some sort of support around $3000, because it is a level that a lot of people are talking about. The only thing is, they're about eight months behind Poop. haha =D Anyway, it's likely that a lot of buy orders are waiting around $3000, so it's likely that we could see a bounce there, before price ultimately continues it's decline toward $1175.

Many people have been asking me if I think we will see new all time highs after $1175. I think if we see a proper floor form there, that would be very similar to the floor that was produced after the high was made in late 2013. Therefore, if a proper floor is defined around $1175-$1100, I think in a few years, BTC could generate new all time highs. HOWEVER, I will never trade that assumption, until the market proves it to me, by actually forming a floor at those levels.

From a fundamental standpoint, my Twitter followers and I have been having an ongoing discussion about mining costs, verses mining profitability, verses a collapse of the BTC network. Mining costs in the US are estimated to be around $4500-$5000. We are well below that right now, which is why miners have been shutting down at a record pace. Difficulty will continue to adjust, but I think that the adjustments lag the market price, and are not as proactive as people think. Also, BTC transaction numbers are horrible, which makes it very unlikely that transaction fees will support miners in this downturn. Therefore, if price continues to collapse, I believe that the security of the blockchain could be at risk, due to rapidly declining miner activity, which could ultimately cause a collapse in the network.

Unfortunately, it is impossible to know the historical average cost of mining, verses the price of BTC , since mining costs and concentrations vary from place to place. I think the best technical indication, is the hash rate chart. Interestingly, the hash rate just saw it's second worst decline in history, indicating that miners are leaving at an increasing pace. Furthermore, the hash rate chart itself, looks like a classic bubble meltdown, which seems to indicate that there is much more downside risk to the hash rate. In other words, a far greater loss in mining activity. If that happens, the BTC network cannot sustain itself. Sure, the hash rate collapsed before, but the network wasn't as big as it is now. It is different, and unlikely to sustain itself, in a catastrophic loss in mining activity. For the record, I'm not saying that a collapse in the Bitcoin network is imminent. I'm just highlighting the red flags, and noting the very real possibility.

A better question would be: "why would mining activity continue to collapse?" I would say, because price continues to fall faster than the hash rate is adjusted, preventing mining incentives from being realized by potential miners.

Anyway, those are the technical and fundamental red flags that I see. For educational purposes, do with it what you must.

I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.

***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***

-JD- (magicpoopcannon)

I personally see 1,500 coming.
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December 08, 2018, 12:24:59 PM
 #2

Exactly!! if we drop below $3000 there will maximum chances it touch $1500 or $1300 low.bull run not before 2020 so we have to wait  Wink

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December 10, 2018, 12:51:26 AM
 #3

i may put a buy at 1500..
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December 10, 2018, 01:55:10 AM
 #4

The only aspect of mining anyone should care about is how many actual coins miners possess and need to sell. I don't think anyone should be trading based on analysing mining.

Mining was designed to take care of itself. No one else needs to care about it. If the current crop of miners can't hack it they'll leave until some others come along who can hack it.  No one knows their costs, whether they're hedged, who's buying their coins or what their plans are. It doesn't matter.

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December 10, 2018, 05:40:27 AM
 #5

The only aspect of mining anyone should care about is how many actual coins miners possess and need to sell. I don't think anyone should be trading based on analysing mining.

Mining was designed to take care of itself. No one else needs to care about it. If the current crop of miners can't hack it they'll leave until some others come along who can hack it.  No one knows their costs, whether they're hedged, who's buying their coins or what their plans are. It doesn't matter.

true.
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December 10, 2018, 09:12:40 AM
 #6

OP, you are right, the hashing power in the network always lag the market price of Bitcoin, not the other way around like what some people in the community believe. BUT difficulty, hashing power, and Bitcoin's price will find an equlibrium, or should I say must find an equilibrium, or else we are dead. Hahaha.

I am confident it will though.


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December 12, 2018, 09:43:35 AM
 #7

Next time if you post stuffs that belong to other people, at least be smart enough to post the link to the original article and not just their name. As far as I am concerned, this still remains an act of plagiarism. I follow magicpoopcannon on tradingview, and he is of course a pretty good analyst.

I would not doubt the fact that $1175 might be likely, but of course, at the same time, it is a market and nothing is guaranteed but one guaranteed thing is that mining will always sort itself out as it is designed that way from the start. As a trader however, what you are actually meant to be doing is to anticipate for likelihoods and trade it accordingly.

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December 13, 2018, 06:59:31 AM
 #8

The only aspect of mining anyone should care about is how many actual coins miners possess and need to sell. I don't think anyone should be trading based on analysing mining.

Mining was designed to take care of itself. No one else needs to care about it. If the current crop of miners can't hack it they'll leave until some others come along who can hack it.  No one knows their costs, whether they're hedged, who's buying their coins or what their plans are. It doesn't matter.

true.
I even wonder why a lot of people tend to put a lot of emphasis on mining as a means of what the market value should be in the long run. Certainly at this stage a lot of the miners have shut down their rigs for now until further notice and usually, the network has been designed to correct itself with increase or decrease in difficulty as the case may be, so one way or the other, I simply will not see that as a problem for the bitcoin network at all.

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December 13, 2018, 08:32:53 AM
 #9

I simply will not see that as a problem for the bitcoin network at all.
I think mining is far more important as you're portraying it or making it look, miners are very pivotal in this network,and a dearth of miners often leads to a huge drop in the price of the bitcoin.

The more miners shut down their rigs,the less bitcoin is mined and a reduction in the demand of the bitcoins,and an increase in the issue of scalability.

This network definitely cannot do without miners,the more reason we need the price to improve in order to incentivize miners

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December 13, 2018, 09:02:50 AM
 #10

The only aspect of mining anyone should care about is how many actual coins miners possess and need to sell. I don't think anyone should be trading based on analysing mining.

Mining was designed to take care of itself. No one else needs to care about it. If the current crop of miners can't hack it they'll leave until some others come along who can hack it.  No one knows their costs, whether they're hedged, who's buying their coins or what their plans are. It doesn't matter.

You're mostly correct here, but I think there's one thing worth considering.

Miners are investors. When we see considerable increases in hash rate from new equipment coming online, we should assume that miners are bullish and are not looking to sell anymore than necessary to cover costs. When we see the opposite (downtrending hash rate), we should probably assume that miners are bearish and generally selling inventory rather than holding. This is for the same reason that farmers and metal miners sell futures contracts: to lock in a price before it falls.

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December 15, 2018, 12:12:14 AM
 #11

You're mostly correct here, but I think there's one thing worth considering.

Miners are investors. When we see considerable increases in hash rate from new equipment coming online, we should assume that miners are bullish and are not looking to sell anymore than necessary to cover costs. When we see the opposite (downtrending hash rate), we should probably assume that miners are bearish and generally selling inventory rather than holding. This is for the same reason that farmers and metal miners sell futures contracts: to lock in a price before it falls.

I remember watching an interview with a Chinese bloke who was heavily involved in mining, one of the very few interviews I've come across with someone who knows anything about Chinese mining.

He said most of the people he knew of who were mining in China did not understand one single thing about Bitcoin, did not care what they were mining, and were solely concerned with getting as much CNY out of it as quickly as possible in the easiest manner.

Others will of course have a different approach, but trying to second guess their moves through their unknown motivations and situations is a task and a half.

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December 17, 2018, 07:35:09 AM
 #12

Eventually hash rate will catch up with the price drop. Price is not really dropping as fast as hash rate right now, it did for a while for almost a month but the price got stuck at these price and unless it goes even lower than eventually it will be catching up.

When that happens the miners will profit once again because difficulty will drop as well and when difficulty drops the possibility of profiting will happen again and people will eventually start mining again.

This is not just for bitcoin for all coins that is depended on mining the possibility of profit will decide on what will happen to the price. Ethereum is cutting that out and making their coin a pos instead and when that happens people will want to work for ICO things again since their funding will be giving them interest rate. So its just a matter of time.



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