One more capitulation event or not, that's the question

[Miz4r]

So here we are, hovering around 420-440 and the market still feels very fragile and undecided what to do. A large part of this is caused by the Chinese situation of course and I'm sure everyone longs for that chapter to finally get resolved. What happens next I think is impossible to say with certainty, no matter how confident people try to make themselves sound on this forum. All of them are just as insecure about their own position as you are, so don't believe for a second anyone on here knows more than you do. What I do feel confident about is that the current bear market is coming to an end soon: the Chinese influence is becoming less and less and the PBOC can only delay the inevitable for a month or perhaps two more. So the real question is whether we will see one more capitulation event towards the low 300s/high 200s or this fragile consolidation phase will continue for a few more weeks with not much happening and as the price slowly starts crawling back up and volume increases the masses of people watching on the sidelines will all fall over each other to jump back on board. Once this snowball gets rolling it can happen very very fast and will catch many of you off-guard with people frantically posting threads on here whether they should buy (back) in now or wait for one more dip as the price continues to climb alarmingly fast.

Whatever may be the case, for me personally it's time to look for my seat belt and lock myself firmly in place, we may see one more capitulation event in the coming weeks but don't be fooled things are going to get seriously wild very soon.

[oda.krell]

So here we are, hovering around 420-440 and the market still feels very fragile and undecided what to do. A large part of this is caused by the Chinese situation of course and I'm sure everyone longs for that chapter to finally get resolved. What happens next I think is impossible to say with certainty, no matter how confident people try to make themselves sound on this forum. All of them are just as insecure about their own position as you are, so don't believe for a second anyone on here knows more than you do. What I do feel confident about is that the current bear market is coming to an end soon: the Chinese influence is becoming less and less and the PBOC can only delay the inevitable for a month or perhaps two more. So the real question is whether we will see one more capitulation event towards the low 300s/high 200s or this fragile consolidation phase will continue for a few more weeks with not much happening and as the price slowly starts crawling back up and volume increases the masses of people watching on the sidelines will all fall over each other to jump back on board. Once this snowball gets rolling it can happen very very fast and will catch many of you off-guard with people frantically posting threads on here whether they should buy (back) in now or wait for one more dip as the price continues to climb alarmingly fast.

Whatever may be the case, for me personally it's time to look for my seat belt and lock myself firmly in place, we may see one more capitulation event in the coming weeks but don't be fooled things are going to get seriously wild very soon. 8)

Nice high level summary of the situation.

I personally see two likely continuations from here: continued bear market in the form of another sharp price drop (the capitulation event you describe), or continued bear market-slash-consolidation in the form of range trading, bounded by 400 and 480-500 (maybe with a slight downward bias).

The other possibility, an immediate continuation of a stable uptrend I consider comparably unlikely. Volume is lacking, and right now both buyers and sellers seem exhausted, which historically (in btc trading) tends to resolve in a continuation along the previously dominant trend, i.e. the downtrend picks up speed again.

Another interesting question is what will happen /after/ the reversal. To compare it to the previous year: post ATH, 2013 can be split up in 3 large trends: the downtrend (April to July 2013), the upwards biased consolidation (July to October), and the run-up to a new ATH (October to December). It will be interesting to see if the first stable uptrend after the reversal already takes us past the the previous ATH, or, if not, how many trend cycles it will take to get there.

[Miz4r]

So here we are, hovering around 420-440 and the market still feels very fragile and undecided what to do. A large part of this is caused by the Chinese situation of course and I'm sure everyone longs for that chapter to finally get resolved. What happens next I think is impossible to say with certainty, no matter how confident people try to make themselves sound on this forum. All of them are just as insecure about their own position as you are, so don't believe for a second anyone on here knows more than you do. What I do feel confident about is that the current bear market is coming to an end soon: the Chinese influence is becoming less and less and the PBOC can only delay the inevitable for a month or perhaps two more. So the real question is whether we will see one more capitulation event towards the low 300s/high 200s or this fragile consolidation phase will continue for a few more weeks with not much happening and as the price slowly starts crawling back up and volume increases the masses of people watching on the sidelines will all fall over each other to jump back on board. Once this snowball gets rolling it can happen very very fast and will catch many of you off-guard with people frantically posting threads on here whether they should buy (back) in now or wait for one more dip as the price continues to climb alarmingly fast.

Whatever may be the case, for me personally it's time to look for my seat belt and lock myself firmly in place, we may see one more capitulation event in the coming weeks but don't be fooled things are going to get seriously wild very soon.

Nice high level summary of the situation.

I personally see two likely continuations from here: continued bear market in the form of another sharp price drop (the capitulation event you describe), or continued bear market-slash-consolidation in the form of range trading, bounded by 400 and 480-500 (maybe with a slight downward bias).

The other possibility, an immediate continuation of a stable uptrend I consider comparably unlikely. Volume is lacking, and right now both buyers and sellers seem exhausted, which historically (in btc trading) tends to resolve in a continuation along the previously dominant trend, i.e. the downtrend picks up speed again.

Another interesting question is what will happen /after/ the reversal. To compare it to the previous year: post ATH, 2013 can be split up in 3 large trends: the downtrend (April to July 2013), the upwards biased consolidation (July to October), and the run-up to a new ATH (October to December). It will be interesting to see if the first stable uptrend after the reversal already takes us past the the previous ATH, or, if not, how many trend cycles it will take to get there.

I agree a continuation of the downtrend is more likely, but the market likes to surprise people and at this point I feel the dominant opinion is that the downtrend is not over just yet and people expect lower prices. So I'm 60/40 on this, where 60% is my personal estimation of the odds for another dive in the price to test the current bottom of 340. The 40% is based on the idea that we have to expect the unexpected.

[RyNinDaCleM]

I was looking for a poll I saw earlier, but it seems to have been deleted.
The majority were on the side of "The bottom is in". Something like 30+ voters. We know how Bitcoin likes to screw the majority.
I believe chances are greater than 50% that we see a retest of $339, and we may possibly see lower lows. We still have no rebound to speak of which is very telling of the buying force. The longer this goes on, the more it feels like 2011 again. By that I mean, people are waiting for a reason to buy, the right time to buy... A decent uptick stirs the hive and the volatility rises, but there aren't enough buyers to hold it and continue the push. That lack of drive fuels the big sellers to do their thing and push it back to levels where activity starts to build again. This may be in the $200's, maybe lower, maybe just a high volume rejection at the recent lows will kick it in. It's hard to say.

Edit:
I found that link https://bitcointalk.org/index.php?topic=597485.0;viewResults

[Bitcoin_is_here_to_stay]

So here we are, hovering around 420-440 and the market still feels very fragile and undecided what to do. A large part of this is caused by the Chinese situation of course and I'm sure everyone longs for that chapter to finally get resolved. What happens next I think is impossible to say with certainty, no matter how confident people try to make themselves sound on this forum. All of them are just as insecure about their own position as you are, so don't believe for a second anyone on here knows more than you do. What I do feel confident about is that the current bear market is coming to an end soon: the Chinese influence is becoming less and less and the PBOC can only delay the inevitable for a month or perhaps two more. So the real question is whether we will see one more capitulation event towards the low 300s/high 200s or this fragile consolidation phase will continue for a few more weeks with not much happening and as the price slowly starts crawling back up and volume increases the masses of people watching on the sidelines will all fall over each other to jump back on board. Once this snowball gets rolling it can happen very very fast and will catch many of you off-guard with people frantically posting threads on here whether they should buy (back) in now or wait for one more dip as the price continues to climb alarmingly fast.

Whatever may be the case, for me personally it's time to look for my seat belt and lock myself firmly in place, we may see one more capitulation event in the coming weeks but don't be fooled things are going to get seriously wild very soon.

Nice high level summary of the situation.

I personally see two likely continuations from here: continued bear market in the form of another sharp price drop (the capitulation event you describe), or continued bear market-slash-consolidation in the form of range trading, bounded by 400 and 480-500 (maybe with a slight downward bias).

The other possibility, an immediate continuation of a stable uptrend I consider comparably unlikely. Volume is lacking, and right now both buyers and sellers seem exhausted, which historically (in btc trading) tends to resolve in a continuation along the previously dominant trend, i.e. the downtrend picks up speed again.

Another interesting question is what will happen /after/ the reversal. To compare it to the previous year: post ATH, 2013 can be split up in 3 large trends: the downtrend (April to July 2013), the upwards biased consolidation (July to October), and the run-up to a new ATH (October to December). It will be interesting to see if the first stable uptrend after the reversal already takes us past the the previous ATH, or, if not, how many trend cycles it will take to get there.

I also think that a rally within few weeks is extremely unlikely. We are clearly in a bear market now and I think it will still last sometime. The recent joint statement of Chinese exchanges may provide clues to how it resolves: they made important concessions to PBOC, but on the other hand they are mostly not closing. So I think it may mean prices falling down very slowly, in a rather torturous manner, as before. I do think we will go into 300s. At some point, the trend will reverse, of course, as it always does. But so far there seem to be consensus among the potential buyers that bitcoin price is not very tempting right now. Of course, there are many people on this forum who keep posting how cheap coins are, etc, and that everybody should buy hundreds of them. But typically they add at the end, that they cannot since all their money is in bitcoin already  

[TERA]

The spikes down on news are not really capitulation events. They are too fast and most of the volume is mean reversion traders. A true capitulation will be much slower and you'll see it clearly on the weekly chart where the same level starts to gain more and more volume.

[Kupsi]

It looks like coins now are moving into cold storage instead of out of...

https://blockchain.info/charts/bitcoin-days-destroyed?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

[Bitcoin BEAR]

It looks like coins now are moving into cold storage instead of out of...

https://blockchain.info/charts/bitcoin-days-destroyed?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Looks to me like no coins are moving at all

[FeedbackLoop]

Although number of transactions seems to be recovering from the Easter lows:

https://blockchain.info/charts/n-transactions-excluding-popular

[Torque]

It looks like coins now are moving into cold storage instead of out of...

https://blockchain.info/charts/bitcoin-days-destroyed?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Looks to me like no coins are moving at all

It appears the last time it crossed below 2M days destroyed was early July 2013, the bottom of the April bubble. Hmmm.. hrmrmrmrm

[windjc]

It looks like coins now are moving into cold storage instead of out of...

https://blockchain.info/charts/bitcoin-days-destroyed?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Looks to me like no coins are moving at all

It appears the last time it crossed below 2M days destroyed was early July 2013, the bottom of the April bubble. Hmmm.. hrmrmrmrm

So what?

Old hands are refusing to sell? We knew that already. However, miners have to sell. They can only max their credit cards out so much.

So, no new fiat, downtrend continues, even if we go to 0 days destroyed.

[HeliKopterBen]

I was looking for a poll I saw earlier, but it seems to have been deleted.
The majority were on the side of "The bottom is in". Something like 30+ voters. We know how Bitcoin likes to screw the majority.
I believe chances are greater than 50% that we see a retest of $339, and we may possibly see lower lows. We still have no rebound to speak of which is very telling of the buying force. The longer this goes on, the more it feels like 2011 again. By that I mean, people are waiting for a reason to buy, the right time to buy... A decent uptick stirs the hive and the volatility rises, but there aren't enough buyers to hold it and continue the push. That lack of drive fuels the big sellers to do their thing and push it back to levels where activity starts to build again. This may be in the $200's, maybe lower, maybe just a high volume rejection at the recent lows will kick it in. It's hard to say.

Edit:
I found that link https://bitcointalk.org/index.php?topic=597485.0;viewResults

41.7% are bullish and 58.3% are bearish in this poll.

[RyNinDaCleM]

I was looking for a poll I saw earlier, but it seems to have been deleted.
The majority were on the side of "The bottom is in". Something like 30+ voters. We know how Bitcoin likes to screw the majority.
I believe chances are greater than 50% that we see a retest of $339, and we may possibly see lower lows. We still have no rebound to speak of which is very telling of the buying force. The longer this goes on, the more it feels like 2011 again. By that I mean, people are waiting for a reason to buy, the right time to buy... A decent uptick stirs the hive and the volatility rises, but there aren't enough buyers to hold it and continue the push. That lack of drive fuels the big sellers to do their thing and push it back to levels where activity starts to build again. This may be in the $200's, maybe lower, maybe just a high volume rejection at the recent lows will kick it in. It's hard to say.

Edit:
I found that link https://bitcointalk.org/index.php?topic=597485.0;viewResults

41.7% are bullish and 58.3% are bearish in this poll.

Yeah, I guess I kinda looked at it wrong. It has the largest of any single option :/

[oda.krell]

The spikes down on news are not really capitulation events. They are too fast and most of the volume is mean reversion traders. A true capitulation will be much slower and you'll see it clearly on the weekly chart where the same level starts to gain more and more volume.

I don't think that's a very practical distinction.

Intrinsically there is perhaps a difference between (news driven) crashes and (sentiment driven) capitulations, but they regularly co-occur and it becomes difficult if not impossible to precisely tell them apart. Even if you can tell them apart (by volume and how they stretch out over time), I am skeptical about claims what a "real" capitulation has to look like:

In late June/early July last year, there seemed to be consent among the technical traders that we "didn't properly capitulate yet". I remember several (detailed and thoughtful) threads that made this point, for example by slipperyslope and bear-in-a-suit-avatar guy.

Didn't really matter... early July came and the market decided what we had was good enough for a capitulation, and moved on. First into an upwards sloping consolidation (July to October), then (after the Silk Road flash crash that revealed the real buying pressure), into the ATH rally (October to December). Of course, China had something to do with it as well.

In my opinion, we capitulated just fine on April 11. Or at least, "good enough". The problem is just that, afterwards, buying pressure still turned out to be insufficient to support the price level resulting from that capitulation. That's why, after the initial upwards swing, a period of sideways trading follows, soon complemented by a few mini pump&dumps, and then the next capitulation is on the horizon.

I expect this cycle will continue until we are able to really defend any price level. Note that each capitulation cycle works towards that in two ways: 1) the resultant price level is lower, so whatever fiat is available is able to soak up more coins, and 2) it gives the market more time to recover, both in the sense that a majority starts feeling that we're read to go up again, but also by giving more time for new participants to enter the market, bringing in new fiat that accumulates and waits for a chance to enter.

[TERA]

The spikes down on news are not really capitulation events. They are too fast and most of the volume is mean reversion traders. A true capitulation will be much slower and you'll see it clearly on the weekly chart where the same level starts to gain more and more volume.

I don't think that's a very practical distinction.

Intrinsically there is perhaps a difference between (news driven) crashes and (sentiment driven) capitulations, but they regularly co-occur and it becomes difficult if not impossible to precisely tell them apart. Even if you can tell them apart (by volume and how they stretch out over time), I am skeptical about claims what a "real" capitulation has to look like:

In late June/early July last year, there seemed to be consent among the technical traders that we "didn't properly capitulate yet". I remember several (detailed and thoughtful) threads that made this point, for example by slipperyslope and bear-in-a-suit-avatar guy.

Didn't really matter... early July came and the market decided what we had was good enough for a capitulation, and moved on. First into an upwards sloping consolidation (July to October), then (after the Silk Road flash crash that revealed the real buying pressure), into the ATH rally (October to December). Of course, China had something to do with it as well.

In my opinion, we capitulated just fine on April 11. Or at least, "good enough". The problem is just that, afterwards, buying pressure still turned out to be insufficient to support the price level resulting from that capitulation. That's why, after the initial upwards swing, a period of sideways trading follows, soon complemented by a few mini pump&dumps, and then the next capitulation is on the horizon.

I expect this cycle will continue until we are able to really defend any price level. Note that each capitulation cycle works towards that in two ways: 1) the resultant price level is lower, so whatever fiat is available is able to soak up more coins, and 2) it gives the market more time to recover, both in the sense that a majority starts feeling that we're read to go up again, but also by giving more time for new participants to enter the market, bringing in new fiat that accumulates and waits for a chance to enter.

This is apples vs oranges here. You are talking about a subcycle consolidation vs a supercycle capitulation. We didn't need to 'capitulate' in July because we were still in the midst of a weekly uptrend.

[oda.krell]

The spikes down on news are not really capitulation events. They are too fast and most of the volume is mean reversion traders. A true capitulation will be much slower and you'll see it clearly on the weekly chart where the same level starts to gain more and more volume.

I don't think that's a very practical distinction.

Intrinsically there is perhaps a difference between (news driven) crashes and (sentiment driven) capitulations, but they regularly co-occur and it becomes difficult if not impossible to precisely tell them apart. Even if you can tell them apart (by volume and how they stretch out over time), I am skeptical about claims what a "real" capitulation has to look like:

In late June/early July last year, there seemed to be consent among the technical traders that we "didn't properly capitulate yet". I remember several (detailed and thoughtful) threads that made this point, for example by slipperyslope and bear-in-a-suit-avatar guy.

Didn't really matter... early July came and the market decided what we had was good enough for a capitulation, and moved on. First into an upwards sloping consolidation (July to October), then (after the Silk Road flash crash that revealed the real buying pressure), into the ATH rally (October to December). Of course, China had something to do with it as well.

In my opinion, we capitulated just fine on April 11. Or at least, "good enough". The problem is just that, afterwards, buying pressure still turned out to be insufficient to support the price level resulting from that capitulation. That's why, after the initial upwards swing, a period of sideways trading follows, soon complemented by a few mini pump&dumps, and then the next capitulation is on the horizon.

I expect this cycle will continue until we are able to really defend any price level. Note that each capitulation cycle works towards that in two ways: 1) the resultant price level is lower, so whatever fiat is available is able to soak up more coins, and 2) it gives the market more time to recover, both in the sense that a majority starts feeling that we're read to go up again, but also by giving more time for new participants to enter the market, bringing in new fiat that accumulates and waits for a chance to enter.

This is apples vs oranges here. You are talking about a subcycle consolidation vs a supercycle capitulation. We didn't need to 'capitulate' in July because we were still in the midst of a weekly uptrend.

It looks to me like you take the tenets of EW theory (or some variant of it) quite for granted. Under that view, we have only one such historic supercycle capitulation to work with, June to November 2011. Textbook case of what you have in mind, I guess,in price and volume.



Looking at the current cycle, I see little chance it'll play out that clearly again this time, unless we're in for another 4 or so months of downtrend, which we'd need to get an equally convincing volume pattern as in 2011 (yeah, I'm eyeballing this).



That scenario however I consider unlikely, because already now the market starts feeling more nervous to enter the next phase. I am pretty sure the little spike we're seeing now is just the last gasp before we're about to go down again, so I'm not making a case for a sudden reversal here, but I also doubt we will see a pattern like 2011 again where the capitulation will express itself that clearly again over such a long time.

EDIT: Fun fact. During the 2011 bear market, you would have been able to ride out the post ATH slide with almost pinpoint accuracy based on a simple 1 month EMA, from 15 to 2.50. Aaah, simpler times....

[seljo]

I only read buy, buy, buy from all this too bad I'm out of fiat.