Even though I don’t think the dust has quite settled yet, what the heck heres some commenting anyway.
So as we’ve seen, in a wave of euphoria bitcoin reached (and slightly surpassed) old highs (in US$) depending on what exchange you look at, and for the first (or is it second) time reached the value of an ounce of gold. Anyway for a time bitcoin was shooting up, like it sometimes does.
Basically it was what I call a mini bubble, not a full on bubble, which is when the previous all time high is left looking like a tiny bump on linear charts, but still a bubble of sorts. Now it has been pricked by the Chinese gov deciding to inspect the exchanges and price is crashing down.
I guess the question everyone is wondering is: Was that a top or just a big correction on to new highs?
Anyway, heres a chart.
As is my habit I’m using Bitstamp data, whether that is most valid or not is another question. However, this chart shows the latest bull trend using 1 day candles, ranging from prices around $200 at the start to above $1000. As I write just above $800.
So you can see the rising pitchfork which I’ve included on my charts for quite a while, the price is still within the pitchfork (but at the rate its falling will it end up below it?) There have been two, what I call mini-bubbles so far, with this one being the third. I guess the bullish scenario (which i think slightly less likely) is that we stay in the fork, maybe bouncing off the bottom a few times.
What makes me uneasy was that the last spike fell below the top of the fork whereas previous ones broke above for short time(s). I take this as a sign to watch out if you are bullish, this bull move was a bit too weak. Not obvious on linear price scale.
No doubt in oversold conditions like this the price will rise again but will it be a real continuation of the euphoria or a bull trap on the way to lower prices below the fork? And a chance to sell and buy back cheaper later.
Having said that previous two mini bubbles did manage to complete their corrections and stay within the rising fork so its not unheard of.
In a longer term view bitcoin could fall below that fork. (No log fork rising up can last too long) but still be painting the handle of a gigantic cup and handle. (I know I’m not the first to observe this but it is a valid idea). But heres my visualisation of it in a very rough sketch.
I personally am not trading, more of a long term holder but if I was I’m guessing this year could play out as another accumulation zone with price chopping up and down in a range around where we are now or maybe lower yet. I’d like to be a bit more bullish on bitcoin, at least in the short term, but I don’t think there is a quick recovery to euphoria from the recent drops and maybe some gut wrenching drops yet to come. Maybe by end of the year bitcoin will be gathering steam again.
As always these views are entirely my own, good luck.