Topic: Bitcoin - Headed a lot Lower - Back to the Mean (Read 318 times)

Hey good news....
We are at the mean....
Time to start buying again, well, almost time. No need to try and catch a falling knife. But $3500, This is it Chief!

Oh, I am so sorry for your HS math teacher.

If you are talking about calculating the drop from the absolute, all time high price - for ease let's call that $19,500 and current(ish) price, $ 7,000 - then we are talking 64% almost 2/3rds. But, ok, let's go with your 90%- which would actually put the current price at $1,950 - but, think about how long it traded at 19,500. Not too long. So the actual average price last year is much, much lower, like under $3000. So a reversion back to the mean would call for a pull back to sub-$3,000. Your 90% is looking more and more possible - lets hope not, but very possible.

Keep hoping and I am sure you will #HODL to the end, but there is still time, sell on any rally and wait for lower entry point when times are more stable. 

The point you are missing is that bitcoin had already suffered in the past losses up to 90% or so of its value and sooner or later it had always recovered. Of course this is not a guarantee it will happen agsin, but you are allowed to hope.

That's the point I'm trying to deliver around here myself and what I get in reply is that my "understanding of cryptocurrency is very limited". In any market without exception hodlers are canon fodder. As an old Wall Street saying warns, bulls make money, bears make money, pigs get slaughtered. Pigs here are those who are excessively greedy, basically another name for hodlers, who do not close their positions at the right moment, obsessed with and possessed by greed.

The "coin" markets are thin markets with almost no institutional players (few but not many). These are markets dominated by unseasoned, immature, and rash traders - both up and down. These two elements, thin and rash, lead to very volatile price swings. My play right now is to move to EUR (not USD) til BTC hits 3,990 BTC/EUR. Then I would look to buy on the 'blow-off' bottom.

Time will tell.
Sell BTC $7,105 (might get a bear bounce to $8k).
Buy 1.23 EUR/USD.
Then wait until baked on both sides, might take to July/Aug.

BUT whatever you do, don't keep 100% in #HODL. That will kill you, you'll get run over in the middle of the road!

What are you planning on doing? State it, and track it, and make sure you trade your strategy. Don't get Armadillo'd.

Well, I'm a bit more optimistic. By the look and feel of it, there is not much extra supply left in the markets. Honestly, I don't know what you mean by the oversupply of miners - they have always been there as well as the coins they mine - but weak hands, which you refer to, should have already been shaken out by now. Look, when the price had first crashed below $6,000 in early February, it actually felt like a genuine panic sell-off. That was for real. Now it feels quite different as if there is plenty of resilience in the market. So, unless a major bearwhale off-loads massively, the price is not very likely to drop below $5,000 on its own.

Bitcoin, and most alt-coins, are still in a free fall. This will continue to occur until a number of traders/investors are "shaken out" of the market. There is still a gross over supply of miners and losing investors willing to dump at low prices as panic (the inverse of FOMO) kicks into high gear. My guess is that we have at least another $1500-3000 drop. Once BTC hits mid to high 3k and the Alt-coins are halved from here, then we will see a new base develop. And after sometime at that base, then we can see a new bull market. But that will take a year or two from here. Sad but too likely, as I'm long BTC too.

That graph was already seen on bitcoin 4 years ago. It already happened and happened again and it will happen again. It's like a cycle.





year 2013 and 2017 looks the same to me. And I think it will possibly happen again but not this year i guess.

I don't know why people are so negative the op is losing money like most people but the price of bitcoin is still way above the levels of the previous year and of all the years before it, if you are not in profit even with the current prices it has to do with your inability or reluctance to buy bitcoin when it was cheap, anyone that bought at the beginning of the previous year still has tremendous profits and this holds true not only for bitcoin but for almost any other coin in the market so if someone is losing money despite the huge growth then it is the fault of the trader not of the market.

I bolded the part of your post which is quite in line with what I'm saying myself and which I referred to in my previous post. Knowing where and when to back off is the lesson that most traders learn in the first years of their trading careers, typically the hard way. If they fail to imprint it firmly on their mind, their careers are soon to be over.

Other than that,  I can't agree that crypto markets are really brutal because till recently they were in fact quite forgiving. Whatever price you bought your coins at, you could just sit and wait patiently untill going into green. This is not the case with, for example, derivatives markets where just holding assets (e.g. futures or options) means losing money.

Lol i remembered being greedy as hell when BITCOIN reached $15000 in the market and got a bit cocky there to hold it no matter what. Then started investing more and more over time then it was a success run and Bitcoin's value even got up to $19000 but sadly i didn't convert all those cause i was determined it will continuously go that high up but unfortunately it hasn't and i was broke after the huge pump.

Oh if it were only so easy. I'm twisted as the next trader when it comes to short term moves. What I'm better at than most is discipline/money management. I've taken some money off the table, profits at the highs and took some losses during the pull back earlier this year. I didn't sell everything, just some. When prices move, I know when to add or subtract. I can't know much more than that when comes to these madding BTC/Alt markets. My experience proved helpful, not bullet proof. I know the market will go lower and higher, I just don't know when.

Yes bitcoin is very low now thats why many people now expecting on their Price increase. I go hope that there will be surprised soon. That bitcoin is going back again to its normal price. Because bitcoin will survive for the many.

My bet is that your a better trader now than a few years ago when you started. Experience does matter. Its not the only thing, but it's a thing.
And, So what's your call now - what do you see in your patterns. Are you long or out of the market?

It doesn't really matter how much experience someone may have as a traditional trader. It basically goes up for traditional market gurus as well; they for years have been predicting that this 'bubble' would end according to their traditional market knowledge, but it's still thriving. If we look at how brutal this market can be from time to time, then even 'experienced' crypto traders some times just have to accept that they can't beat the market. I have been trading Bitcoin for years now, and one thing that helped me a lot, is the fact that I know when to back off. I tried to trade against the market in all sorts of circumstances, but it's not worthwhile anymore when everything starts to look like a gamble rather than a well thought out trade. That's why I currently focus almost solely on repetitive patterns. It's much easier, more rewarding, and above of all, it results in less headache and stress.

The price might shoot up instantly but the thing here is that no one knows on when that thing would happen.I know the words being spoken by OP which I do believe that most people who did invest on crypto since last year specially on December are really suffering from huge drawdown or negative with their coin holdings which it would really give you pain but doesn't mean this declining market would be over.Its still breathing chances of growing up would be there.

If you've been trading markets for 35 years, and this is a helluva job, how could it happen that you bought into this ****? Typically, people learn their lesson the hard way in their fresh years, and then it either remains with them for the rest of their trading lives or they go to hunt elsewhere. Don't consider this as an offense of any kind because I'm really-really curious. After 35 years you should be kinda invincible to these things. I mean the ones like "it will be different this time".

Give the uniqueness of this market, I agree that you can't know what real market sentiment is, nor where we are in the cycle. This is an odd market, heavy with new money/traders, low number of institutional players, big oversees participation, and a very mixed Government(s) oversight. Wildly unpredictable, immature and volatile. Plus we have gone from $1000 to $20,000 to $7500 in the past six months. I've heard some ex-Fx traders call the BTC market "Set on easy" - Not me, I don't find it set-on-easy at all.

The market activity has been bothering me for a while now. A couple of weeks ago, I switched up my mining operation from "Spec" mining to a hybrid "Cash/Spec" mining. That way I get some money off the table and still holding some coins. I don't have a strong short-term opinion on pricing. I do agree that long term, there are fundamental changes going to happen. But between now and then, the BTC/Alt markets will shake up and spit out a number of traders and investors, the way markets always do.

Any investing isn't all science and isn't all art. AND I don't think anyone, at least right now, can trade the BTC/Alt markets like they do other markets - stock, options, futures, etc. I've followed different theories over the years and adjusted the strategy for my size and my gut feelings, all very profitable, making good money. With BTC/Alt, I haven't figured out what the optimal trading theory is yet (it isn't #HODL for sure), and I am totally on gut feelings when it comes to BTC. And I wish I could figure out some Quant like analysis to this market. There is a solution out there, and the first one to figure it out will be a big winner. Just ask Ed Throp or Ken Griffin about inefficient stock warrant pricing a decade back.

Trade on,

The big question is how to price, hedge and execute a bullet proof strategy on BTC.

Well you got the bounce that you requested. BTC looks destined to at least break 9k again. It's going to be a tough ask for it to break 12k and that's really what to me would signal that the market is still bullish and the rest of the year will go well.

It's worrying when considering what stage we are at if your graph or other similar theories are true. Because they all speak of the bottom being when there is absolutely no confidence in the market whereas right now there are still so many people bullish about a recovery. When bitcoin initially went from 7.5 to 8k last night in telegram chats there were hundreds of people going wild and calling the bottom and that the next bull run to a new ATH had begun. Not saying it hasn't but it didn't seem to fit most theories of market sentiment and investor psychology.

It is very unlikely we are going to return to the mean, we can all recognize that bitcoin was in the middle of a bubble but the bubble did not began without a reason, the reason the price went up was because of the activation of segwit that in itself should rise the price of bitcoin a few thousand dollars at least so it is very unlikely we are going to see a price a 1000 once again.

I agree with what your opinion here. It is almost impossible for a bubble to survive more than 8 years. All those negative news you hear about bitcoins sounds so funny and stupid. Earlier people were saying that bitcoins is being used by criminals and thus it will not rise much as governments will ban it. And recently I read an article saying that now monero is being used for criminal activities instead of bitcoins and thus bitcoin will not rise and its demand is decreased because of this. I think bitcoins will break all records this year.

But the bubble has already exploded more than ten times before, so we shouldn't be worried about this situation anymore, this is normal.
The price will go up until it touches $10k again, and then it will go back like it has been happening for weeks-.

The graph in OP represents the Dow theory, not a bubble graph which includes 3 phrases...1 Accumulation phase. 2. Public Participation 3. Excess 4. Correction. You can easily find such figures in historic charts of many stocks. So there is nothing to panic. This is a secondary trend in between primary trend which can give correction up to 1/3 to 2/3 of price an can last from 3 weeks to 3 months.

I think now the main news for bitcoin will be G20. Poor bitcoin has already endured everything. And the crash of the exchange, and bans of social networks, and bans of search engines, and hacker attacks on the crypto exchange. If the bitcoin re-emerges from the ashes, it will no longer be stopped ...

I think my experience helps a lot, at least it helps me. I've made millions over the years in all sorts of markets. I've found Alpha and some times Truth (investment speaking). And I have a good return in Crypto too - maybe not Alpha, and certainly not Truth in trading Crypto, at least not yet. 

I want smart, good crypto traders to make money. I hate to see people get killed and walk away from any market because they don't know what they are doing. And I've seen that in spades over the years - 2007/08 was a classic for chasing money out of the markets and it took years for some traders to come back, and some never returned.

Anyway, Just trying to get traders to think, #HODL isn't the only strategy: try taking profit, keeping some side line cash, and patience, for a new market will arise out of the ashes of this correction.

Bulls make money, Bears make money, but Pigs - they get slaughtered.

Well, it could be that your 35 years of experience doesn't help here in crypto.
Many guys that I know made millions in a few years and finished with investing. They retired.
That would be a nice thing for me too and I'm on the good path at the moment to do that.
Why I need to break my head about your or anybody's long-term chart thing.
I would like to see Bitcoin still going strong because I like technology and he has a good chance to kill fiat currency.

We can't know if that's the "mean price" or it's just another small price correction on the way to 100K$.
The true value of bitcoin is unknown as the asset is still very new and it's price only being determined by speculation.
I think that a large amount of years are going to pass before bitcoin can actually get to a point of stable price.
The world can't determine what's bitcoin worth and that's what makes it so volatility

Hard to say where we are, but I think you're about right. Fear seems to be getting a strong foothold. Prices could easily track to sub-5K. My guess, sell here buy 25-50% lower. Doesn't make me happy as I'm long a lot of Alts and Major coins too.

It's an unfortunate reality.  I hoping that there are a few (and soon) Dead Cat bounces in the market. While I've lighted up a little, I need to sell a bit more.

If the graph is true then I would say that puts us somewhere between fear and capitulation, would you agree with that or would you place us some place differently? I would guess the mean price would be somewhere around 2-3k

You are correct when you say Crypto/Bitcoin will continue to be used, as are all the asset classes that got swept up in recent bubble history - tech stocks and real estate for example. Bitcoin isn't going away, just a shift in pricing. In time, after the dust settles, Crypto leaders will emerge again, some may be the same, some new.

Right now, It's time to put some money to side lines, and wait. My personal motto, "Waiting is the hardest part." Thank you Tom Petty,  God bless you.

Interesting points, i had to check out the South Seas Company, i found it
intriguing > https://en.m.wikipedia.org/wiki/South_Sea_Company

That company seems to have been destined to fail !

Ok while the prices of BTC and crypto in general are falling its a horror
story for people who are using them as pure investments especially those
who got into it all in November, December and early January.

For the people that are looking long term and not following market trends
todays fiat price doesnt make a difference. BTC and crypto will continue
to be used.

Here is the story I tell new traders.

Isaac Newton was one of the smartest people to ever live.

"Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he 'could calculate the motions of the heavenly bodies, but not the madness of the people.' Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in today's money. For the rest of his life, he forbade anyone to speak the words 'South Sea' in his presence."

So if one of, if not "THE" smartest man every to live cannot avoid a bubble, how are you going to avoid it? (really not looking for an answer to that question). I've lived through a lot of them, traded them, and hated them all. No one ever knows what a bubble is until it's pasted. Just the way it is. But you need a trading strategy to deal with market moves like a bubble popping or correcting or pausing, or what ever you call hitting $20,000 and pulling back to $7,500.

For me Bitcoin is surely not a bubble as we have already seen much drops in the prices of Bitcoin and other crypto currencies and also their are many examples of very rapid rise in the rates of some coin so we cannot say that it is a bubble as a smart investors will now buy more coins as it is a great opportunity for every one to become rich very easily.

If you are so well versed in the markets you should understand that the bubble is easily blown away but it can also be easily inflated. Where you have confidence that the whales don't stop now the sale of coins? They have long returned their investments in bitcoin. Why can't they take the risk? Expectations in the market are very high. The price may go up instantly.

Bitcoin - Headed a lot lower, back to the Mean
Like a lot of people on this Forum, I'm in pain right now. My gains and profits are now turning into losses - capital is vanishing, melting, gone away. And it's going to get worse. I like reading the post here, it's a good community. BUT, lots of people are going to learn a hard lesson if they are trading like they say in their posts.

I've been trading markets for 35 years - as a job - and yep, I'm an old dude. I am still a trader and an accountant for a mid-size company; stocks, bonds, funds, options, futures, forwards, and a lot of currencies (thank god we aren't in Crypto-investments at work too).
Last year was seductive, I was doing well in all the markets (equity, debt, and crypto) - 'halcyon days'.  Last year, I had profits in Crypto, I was even buying into "it will be different this time."  But this year, I now have "unrealized" losses with some serious % numbers next to them. I from what I read, I'm not alone.

There are unavoidable Truths coming, if not already here. Lots of, if not most, people will lose in Crypto/Bitcoin investing. It’s just the way of the market. Holding to the end is a sure fire way to lose. Stepping up, ending a trade that’s losing money is so, so hard to do. But right now, it’s the only right answer. Save your capital, fight another day.

Good luck
The King Fisher and Wicked Pigeon



The classics never die.. they just find new markets.

From Jean-Paul Rodrigue (2017)
Bubbles can be very damaging, especially for those who arrived late with the hope of getting something for nothing. Even if they are inflationary events, the outcome of a bubble’s blow off is very deflationary as large quantities of capital vanish in the wave of bankruptcies and financial defaults they trigger. Historically, they tended to be far in-between, but the scale and amplitude of bubbles has accelerated; web/technology stocks (deflated in 2000), real estate (deflated in 2006), commodities (deflated in 2008) and crypto-currencies such as Bitcoin (deflated in 2018).