Previous crashes and recoveries

[Joe200]

(This is the latest, posted 2014-11-20. Original here.)

The list. Here is a list of all the price drops of 15% or more.

Code:

     pk.date pk.dow pk.moon pk.price    tr.date tr.moon tr.price drop    ft.date ft.moon ft.price n.dest n.be n.tr.pk n.ft.pk
1 2010-07-19    Mon       8     0.09 2010-07-24      13     0.05 44.4 2010-07-27      13     0.06     NA   83       5       8
2 2010-11-07    Sun       1     0.36 2010-12-10       5     0.19 47.2 2010-12-11       6     0.22     11   68      33      34
3 2011-01-16    Sun      12     0.39 2011-01-19      14     0.31 20.5 2011-01-20      13     0.35     10    5       3       4
4 2011-02-14    Mon      12     1.06 2011-04-05       3     0.67 36.8 2011-04-07       5     0.75     14   62      50      52
5 2011-05-14    Sat      12     7.86 2011-05-21      10     5.97   24 2011-05-23       8      7.1      2   11       7       9
6 2011-06-09    Thu       9     29.6 2011-11-18       7     2.14 92.8 2011-11-24       1     2.42     42  617     156     162
A 2012-01-08    Sun      15     7.05 2012-02-16       5     4.19 40.6 2012-03-26       4     4.65     11  184      39      78
B 2012-08-17    Fri       1     13.3 2012-08-19       3     9.09 31.4 2012-08-23       7       10     18  110       2       6
7 2013-04-09    Tue       1      215 2013-04-16       6     65.3 69.6 2013-07-08       1       77     17  209       7      90
C 2013-09-03    Tue       1      145 2013-10-03       1      111 23.7 2013-10-06       2      122     18   45      30      33
8 2013-11-30    Sat       2    1,130 2014-11-02      10      324 71.2 2014-11-09      12      361     20   NA     337     343

* Number = peak was higher than all previous peaks. Letter = peak was lower than a previous peak.
* 8 drops from a peak that was higher than all previous peaks. 3 drops from lower peaks.
* pk = peak. tr = trough. ft = "foot" -- according to my simplistic algorithm, this is when the next move up begins. (For the latest crash, these are provisional.)
* xx.moon = the distance, in days, from the new moon. Either the previous new moon or the next new moon, whichever is closest.
* drop = percent drop from peak to trough.
* n.dest = number of days of gains (prior to the peak) that were destroyed in the crash.
* n.be = number of days to break even if you bought at the peak.
* n.tr.pk = number of days from the current trough to the peak which preceded it.
* n.ft.pk = number of days from the current foot to the peak which preceded it.

A drop of 15% is not really a crash. Here are all drops of 45% or more, which is what I would consider to be a crash.

Code:

     pk.date pk.dow pk.moon pk.price    tr.date tr.moon tr.price drop    ft.date ft.moon ft.price n.dest n.be n.tr.pk n.ft.pk
1 2010-11-07    Sun       1     0.36 2010-12-10       5     0.19 47.2 2010-12-11       6     0.22     11   68      33      34
2 2011-06-09    Thu       9     29.6 2011-11-18       7     2.14 92.8 2011-11-24       1     2.42     42  617     156     162
3 2013-04-09    Tue       1      215 2013-04-16       6     65.3 69.6 2013-07-08       1       77     17  209       7      90
4 2013-11-30    Sat       2    1,130 2014-11-02      10      324 71.2 2014-11-09      12      361     20   NA     337     343

* Only 4 crashes so far.

Crash duration.
* In the current crash, it has been 355 days since the peak. So far, this is the second longest crash to break even. The only longer crash was off of 2011-06-09, which took 617 days to break even. If it takes as long to break even in the current crash, then it will take until 2015-08-09 to get back to 1,130.

* In the current crash, the trough so far is 2014-11-02 / 324. There've been 337 days from peak to this trough. This is by far the longest ever.

* Similarly with the foot -- 343 days from the peak, longest ever.

What does this all mean?

History.
* 2014-05-15
* 2014-07-03

Peaks and troughs are not equivalent. I detect peaks as the highest price before a drop of X%. The troughs are the lowest price before the next peak.

The above shows peaks and troughs in the price of BTC/USD. For another perspective, let's look at the price of USD/BTC. For convenience, I convert it back to the BTC/USD scale.

All drops in the price of USD in terms of BTC of 15% or more.

Code:

      pk.date pk.dow pk.price    tr.date tr.price drop    ft.date ft.price n.dest n.be n.tr.pk n.ft.pk
1  2010-07-17    Sat     0.05 2010-07-19     0.09 44.4 2010-07-20     0.08     NA   NA       2       3
2  2010-07-26    Mon     0.05 2011-06-09     29.6 99.8 2011-06-10     24.7     NA   NA     318     319
3  2011-09-10    Sat     5.03 2011-09-11     6.07 17.1 2011-09-15     4.98      2    5       1       5
4  2011-09-17    Sat     4.81 2011-09-20     6.11 21.3 2011-09-24     5.45      9   11       3       7
5  2011-10-19    Wed     2.28 2011-10-29     3.54 35.6 2011-11-03     3.21      3   29      10      15
6  2011-11-18    Fri     2.14 2013-11-30    1,130 99.8 2013-12-06      918     NA   NA     741     747
7  2014-02-25    Tue      535 2014-03-04      675 20.7 2014-03-19      613     14   30       7      22
8  2014-04-11    Fri      393 2014-06-03      666   41 2014-07-25      603     36  170      53     105
9  2014-10-05    Sun      325 2014-10-15      398 18.4 2014-10-24      358      8   28      10      19
10 2014-11-02    Sun      324 2014-11-13      418 22.4       <NA>       NA     39   NA       8      21

* Peak is the peak USD price, which is a BTC low.
* 10 USD price drops in all (BTC price rises).
* 3-6: 4 lower peaks, followed by a huge USD drop. Peaks 7-10: we've just had another 4 lower peaks.
* 2, 6: Trough higher than previous trough. The following peak is higher than previous peak. 10: trough is again higher than the previous trough. Will the next peak (BTC low) be higher than 324?
* Two big bull markets (in BTC): 0.05 to 29.6: 318 days. 2.14 to 1,130: 741 days.

Does anything look interesting to you?

[matt608]

Nice predictions, I roughly agree with you though I'm not sure it will take quite so long (until January) to reach the peak, though it might, depending when the ETFs launch.  But what about the Willy report?  Do you not place any importance on that?  I thought that might make this next predicted 'bubble phase' a bit smaller in proportion to the previous ones, but then again the longer time it takes to reach the next bubble the bigger it will be, so that would cancel the negative willies out.

[InwardContour]

It is very important to note that bitcoin being invested in by VC has very much changed the dynamic of the trading market. As less percentage of investors are speculating on the price the price of bitcoin should become more stable and the frequency of "bubbles" and crashes should decrease.

[yayayo]

You've compiled interesting facts on previous peaks and crashes which is nice. But I don't think they can be considered good predictions on future peaks/crashes. One thing is that the history you use is quite short which is due to the fact that bitcoin is still young. On the other hand - what makes you think, that bitcoin will behave similar in the future at all?

If you can back your assumptions with solid fundamentals they would definitely gain in value.

ya.ya.yo!

[InwardContour]

Nice predictions, I roughly agree with you though I'm not sure it will take quite so long (until January) to reach the peak, though it might, depending when the ETFs launch.  But what about the Willy report?  Do you not place any importance on that?  I thought that might make this next predicted 'bubble phase' a bit smaller in proportion to the previous ones, but then again the longer time it takes to reach the next bubble the bigger it will be, so that would cancel the negative willies out.

If the ETFs are needed for the next growth spurt a peak in January is early I would say.

I don't think it will take this long but it might.

I think ETFs will completely change the dynamic of bitcoin trading as it will make the barriers to trading much less and will expose many more people to the possibility of trading in bitcoin

[CoinsCoinsEverywhere]

Nice predictions, I roughly agree with you though I'm not sure it will take quite so long (until January) to reach the peak, though it might, depending when the ETFs launch.  But what about the Willy report?  Do you not place any importance on that?  I thought that might make this next predicted 'bubble phase' a bit smaller in proportion to the previous ones, but then again the longer time it takes to reach the next bubble the bigger it will be, so that would cancel the negative willies out.

If the ETFs are needed for the next growth spurt a peak in January is early I would say.

I don't think it will take this long but it might.

I think ETFs will completely change the dynamic of bitcoin trading as it will make the barriers to trading much less and will expose many more people to the possibility of trading in bitcoin

I agree, and I think we may need an ETF to get the influx of money needed to reach all-time highs again.  All the ATMs that are coming online around the world may also add an unpredictable amount of fuel to the fire if/when bitcoin really rallies again.

[CoinsCoinsEverywhere]

To the OP: this is some really interesting stuff.  Thanks for posting it.

One question though: what would it take to invalidate your analysis?  In other words, what price would bitcoin have to drop below for you to reconsider your predictions?

[BTCfan1]

I know I am gonna refer back to this when/if we get to that price level, thanks op!

[blatchcorn]

I love non-technical analyses - great work

[phatsphere]

about the dates, what did you do for the "truncated distributions"? for me, it looks like the peaks become more often over time.

[transient858]

Nice predictions, I roughly agree with you though I'm not sure it will take quite so long (until January) to reach the peak, though it might, depending when the ETFs launch.  But what about the Willy report?  Do you not place any importance on that?  I thought that might make this next predicted 'bubble phase' a bit smaller in proportion to the previous ones, but then again the longer time it takes to reach the next bubble the bigger it will be, so that would cancel the negative willies out.

The author of Willy report didn't seem to understand the price action on Mtgox has no bearing on bitcoin price as Fiat can't be withdrawn.

The rally from 100 usd to 1100+ is mainly due to China demand and widely being reported on China news network.

[Este Nuno]

The bitcoin market is changing and evolving quite a bit and while this is interesting analysis I'm pretty sceptical that it will hold up to the new and changing market conditions.

People in bitcoin do love a good crash though and it seems everyone loves to try to sell out to buy at a cheaper price later. That's one constant in bitcoin that is going to be a very hard habit for people to break if it's ever going to go really far and become less volatile.

[InwardContour]

Nice predictions, I roughly agree with you though I'm not sure it will take quite so long (until January) to reach the peak, though it might, depending when the ETFs launch.  But what about the Willy report?  Do you not place any importance on that?  I thought that might make this next predicted 'bubble phase' a bit smaller in proportion to the previous ones, but then again the longer time it takes to reach the next bubble the bigger it will be, so that would cancel the negative willies out.

If the ETFs are needed for the next growth spurt a peak in January is early I would say.

I don't think it will take this long but it might.

I think ETFs will completely change the dynamic of bitcoin trading as it will make the barriers to trading much less and will expose many more people to the possibility of trading in bitcoin

I agree, and I think we may need an ETF to get the influx of money needed to reach all-time highs again.  All the ATMs that are coming online around the world may also add an unpredictable amount of fuel to the fire if/when bitcoin really rallies again.

I think the Willy report essentially shows that the previous rise from 100 to 1100 was due to large investors (I am sick of hearing all these conspiracy theories). With the bitcoin ETF I would think that a whole new group of investors could pour their money into bitcoin causing the price to rise.

[Benjig]

Hodl! and if it crash just buy more at the bottom and hodl more! that strat has been working for years, should keep working

[okthen]

I like your analysis!
Specially 'don't sell for two weeks after $3300' part.
I was thinking of starting to sell after $3000, but you convinced me to wait

[ajareselde]

Hodl! and if it crash just buy more at the bottom and hodl more! that strat has been working for years, should keep working

im gonna be the black sheep here, but i dont realy see much fundation in your expectations.
there is no way this current comunity can push bitcoin into above 2k range anytime soon, not that it doesnt want to, but it lacks the wealth to do so.
appreciate the effort tho.

[wachtwoord]

Hodl! and if it crash just buy more at the bottom and hodl more! that strat has been working for years, should keep working

im gonna be the black sheep here, but i dont realy see much fundation in your expectations.
there is no way this current comunity can push bitcoin into above 2k range anytime soon, not that it doesnt want to, but it lacks the wealth to do so.
appreciate the effort tho.

There's no way? Have you paid attention of any of the news in the last weeks?

[okthen]

Hodl! and if it crash just buy more at the bottom and hodl more! that strat has been working for years, should keep working

im gonna be the black sheep here, but i dont realy see much fundation in your expectations.
there is no way this current comunity can push bitcoin into above 2k range anytime soon, not that it doesnt want to, but it lacks the wealth to do so.
appreciate the effort tho.

I see you've been around since 2011! Why so pessimistic?
A couple of big businesses buying in would be enough to drive the price to 2000. And if it goes there, it'll probably keep rising.

[aminorex]

There is only one environmental requirement left for a price spike:  Sellers dry up.  Usually this is the result of coins moving from weak hands to strong hands.  That is like reducing atmospheric pressure.  Volume will go down before price goes up.  Then when a trigger event occurs or a critical demand level is reached in some other way, the spike begins.  The last bit is like the transition from superheated to boiling.

[wachtwoord]

Yeah there is still too much volume I think, but we're getting there.