The end of the end of the bear trend ?

Bitcoin has fallen (some might even say crashed) down below my “End of the Bear Trend” channel .. So is it now the end for the “end of the bear trend” ? Are prices doomed to continue falling as bitcoin falls to a spectacular demise?

First heres the damage on btc-e log price scale.

As shown bitcoin is now below the bullish channel I have been following. However not unsurprisingly my next move is simply to look for the next lower parallel following same slope up., perhaps where I have added a new dashed trendline.

Despite numerous threads in the bitcoin talks forums describing this drop as a crash, really it is not a crash (not yet at least). In fact viewed objectively it looks like the market is not up or down but rather horizontal, you might call this a boring phase. Bullish and bearish impulses are cancelling each other resulting in … a stable price. (Dont get too excited about stable price yet I consider the bitcoin market is still tiny, either upwards (or downwards) big moves will occur soon enough.

What is not helping matters is the debate (feud?) regarding blocksize. It appears that uncertainty could be hindering things. Bitcoin opinion is split on wether to increase the block size now before blocks start being too small to cope with increasing demand or to continue as we are and hope miners muddle through, perhaps using increasing fees as a way to try and prioritese transactions. This split could lead to an actual split where bitcoin separates into two forks. I have yet to hear why bitcoin cannot have dynamically sized blocks which are exactly the size they need to be, but presumably there are reasons it needs a hard coded size.

In all honesty both possibilities fail to inspire me with much bitcoin love. (Will this open the door for some other alt to pick up the baton ?). However I think bigger block sizes will be received well by the market (although at cost of further centralisation because few people will cope with storage of such a hugely increasing blockchain which is already becoming a little too big to easily sync and store)

Regardless of that debate, from pure price perspective we are still some way above the recent bottom. I have no reason yet to expect that to be broken to downside. Heres another chart again on log scale but zoomed out this time.

I normally show the trendline supporting “the bottom” on a linear price scale but heres an attempt to show it on the log chart, which results in a kind of flattening curve on log scale.

The other main feature of this chart is the very well defined bear trend resulting from all time high and subsequent bubble collapse, shown with red trendlines.

The end of the bear trend will be the final defeat of the upper red trendline. Before that there is the red dashed line to suprass. Although these lines have provided very stout resistance they are falling rapidly and I expect will be beaten when price is too low to fall much farther. Bitcoin block size debate finally being resolved might provide a spring board to finally beat those trendlines.

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7 thoughts on “The end of the end of the bear trend ?

  1. Thanks for the update! Not sure to get the debate regarding blocksize though … But as long as technical debates don’t get sterile and keep things going forward ..

  2. Thank you AF for your article. I’m no longer an hardcore bitcoin follower but last year I did some research about bitcoin specifications.

    I remember you was a bit worried about blockchain size. Satoshi described this storage expansion. The solution might be removing transactions that are no longer needed to verify that the blockchain is in a consistent state ; type “blockchain bitcoin pruning” on your favorite search engine.

    To me, the next main black point is the amount of “simultaneous” transactions. It will be the bottleneck of Bitcoin. Currently, limit is 7 tps (transaction per second) wich is enought regarding current bitcoin’s ecosystem. Note, VISA is 1Ktps.

    1. Hi Artiti, thanks for stopping by my blog even though you are growing cool on bitcoin. You are right I still have that concern about the ever growing blockchain (even with pruning) although I haven’t been very vocal about it lately. I guess I have come to terms with more centralisation being pretty much unavoidable/ These days I am less idealistic about bitcoin but pragmatically I still view it as a great investment and also protection against coming financial crisis.. I’m not sure what bitcoin’s role is yet but i don’t think it is replacemet for gold or visa, its a different animal.

      I am also increasingly keen on dash and monero as examples of crypto with superior anononiymity, perhaps these will come into play as the war on cash intensifies

    1. TBD. My guess is we will get wedged into the 250-260 area by August where it is going to try to test the long downtrend line going back to December 2013, or if it fails, price will remain below that level and the downtrend continues.

      1. I still don’t know how to interpret those charts but I like seeing bitcoin above that cloud thingy.

        @James I think I know the wedge you are referring to.

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