point of maximum pain

[Maged]

Plenty of oldtimers coming out of the woodwork for this thread.

I've been here riding the waves since 2011. The point of maximum pain is not here yet. But I predict it will be here soon. Best brace yourself for it now.

I completely agree. If I think about where I and others are emotionally, it reminds me a lot of the opposite of when we went up and hit $600. Based on the history of corrections in Bitcoin, I believe that means that in the next few days we will drop to around $200 and stabilize at just under $400 shortly thereafter.

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[Ibian]

Really don't think we will drop below the previous ATH. Didn't happen the last few times.

[Raize]

Since I am honored to be around some old timers Id like to hear projections about time to next rally and price estimate? or is everyone think the show is over lol..

Really don't think we will drop below the previous ATH. Didn't happen the last few times.

There's definitely some truth to this outlook. For the sake of everyone wondering what *I'm* at least thinking, I'll go into a bit more detail.

Looking at the major bubbles over time I believe the first one was the run from essentially nothing to $0.10 in the Summer of 2010. This was around when artforz hopped in with GPU miners. I didn't get involved in Bitcoin till late 2010, and even then I mostly lurked on the forums and mined solo using GPUs & CPUs for a bit. I wasn't present during that bubble. Gox was created around this time as well if I remember correctly. I believe it settled around $0.03 for a long while. theymos mentioned once he sold a reasonable amount at $0.02-$0.03 expecting it to go further down. It's reasonable to expect that others thought the same, that after that initial entry of a new exchange, the folks most likely to be doing the selling had tens of thousands of coin (if not even more) and probably had no reason not to sell.

The run I got to see was the run from about October 2010 to February 2011. I remember it hit a high of $1.10 where there was this huge hidden wall on MtGox since they were still doing dark orders. It then fell in most of March till about $0.55, where the next bubble started. The low of $0.55 was higher than the high of the last bubble at $0.10. It was even higher than the November mini bubble of ~$0.50.

Previous bubble high: $0.10 or $0.50
Self bubble high: $1.10 (IRC OTC was higher yet and more common for trading at the time than Gox)
Self bubble low: $0.55



The next bubble went from that low of $0.55 to over $30, then back down to ~$2. This one took considerably longer from high to low, and had considerable retraction as well, falling 95% or so. Still it never reached as low as the top point of the previous bubble at $1.10. The 360K volume in mid-November at the low still puzzles me to this day. It made my comments in the link I made above so much easier to do. Someone lost control of a lot of coin, and someone gained control of a lot of coin. The next bubble, to me, was inevitable.

Previous bubble high: $1.10
Self bubble high: $33ish
Self bubble low: $2



Moving on to nearly two years later, we had the run of early 2013. Most folks here probably remember this one and are familiar with the chart. It is worth noting that the crash from $260 to $55 or so in one day was likely related specifically to the DDOS attack on MtGox. That said, the "real" low of the bubble is more than likely the $65 it reached several months later.

Previous bubble high: $33ish
Self bubble high: $260
Self bubble low: $65 (or possibly $55ish)



So that brings us to today. What is the present low going to be? Generally speaking, it looks like the low is usually still double that of the previous bubble's high, but we've clearly passed that here. So what's the real bottom going to be?

Previous bubble high: $260
Self bubble high: $1150
Self bubble low:

[paratox]

Thanks very much for your analysis, Raize!


What caught my eye is the 2011 Jan-April "Bubble". It seems to have a more straight downtrend than the other bubble cycles which had more of a curved downtrend, except for the cycle we are in now. Again it's more of straight downtrend.

Interestingly, the downtrend of the 2011 Jan-April cycle ended with a sharp upwards trend reversal. The analogy of a spring coil which was mentioned in another thread comes to mind. What followed was the big run up of 2011. All the other bubble cycles seem to had a curved uptrend.

Thinking of fractal patterns, we may see a spring coil reversal again?

[adpinbr]

I dont think bitcoin can just sit idle for another 2 years, to many businesses are being built for it to just lay their idle, something has to happen, for good or for bad..

[dreamspark]

Firstly thanks for that analysis Raize, I'd be interested to hear how you felt about the general sentiment during the bubles you experienced in comparison to today?

I dont think bitcoin can just sit idle for another 2 years, to many businesses are being built for it to just lay their idle, something has to happen, for good or for bad..

Exactly, what the previous bubbles have also shown us is a decrease in time from one to the next. I honestly believe that there is more money to be put into BTC now than around the early november 2013 price, its just all jostling for a good entry point.

People always spout of about how a $50 price difference doesnt matter but what they always fail to mention is that a price difference now compared to in the future should be expressed as a percentage. Yes $50 less now might not seem alot but as a percentage of the current price ($450) its almost 10%. At $10,000 BTC thats $1000 per coin, quite a big difference. Thus many people are looking for that perfect entry point, leading to the coiled spring effect.

[Raize]

Firstly thanks for that analysis Raize, I'd be interested to hear how you felt about the general sentiment during the bubles you experienced in comparison to today?

Click that first link and read some of the comments from the first post, you'll note both theymos and evoorhees were very bearish on Bitcoin even after it had fallen as much as it had. I think the sentiment today is still far too chipper to say we're in capitulation. I think the tune of the forums will be much harsher once we're looking at double digits again. I also think it wouldn't be surprising to see people talking about having lost their entire life savings on Bitcoin regularly in the news, as well as a few reports of folks who took out loans that had to declare bankruptcy due to loans they took out to buy it during either bubble. Remember that the post one week after the $2 low Wired ran an article called The Rise and Fall of Bitcoin, it was seen as an experiment that failed. We have to see people saying the same things again in the news for me to think it's at a new low.

Lastly, when the next increases *do* happen, I suspect they will be significantly slower to ramp up into anything resuming a bubble. It might be another year (possibly two) yet before we see the ATH, and it might not happen till sometime after the next halving, even. This was a pretty epic bubble and there's a lot of cheap $100 coin from Gox, TM Gox coin, hacked coin, and the SR coin that might keep downward pressures heavy for some time as it gets sold regularly.

That said, I've been wrong before, I thought the fall from $260 was "the big one" and we were going back to $12 or so then to match that 96% decline, then more ASICs came out. That's why I put a heavy emphasis on the impact of taxes, regulations, and second-generation ASICs today. It could be that the expectations now for ASIC miners are going to get so high that easy coin is no longer achievable, and the supply ends up going into the hands of folks that hoard it.

Put simply, the less miners hoard, the more likely the price will fall, the more likely they hoard, the more likely we'll see bubbles form. I'm hoarding myself and waiting for double-digits to buy back in, but that's pretty much been my modus operandi for the last three years anyway. I want to retire and live off of my coin for the rest of my life, and I can't safely do that right now. Without taxes, I almost could.

[cbeast]

I'm hoarding myself and waiting for double-digits to buy back in, but that's pretty much been my modus operandi for the last three years anyway. I want to retire and live off of my coin for the rest of my life, and I can't safely do that right now. Without taxes, I almost could.

As we saw with MtGox, if Bitcoin goes below $100, every exchange will become insolvent. You will not be able to buy bitcoins except from miners and that will be the end of PoW cryptocurrencies.

[knightcoin]

I am very bad trader, every time I sell prices goes UP, every time I buy price drops .. so OP I actually can control the bitcoin prices, let me know what I can do for you to relief your pain ... 

[Melbustus]

Firstly thanks for that analysis Raize, I'd be interested to hear how you felt about the general sentiment during the bubles you experienced in comparison to today?

...Remember that the post one week after the $2 low Wired ran an article called The Rise and Fall of Bitcoin, it was seen as an experiment that failed. We have to see people saying the same things again in the news for me to think it's at a new low.
...

I remember that time very well. I started buying small amounts in summer 2011, and continued through the low and afterwards. My thought then was that IF bitcoin didn't simply fizzle, it was very likely going to explode. Thus, any purchases with even a 95% chance of total wipeout were still very positive-expectation. I considered it a 5-10yr position, and I still do.

That said, the 2011 crash *did* worry me. We didn't have any real public awareness, hardly any academic discussion, no venture backed companies, no institutional interest or attention at all, no real seasoned entrepreneurs in the space, near zero merchant adoption, and almost no professional presence whatsoever. The risk was very real that interest in bitcoin could simply fade and that'd be that (for a while anyways.....I always considered the idea of crypto-currency to be too compelling to go away permanently).

Now that we have all of the above, I consider the pure existential risk almost gone. There are enough smart and talented people who now understand the potential and benefits of bitcoin that ecosystem development will continue, more innovation will happen, and traction will increase. Sure, price can do virtually anything on top of that dynamic, but over the longer haul, increased traction/adoption/mindshare yields increased price.

So whatever happens to price in the short/medium term, I'm considerably less "worried" than in late 2011. I think we're very much over the mindshare hurdle, where we do now have sufficient critical mass for the ecosystem to continue to grow over the longer-term. I said the same thing after the April 2013 crash...

[IIOII]

Now that we have all of the above, I consider the pure existential risk almost gone. There are enough smart and talented people who now understand the potential and benefits of bitcoin that ecosystem development will continue, more innovation will happen, and traction will increase. Sure, price can do virtually anything on top of that dynamic, but over the longer haul, increased traction/adoption/mindshare yields increased price.

So whatever happens to price in the short/medium term, I'm considerably less "worried" than in late 2011. I think we're very much over the mindshare hurdle, where we do now have sufficient critical mass for the ecosystem to continue to grow over the longer-term. I said the same thing after the April 2013 crash...

I agree that overall risk has constantly diminished, but I would not say that existential risk is almost gone. There is a lot of risk with the software (still in beta) and the network. The whole system ist quite complicated and may contain points of failure that pop out unexpectedly.

Also bitcoin is still far away from mass adoption due to usability issues.

So there is no assurance that bitcoin may not fail in a culmination of sudden events that no one had on his radar. However bitcoin is a great innovation that is worthy to be believed in. So hold on.

[proudhon]

Who feels it?  This morning I woke up, read what was going on, and felt a slight bit of panic creep into my mind.  Now, I could totally botch it this time around, but if my history with bitcoin tells me anything, I'm on the verge of significantly increasing my wealth again.  Still waiting for the psychological pressure I feel to get stronger, but it seems to be pretty clearly on its way.

[keystroke]

Who feels it?  This morning I woke up, read what was going on, and felt a slight bit of panic creep into my mind.  Now, I could totally botch it this time around, but if my history with bitcoin tells me anything, I'm on the verge of significantly increasing my wealth again.  Still waiting for the psychological pressure I feel to get stronger, but it seems to be pretty clearly on its way.

Let's do this thing. See you at the $1000 party?

[600watt]

Who feels it?  This morning I woke up, read what was going on, and felt a slight bit of panic creep into my mind.  Now, I could totally botch it this time around, but if my history with bitcoin tells me anything, I'm on the verge of significantly increasing my wealth again.  Still waiting for the psychological pressure I feel to get stronger, but it seems to be pretty clearly on its way.

Let's do this thing. See you at the $1000 party?

Did i hear $ 1000 party ?

 

[proudhon]

Who feels it?  This morning I woke up, read what was going on, and felt a slight bit of panic creep into my mind.  Now, I could totally botch it this time around, but if my history with bitcoin tells me anything, I'm on the verge of significantly increasing my wealth again.  Still waiting for the psychological pressure I feel to get stronger, but it seems to be pretty clearly on its way.

Let's do this thing. See you at the $1000 party?

HIGH FIVE!

[-droid-]

woot!! all aboard the 1k party train!

[adpinbr]

I dont think we are there yet...

[ArticMine]

If we are not there already we are pretty close. April 2011 really comes to mind here.

[Raize]

I still think we're a few months away, but with the late February exchange of about 100K Bitcoin in the span of an hour or so, someone is still accumulating big time at these prices.

Combined with these recent high-volume drops:


Plus I'm noticing the order books are starting to level out a bit more as well. I'm not sure that's a really a bearish or bullish sign, just thought it was interesting to note.

Also, just as a last indicator. I do remember quite vividly that during the bear run of June 2011 - November 2011 there were tons of people selling GPUs on the forums. Do we have a lot of people selling ASICs, yet? If not, I think we've got a while to go.

[keystroke]

woot!! all aboard the 1k party train!

Haha, I love you guys.