On the verge of a huge bubble

Title is provocative but is not totally fanciful. Just as when I wrote that bitcoin could reach $500 when they were below $50 it is also possible that now bitcoin could be propelled over $5000! Which is actually a conservative number.

Seems like ages ago but was only the start of 2013 ..

https://afbitcoins.wordpress.com/2013/02/28/bitcoins-could-reach-500-dollars/

The same trend line on the log chart of that old post is near to being tested again it could very be interesting if bitcoin stays above that line.

Heres another look at that my chart which I’ve still been tinkering about with.

Primarily this is a bitcoin chart but in order to manage to include historical data from MtGox I have to choose a symbol with long time period as such I’ve chosen gold. I am interested in comparison of bitcoin and gold which can both be seen on this chart and are both forms of money which rival the fiat central banking bits of paper we all love to value (for some reason)

It is strange to see all the volatility and the price peak of gold and subsequent decline look so flat compared to bitcoin when both shown on same scale. Price is log in this chart. While gold looks like a stable store of value from this perspective bitcoin on the other hand looks like its ready for another rampaging bull run after already rising from only a few cents up to over $1000.

With price now down below $400 is bitcoin looking cheap again ? If bitcoin was to follow those arrows which would be similar to the first Gox bubble that would be quite epic!

While I’m at it heres a look at some other charts.

This is the bitstamp log chart I have revisited several times. I’ve often stated that a date with the lower trendline of that channel is on the cards. Price is falling steeper than my last red arrow but still has a bit further to fall to hit that line.

Heres bitstamp on linear price scale.

On this chart price falling steeply and rapidly. Looks like the down trend is winning out from all appearances of this view. Is double (or is it triple?) bottom reversal on the cards ? Hard to see where the support is except perhaps the horizontal area around the April 2013 high, blue line.

I haven’t really visited the downside risk on this post but I’d be looking to see where price rebounds before buying in. Price still may fall further in short term. If that support from the top chart doesn’t hold then bitcoin can still go a lot lower. This is not without risk.

Disclaimer: Investment desicions are your own. You may choose to buy into the stock market instead of bitcoin (by shorting them 🙂 ). Good luck

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11 thoughts on “On the verge of a huge bubble

  1. I love that title !
    I’m looking forward to see what will happen during the next days/weeks.

    One year ago, bitcoin reached its all time high… I want my bitcoin adrenaline back right now !

    1. Title was stolen from a comment someone made after looking at my chart in the speculation forums! Is a nice title. I’m also looking forward to next big bull run long grid down has been very boring!

      1. There needs to be a trigger. April 2013 was Cypress. November 2013 was Mt Gox bots (and possible anomaly). 2015 – ?? (need a financial crisis of some sort)

    1. We need bail ins or a massive devaluation of the currency by the government which will force them to look for a place to hide, resulting in either gold or bitcoin or both going up

  2. For the long term viability of bitcoin and for it to gain credibility as an alternate currency, I think it would be better to start a long secular bull run where it outperforms all other markets like in the manner that gold did from 1999-2011 (and we can have higher returns than gold since bitcoin would behave more like a growth stock since it has a smaller market cap, so I would take even something like 30% returns every year for a decade) rather than a massive bubble every few months where it goes up 10 fold in a matter of weeks, then loses 70% almost immediately.

    1. Once more, completly right James.
      I totally agree with you but that won’t happen for the next few years I think.
      Bitcoin capitalization, or should we call it M1 money stock, equals to $4.4billion. In comparison, mozambique M1 = $4.33billion

      So BTC M1 value is too narrow for your scenario. If some guys decide to buy or sell $50 million BTC (1.15% of actual M1), the volatility will uprise.

      Your scenario would be realistic if BTC M1 is much bigger.
      For example, let’s take that hypothesis : BTC M1 = one of the biggest european market cap.
      “Anheuser-Busch InBev NV” market cap = €151billion (wich represents only 2.6% of € M1). So If some guys decide to buy or sell €50 million BTC (0.03% of hypothetical M1), they will just tickle bitcoin price.

      Ok, I’m comparing cabbages, apples and oranges. But all this is to point out that we are just at the begining of bitcoin lifetime. Now it’s very speculative but it’s going to be used as a western union tool. See more and more firms and foundations accepting BTC and then they convert immedialty into USD. Tomorrow it will be a common used currency or a storage of value or both.

      sources:
      http://www.coinometrics.com/bitcoin/mix
      http://www.bloomberg.com/quote/ABI:BB
      http://fr.tradingeconomics.com/euro-area/money-supply-m1

      1. That’s true, it is being widely adopted as a form of payment right now. Ultimately we probably want people to hold onto it and that’s what’s going to make it appreciate over time. If people are converting USD to bitcoin and right back to USD it won’t appreciate. But I guess we’re laying down the foundation right now in terms of it being accepted as a form of payment everywhere.

  3. Seems to me like bitcoin moves in 3 month cycles. The last 3 months bitcoin has been oscillating in the $300 range. I just wanna see it move!

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