On 4hour chart the recent rise to $500 then fall down to about $300 looks like a bubble, or in the case of bitcoin a mini bubble. We all know a real bitcoin bubble when we see it, dwarfing all time highs etc. So I say this is a mini bubble.
Heres the 4 hour chart. Note all charts on this post are using log price scale which is my preferred view usually.
If this is to follow a normal bubble kind of shape then we might expect a ‘dead cat’ bounce. And as I write bitcoin appears to have started rebounding quite strongly. Although it is disheartening to see price fall so far from $500 down to $300, especially if you bought during that rise, take comfort in the thought that $300 looks like it is the new $200.
If price does fall below $300 I would imagine it to bottom on the lower trendline of my up trending channel, currently around $265. But it might never get that far. For me the overall context of bitcoin is now bullish rather than bearish. We’ve already seen the break out from the giant bear trendline and now the break above the horizontal ‘accumulation zone’. We will probably have to endure a few more volatile ups and downs before the next big move (up), as this market corrects and absorbs the new levels in price.
Zooming out to 1 week chart you can see other mini bubbles which followed in the wake of the first giant bitcoin bubble (which isn’t shown on this chart as the data doesn’t reach far enough back on Bitstamp).
Note on those past mini bubbles dead cat bounces bottomed higher than the first fall, I’ll be looking for something like that again in the aftermath of this mini bubble with an upwards trend becoming more and more obvious as time goes on.
As always note my disclaimer, that my opinions are my own and freely shared but I am not advising anyone what they should do in their own trading.