Wow, what has happened to the BitCoin. The price has skyrocketed. There are Bulls and Bears everywhere. Some have given excellent insight to the Market and analyzed it using the latest and greatest models for financial markets.
Rather than dive into the RSI, MACD, PVT, etc..., etc.... Lets take a look at it from a different perspective. Since, I don't personally believe one can do a Technical Analysis on the BTC Market using basically one Exchange (MTGOX). Rather lets try to figure out the why and the who of the BTC Market.
For the most part, BTC can still not be used for everyday transactions. You can't pay your rent, tuition, car payment, etc... with them. Hence, this is a speculative market, with the expectation that one day you will be able to do the above. Then there are the miners. Miners need to have the price go up when the difficulty goes up. Or mining is not as profitable for them.
There are 3 users in the market. The investors, miners, speculators are the main driving force behind the BTC. Of these, most are young and of a technical nature. <-- Important as to figuring out market swings. The investors buy BTC with the intent to hold their position in the market. The miners are in it for the money for the most part. Miners have to pay for their rigs and electricity. Then there are the speculators. Who are not only in it for the money but to make lots of money.
Lets discount the investors, as they provide a temporary price boost as they buy. But since BTC is hovering around $8 per BTC more and more will not be able to invest as the price eliminates them from the market.
The miners, which are a driving force currently on MTGOX. Their behavior is predictable. They will drive the price up and try to cash in at the highest price. Which works. FOR AWHILE. Miners compete using basically what comes down to Random Chance + Processing Power. The Random Chance part of the equation will slowly eat up the in efficient pool of miners. However, there will always be a place for miners, if they mind their power bills and rig costs.
That leaves Speculators. Speculators have two sub groups the Professional and Amateur groups. The Amateur uses gut feeling on whether the price is going to go up or go down, or otherwise known as FISH. Then you have the Professionals. The Pros are keenly aware of all that is taking place. They know the number of accounts MTGOX has, they know the mining statistics, they know when the mining pools pay out their BTC to the pool, they know about arbitrage opportunities or inter exchange advantage. The Pros know how many clients are out there and the average that is being used.
So lets look at the Pro speculator. They drive the market, literally. They can cause up swings and down swings because they are aware of all the statistics. They have even written BOTS to take advantage of it. I will let you wonder what else that is known.
The BTC has been taken over by.... Wait for it..... Capitalists. With everything that comes with them, including the corruption. My advice would be to not put a lot of money into BTC or MTGOX. While MTGOX has had a good record so far, the software isn't FOSS. And before you trade a large amount ask yourself do you know MTGOX, where is it (Japan), who runs it (MagicalTux). MTGOX does have an incentive to be legitimate, especially with recent volumes on the exchange.Now for the Non-Technical Analysis:
The BTC has to be considers an investment stock, not a currency at the moment. The current price of the BTC is to expensive for more investors to take a chance on the stock. Basically, the BTC has priced its self out of the market. Demand will fall for the BTC. The current price will continue to rise until certain Miners and Bots loose in the MTGOX exchange. The current players will loose interest in the BTC and move on to less expensive ventures.
Current Outlook: Bearish - expect a hard fall after the peak. Danger of loosing all interest in the BTC from New Investors.
Advice: Currently, Sell 80% of BTC, Hold 20%.
Expected Fall: 90% loss of value.
How to bring Stability: Trusted Multi-Country Exchanges, introduction of an Options Market, and finally be able to use BTC in everyday purchases.
Remember the Pros, have Bots, Algorithms, and (yes inside information) , etc.... And know who the players are. Do You? As long as the market is volatile, stay out of it with large sums of money.
Let me, leave you with an old story.
A man goes to the track and parlays $5 dollars into $120 dollars. He then proceeds to loose $120 dollars. Goes home and the wife asks; how much did you loose? He says only $5. <-- He is your typical Gambler. The Pro - tells his wife that he lost $120.
Or better put: A bird in the hand is worth more than 2 in the bush.
Have a Good Day !!!