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 ;-)