7 days after the April 10 peak
How many more seller capitulations before the bottom?
The previous bitcoin bubble that peaked back in June 8, 2011 at 31.90, did not finally reach bottom at 2.20 until 159 days later. It dropped on average about 1% daily and featured six capitulations, the last two reaching the bottom vicinity. The six capitulations on average occurred 31 days apart. In the previous bubble, every one of the six capitulations failed to make new highs.
In this bubble, I count April 12 as the first capitulation, and yesterday April 16 as the second capitulation. These are only 4 days apart and thus for these two, the capitulations in Bitcoin Bubble 2 are occurring 8x faster than in Bitcoin Bubble 1.
If this bubble has the same number of post-peak seller capitulations as the last one, then 3 or 4 remain until the bottom is reached.
Topic: SlipperySlope's Bubble Collapse Journal - page 14. (Read 24785 times)
5 days after the April 10 peak
Issue 1 - Evidence for the Bear Case.
The post-peak negative sentiment shut off the flood of new money that caused the bubble. I define this negative sentiment rather weakly - merely the lack of news about 10x price increases and lack of new significant all-time highs, e.g. 33, 50, 100, 150, 200. Clearly the wave of euphoria on Reddit /r/bitcoin has abated.
Sunday/Monday price action was almost exactly reversed from before the peak. Previously, new deposits at Mt. Gox would propel the price strongly upwards. In contrast, the decline since Sunday has been continuous and brutal.
The most compelling evidence for the bear case is that a new post peak low was recorded this morning. This issue is closed.
Issue 2 - Comparison with Bitcoin Bubble 1.
The second halving of price from the 266 peak is 66.60. This price was reached today, April 16, which is six days after the peak. In the previous bubble, the corresponding point of decline occurred 58 days later. Accordingly, the rate of decline for this bubble is more rapid than the first bubble by a factor of 10.
I suppose that in this bubble, the smart money exited sooner - given what they learned from the first one.
This would mean we are gonna recover faster
Issue 1 - Evidence for the Bear Case.
The post-peak negative sentiment shut off the flood of new money that caused the bubble. I define this negative sentiment rather weakly - merely the lack of news about 10x price increases and lack of new significant all-time highs, e.g. 33, 50, 100, 150, 200. Clearly the wave of euphoria on Reddit /r/bitcoin has abated.
Sunday/Monday price action was almost exactly reversed from before the peak. Previously, new deposits at Mt. Gox would propel the price strongly upwards. In contrast, the decline since Sunday has been continuous and brutal.
The most compelling evidence for the bear case is that a new post peak low was recorded this morning. This issue is closed.
Issue 2 - Comparison with Bitcoin Bubble 1.
The second halving of price from the 266 peak is 66.60. This price was reached today, April 16, which is six days after the peak. In the previous bubble, the corresponding point of decline occurred 58 days later. Accordingly, the rate of decline for this bubble is more rapid than the first bubble by a factor of 10.
I suppose that in this bubble, the smart money exited sooner - given what they learned from the first one.
This would mean we are gonna recover faster
5 days after the April 10 peak
Issue 1 - Evidence for the Bear Case.
The post-peak negative sentiment shut off the flood of new money that caused the bubble. I define this negative sentiment rather weakly - merely the lack of news about 10x price increases and lack of new significant all-time highs, e.g. 33, 50, 100, 150, 200. Clearly the wave of euphoria on Reddit /r/bitcoin has abated.
Sunday/Monday price action was almost exactly reversed from before the peak. Previously, new deposits at Mt. Gox would propel the price strongly upwards. In contrast, the decline since Sunday has been continuous and brutal.
The most compelling evidence for the bear case is that a new post peak low was recorded this morning. This issue is closed.
Issue 2 - Comparison with Bitcoin Bubble 1.
The second halving of price from the 266 peak is 66.60. This price was reached today, April 16, which is six days after the peak. In the previous bubble, the corresponding point of decline occurred 58 days later. Accordingly, the rate of decline for this bubble is more rapid than the first bubble by a factor of 10.
I suppose that in this bubble, the smart money exited sooner - given what they learned from the first one.
Issue 1 - Evidence for the Bear Case.
The post-peak negative sentiment shut off the flood of new money that caused the bubble. I define this negative sentiment rather weakly - merely the lack of news about 10x price increases and lack of new significant all-time highs, e.g. 33, 50, 100, 150, 200. Clearly the wave of euphoria on Reddit /r/bitcoin has abated.
Sunday/Monday price action was almost exactly reversed from before the peak. Previously, new deposits at Mt. Gox would propel the price strongly upwards. In contrast, the decline since Sunday has been continuous and brutal.
The most compelling evidence for the bear case is that a new post peak low was recorded this morning. This issue is closed.
Issue 2 - Comparison with Bitcoin Bubble 1.
The second halving of price from the 266 peak is 66.60. This price was reached today, April 16, which is six days after the peak. In the previous bubble, the corresponding point of decline occurred 58 days later. Accordingly, the rate of decline for this bubble is more rapid than the first bubble by a factor of 10.
I suppose that in this bubble, the smart money exited sooner - given what they learned from the first one.
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
We already hit the bottom 3 days ago at $54.25. If you didn't buy when you had the opportunity then commiserations.
Is that like we already hit the peak last week at $200?
$100 is the new $20 (in 2011). It will drag on down to $32, doubt we'll ever see $13.50 though.
I agree with much of what has been said already. I feel that we will track down to sub 50 at which point bitcoin will stabilize. This downward sell off will continue over the next 3 to 4 months.
I think people like SlipperySlope and bitrider are on the right lines.
Wether we like it or not the mania has ended (for now at least) and we are now in a new phase. From what I've seen speculative bubbles seem to follow a very classical pattern, there is the initial phase which is the bull run which grows exponentially over some time, at some point it can't be sustained any longer as the price increase becomes almost vertical.
In this case MtGox infrastructure causing lags was the cause of the fracture, but if it hadn't been that something else would have done it soon enough as the upwards pressure becomes unsustainable.
Next the price plummets as panic sets in and everyone rushes to sell all at once. This creates a huge spike down on the price chart. In the aftermarth of the crash, the price rebounds but not as high as the original peak (dead cat bounce). Then there is a long slow decline as enthusiasm fades more and more.
All of this has been repeated again and again in different markets, from tulip bulbs to gold and silver in 1980 to bitcoins in 2011, and I don't think this will be much different.
I have an entry in my blog where i also talk a bit more about this, 'Bull market tops'.
Wether we like it or not the mania has ended (for now at least) and we are now in a new phase. From what I've seen speculative bubbles seem to follow a very classical pattern, there is the initial phase which is the bull run which grows exponentially over some time, at some point it can't be sustained any longer as the price increase becomes almost vertical.
In this case MtGox infrastructure causing lags was the cause of the fracture, but if it hadn't been that something else would have done it soon enough as the upwards pressure becomes unsustainable.
Next the price plummets as panic sets in and everyone rushes to sell all at once. This creates a huge spike down on the price chart. In the aftermarth of the crash, the price rebounds but not as high as the original peak (dead cat bounce). Then there is a long slow decline as enthusiasm fades more and more.
All of this has been repeated again and again in different markets, from tulip bulbs to gold and silver in 1980 to bitcoins in 2011, and I don't think this will be much different.
I have an entry in my blog where i also talk a bit more about this, 'Bull market tops'.
My experience watching markets suggests that V shaped recoveries are notoriously unstable and rarely lead to new highs. Bitcoin is moving very fast on every level so I think the U shaped recovery will not take as long as it did back in 2011-2012, I still think we will have 3-4 months of testing before we really get moving again. I think the market wants to test the new lows of 55 and maybe even back to 35 before going for the next big leg up. We may rally from here ($100) because there are lots of speculators in the game, but I would bet we will come back to test these lows. Of course I'm good either way. If btc goes down, I just get to buy more coin, if it goes up, I just hang on tight... 
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
$100 is the new $20 (in 2011). It will drag on down to $32, doubt we'll ever see $13.50 though.
We already hit the bottom 3 days ago at $54.25. If you didn't buy when you had the opportunity then commiserations.
Is that like we already hit the peak last week at $200?
Yes we hit the peak at $266. I believe the price will remain in a trading range of $80-$150 for the next 1-3 months. The sentiment of the forum seems evenly balanced between bulls and bears. I think we are at equilibruim at $100 and sideways price movement in the short to medium term is likely. After that we'll probably rally past $200 later in the year but slowly.
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
$100 is the new $20 (in 2011). It will drag on down to $32, doubt we'll ever see $13.50 though.
We already hit the bottom 3 days ago at $54.25. If you didn't buy when you had the opportunity then commiserations.
Is that like we already hit the peak last week at $200?
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
$100 is the new $20 (in 2011). It will drag on down to $32, doubt we'll ever see $13.50 though.
We already hit the bottom 3 days ago at $54.25. If you didn't buy when you had the opportunity then commiserations.
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
$100 is the new $20 (in 2011). It will drag on down to $32, doubt we'll ever see $13.50 though.
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
No, bitcoin was undervalued at $13.50 in January. Like gold was undervalued at $250 and silver undervalued at $5. The price corrected upwards to reflect the real growth in the bitcoin economy and larger userbase and increase adoption. $266 was overvalued no doubt, but now Bitcoin has found it's new equlibrium at $100.
$100 is the new $13.50.
Quote
But as far as what price will be sustainable at that level of growth, I have no idea.
Smoothing out the boom and bust of the bitcoin price series suggests an annual growth of approximately 5x, or about 400% APR. I take this as a strong indicator of the relative value of the underlying bitcoin economy. Bubbles are happening in bitcoin because 400% APR is enormous and speculators naturally get way, way ahead of the underlying fundamentals as new people learn about bitcoins and big returns.
Back in January, bitcoin was fairly valued at 13.50 even though it advanced during 2012. I think this is sustainable as a base.
The gox queue is over 20k, google trends for "bitcoin" has doubled since the peak last week, and the news coverage is growing and much less negative overall than I expected.
This just in:
http://www.google.com/trends/explore?hl=en-AU#q=bitcoin&date=today%201-m&cmpt=q
The low point's tooltip says 53 (47% drop). That's the biggest drop to date and given the news dynamic I don't see how interest can pick back up. I concur 100% with SlipperySlope, the news has changed dramatically: it no longer invites greed but caution. The Gox verification queue is probably just a myth.
Disclaimer: I'm a perennial bear that made small fortune during this bubble and it's subsequent bull trap, so yeah, i'd like the satisfaction that I got out at the right time.
Definitely something to keep track of, I'm not convinced yet though
I think the next week of data will be interesting.I don't think we could really expect to keep interest that high, but it's still 3 to 4 times what it was in March during most of the price increase. I'd be happy to go back to the levels in March, and continue slower growth.
There's also more to talk about this time than just the price. Much of the media coverage I've been seeing lately is focused on the benefits of merchants accepting bitcoins as payment. More will have to happen to keep it going though.
But as far as what price will be sustainable at that level of growth, I have no idea.
Quote
At what price would you buy back in, and is there a minimum time that you would wait for things to settle down?
When it dipped the second time, I had various buy orders at 30 ... 60. I couldn't get 100% back in and I lost the 120 secondary peak (sold all at about 100), but still, it's almost double money for free.
I think this is the best strategy when buying: buy on the long run, when market looks bear and "stable" and prepare ammo for the next bubble. Wait at least 6 months for the previous bubble to deflate before buying. OR, buy during panic moments and sell back after hours/days (higher risk).
I believe this is the worst market to buy in, an overheated "stable" high, with trigger happy people watching the price, ready to get out. It's a game of chicken with low potential upside and high risk.
Quote
Currently the process from signing up, verifying and transferring funds to Mt. Gox takes about 2 weeks. So that huge surge in interest over the last few days has not played a part in the bitcoin market yet. Hell, the smaller surge in early April probably hasn't even bought in yet. And the low point is still higher than at any point before the recent surge.
That's not the correct way to think about it, if you observe the interes/price relation of previous events they are perfectly correlated, there's no delay between the two lumps. So you will never be able to milk the very last people who enter on the peak, the only way to get their money is to have an even higher news peak today or this week. And I'm just saying the news space is saturated and the message is no longer greed inducing, but caution inducing.
The gox queue is over 20k, google trends for "bitcoin" has doubled since the peak last week, and the news coverage is growing and much less negative overall than I expected.
This just in:
http://www.google.com/trends/explore?hl=en-AU#q=bitcoin&date=today%201-m&cmpt=q
The low point's tooltip says 53 (47% drop). That's the biggest drop to date and given the news dynamic I don't see how interest can pick back up. I concur 100% with SlipperySlope, the news has changed dramatically: it no longer invites greed but caution. The Gox verification queue is probably just a myth.
Disclaimer: I'm a perennial bear that made small fortune during this bubble and it's subsequent bull trap, so yeah, i'd like the satisfaction that I got out at the right time.
Currently the process from signing up, verifying and transferring funds to Mt. Gox takes about 2 weeks. So that huge surge in interest over the last few days has not played a part in the bitcoin market yet. Hell, the smaller surge in early April probably hasn't even bought in yet. And the low point is still higher than at any point before the recent surge.
Quote
... I'm a perennial bear that made small fortune during this bubble and it's subsequent bull trap, so yeah, i'd like the satisfaction that I got out at the right time.
At what price would you buy back in, and is there a minimum time that you would wait for things to settle down?
The gox queue is over 20k, google trends for "bitcoin" has doubled since the peak last week, and the news coverage is growing and much less negative overall than I expected.
This just in:
http://www.google.com/trends/explore?hl=en-AU#q=bitcoin&date=today%201-m&cmpt=q
The low point's tooltip says 53 (47% drop). That's the biggest drop to date and given the news dynamic I don't see how interest can pick back up. I concur 100% with SlipperySlope, the news has changed dramatically: it no longer invites greed but caution. The Gox verification queue is probably just a myth.
Disclaimer: I'm a perennial bear that made a small fortune during this bubble and it's subsequent bull trap, so yeah, i'd like the satisfaction that I got out at the right time.
I saw this image linked in another post. It perfectly illustrates the similarities between Bubble 1 and Bubble 2.
Jump to: