Comparison of bubbles

This isn’t the first time I’ve compared bubbles, eg see here but it has been a while, and I had nothing better to do, so I thought I’d take another look and see how the last bubble collapse compares to the 2011 bitcoin bubble.

So heres bitcoin on MtGox back in the day in 2011.

Ah remember that massive spike up to $32!!! That was huuuge. It was to the moon. When I got into bitcoin I bought during that long decline after the peak, I was instantly a believer in bitcoin when I first heard about it, due to the decentralised nature of bitcoin and all that, but still it was tough waiting out during the decline that followed.

Anyway moving on… and here is our old friend the 2013/14 bubble which we are currently still deflating from. This data is from btc-e as most of my recent bitcoin charts are..

I’ve aligned them roughly so the shape looks similar, but it you notice on the lower chart has a more extended time scale so that things are happening slooower in the latest bubble compared to back then.

There are some obvious similarities and differences in the two charts worth commenting on, in the shape and in the magnitude of rise and fall. To start off with, based on just eyeballing the charts to me it looks like bitcoin is quite possibly going to fall further if it is to mirror the 2011 bubble, but having said that we are not too far from where the bottom might lie. This is supported by my latest posts, and in particular my last post, despite the ‘to the moon’ news and the price spike it still looks like we are in the downtrend.

Unlike in 2011 more patience is required as the timescales do look more stretched now. On this view it looks like 2013 April bubble was just a little kind of fractal ripple to the real bubble that followed. I’ve been looking back over old posts on this blog this evening and reliving how I racked my brain trying to decide if April 2013 was a bubble top or a correction on the way to a bigger top. With perspective and hindsight I can safely say I still don’t know. I’m leaning more to that they were one big bubble.

Anyway to close this post I’ll say that I’ve had plenty of doubts over the bitcoin project over the last year or so, I sometimes worry the blockchain will become unwieldy and inevitably tend towards becoming centralised. I also note that mining pools verge very closely to being monopolies.

My libertarian dream of financial freedom from the central banking gangsters probably won’t be realised with bitcoin. However the big money doesn’t give a fuck about libertarian ideas and actually probably quite like that it may become monopolised and centralised. Or maybe bitcoin or some other crypto will fight back for liberty and freedom when it is threatened. Anyway at the moment it seems to me the big money looks like it might be settling on bitcoin, in which case you might as well stick with it because future bubbles look assured. Maybe the next bubble when it comes, (2016? 17?) will make all before it look like tiny little ripples.

5 thoughts on “Comparison of bubbles

  1. Yeah my expectation is that even after it has finished deflating it will go trendless for a while until the next big event that triggers manic buying, as I have posted before.

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