Bubble collapse or bull shakeout ?

The question everyone wants to know is, are bitcoins going to keep going up until 1 bitcoin is worth hundreds of thousands of dollars, or is this a bubble ready to burst at any time ? To be honest I think the answer could be both, that yes its a bubble ready to burst but yes it may end up worth those kind of numbers one day. I wish I knew the answer for definate.

Or maybe a better question is, if we all agree this is a bubble, is it going to collapse now or go higher?

I’ve had a couple of requests to look at the long term channel again, so here it is in all its glory. This is all MtGox data displayed on a log chart, each candle is 1 week.

On this view it looks like there are three sizeable bubbles, 2011, April 2013 and this one, December 2013. (Unless you want to count April and this one as part of the same bubble because the price didn’t correct back to the long term channel after the April peak).

Anyway, I’d say its quite hard to argue that bitcoins isn’t in a bubble looking at that chart. Believe it or not if we were in that channel now, bitcoins would still be somewhere between $50 and $150 ! That will be a very painful correction if it happens.

Heres another chart, showing my double top hypothesis with 2 hour candles.

We never made my target (yet ?) and instead a new bullish rally has sprung out of nowhere. You have to wonder could it be a dead cat bounce ? My target is about $440. I have been feeling confidently bearish and even gone short by selling some of my ‘buy and hold’ stack which I’m not supposed to touch. I hope this isn’t greed getting the best of me.

On the contrary side of the argument until recently I was confidently bullish and predicting a spike up to or above $2000 dollars, the reasons for that can be seen if you look again at the long term channel.

Here is is with the top of the channel extended up to the level that the 2011 bubble reached. Note on the way up to the 2011 peak there was a red candle that looks very like the red candle we just saw. I’ve highlighted them with elipses.

Maybe I’m talking myself into this second hypothesis as I write. So which is it? If you know please tell me ;-)

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9 thoughts on “Bubble collapse or bull shakeout ?

  1. Hey,

    Been reading avidly the last few days, but haven’t had a chance to comment yet. I did a chart last week on Thursday when I saw the bearish divergence of the MACD on 4 hour ticks (https://www.tradingview.com/v/4HRfjI91/).

    This had the price to fall down (after a double top) then find resistance around $950 before having further falls to the $450-500 level.

    I sold everything at $1,100.. But I bought some back in at $800 as I noticed the 4 hour ticks had another MACD cross into a bullish sentiment plus the EMA cross back again. I am considering selling these again now but I’m definitely in two minds about it – I’m pretty sure we will see further falls however if the MACD breaks the zero line on 4 hour ticks then we might on for a bull run again plus it looks like the daily ticks (which cross into a bearish market on Friday with the MACD and EMA — Which was the first time I could see for this year at least) might be turning back. We have the EMA narrowing, the MACD narrowing and the scholastic RSI now showing an oversold/underbought market.

    I’m always been surprised at how little Bitcoin falls every time the bubble bursts.. This time we also had the daily ticks turning bearish but I think they might be going the other way. Volume on Chinese exchanges is back up to the pre-Friday announcement levels now the misinformation about it being made illegal has been cleared up.

    All in all.. I don’t know.. I’ve hedged and I’m sitting with fiat plus some coins bought back in at $800 (also some Peercoins at $3.8, which I sold at $4.8 on the way up then bought back in again by mistake as I wasn’t paying attention at $4.9 :-p).

    We will see where Bitcoin goes!

    • Hi, Thanks for the comment, I’ve sold a fair bit of my bitcoin stack now so definately leaning on the short side than the long at the moment. (But have been wracked with doubt at times, Lol) My timing wasn’t as good as yours, partly due to delays getting my bitcoins transferred to localbitcoins. I don’t want to buy back in at these levels really.

      Bitcoin price tried to get above the 200day moving average but has fallen below it again. I feel like the rally might be running out of juice.

      I’ve been reading up about peercoins by the way, its definately an innovative idea, haven’t bought any yet though but definately interested in the concept.

  2. If you check out the interview in the second half of this program, you can see BTC’s future potential is bright even if the western central banks try to squash it. Absolutely no reason to sell yet, IMO.

    • That’s not all! He’s also petitioning the Cyprus government to launch BTC payment/transfer/trading infrastructure development in order to be first movers for a grab at the BTC global hub. Cypress is in the Eurozone, and therefore could receive pressure not to do this, but the Fed, ECB, BOJ, BOE can only reach so far. If not Cypress, then surely some other country WILL. That will be a huge leap in global legitimacy and accelerate adoption.

      • The Swiss are evaluating bitcoin as well. They need a new niche to stay relevant ever since the whole banking anonymity thing was axed by the guns of USA…. I’m surprised it’s not a race of Nations to be the first mover…. similar to private persons holding BTC to potentially benefit from the future value. Seastead anyone?

      • Yep. All your suppositions come to a petition. You should know that 99% petitions end in a trash somewhere in a ministry :(

        The main idea to keep in my mind after watch this program is western union (WU) cap < BTC cap. And the entire world don't use to go to afbitcoins.worpress.com and particulary don't go to 'educate yourself' section. People know absolutely nothing about money. All they can understand is btc is cheaper and better than WU.
        And maybe bankster will use their own private criptocurrency system to transfert money from a bank to another one.
        This is what I see for cryptocurrencies'future.

  3. You’ve got to love Max Keiser, he’s unashamedly the biggest bitcoin pumper. Its a good episode.

    Can’t put my finger on it but I’m a bit uneasy about something in bitcions, maybe it will come to me. I think its to do with all transactions being public, which of course is a requirement of the way it works but I’m uneasy bitcoins ccould morph into something which works against us not for us. Eg facebook started out as quite a neat website to keep in contact with friends, but now is a huge state survelliance tool. Could bitcoins turn against us one day?

    On subject of the reach of Fed, ECB, BOJ and BOE, I’m not so sure it is easy to avoid. Look what happened to Libya after Gadaffi’s attempt to create a gold backed African money. You didn’t here much about that in the news. But at least we spread some democracy to another nation which needed the shit bombed out of it!

    Forgetting all that vague uneasiness and focusing on technicals, I just tried to update my chart but Trading View is still showing yesterday frozen. (Or maybe its something to do with my computer). Hopefully it will update soon. I think jury still out if bears or bulls will win this battle.

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