I have a hypothesis.
1) Bitcoin was growing too fast. Everybody expected it to crash. When mtgox failed to handle the load, it crashed.
2) Almost everybody is long-term bullish, that is why many buy when bitcoin is cheap. But at the same time everybody knows that bitcoin is volatile and unpredictible. So people try to use the price swings to increase amount of BTC they own and maybe to make some pocket money too.
3) It is too easy to make profits when price swings widely. You just make an order in any direction at any price, and it is highly likely that you'll be able to take profit if you do not fix losses (since the price can go literally anywhere within few days).
So many people followed this strategy thus reducing the amplitude of price swings. And now there are a lot of fixed profits and unfixed losses, and the price can't fluctuate that much until something happens. And probably trade volume reduced because both short time bears and bulls don't want to fix losses and are waiting for price to come back to make even more profits to them.
That's why it looks like that:
But that is just a hypothesis. The other hypothesis might include some kind of conspiracy and manipulators.
1) Bitcoin was growing too fast. Everybody expected it to crash. When mtgox failed to handle the load, it crashed.
2) Almost everybody is long-term bullish, that is why many buy when bitcoin is cheap. But at the same time everybody knows that bitcoin is volatile and unpredictible. So people try to use the price swings to increase amount of BTC they own and maybe to make some pocket money too.
3) It is too easy to make profits when price swings widely. You just make an order in any direction at any price, and it is highly likely that you'll be able to take profit if you do not fix losses (since the price can go literally anywhere within few days).
So many people followed this strategy thus reducing the amplitude of price swings. And now there are a lot of fixed profits and unfixed losses, and the price can't fluctuate that much until something happens. And probably trade volume reduced because both short time bears and bulls don't want to fix losses and are waiting for price to come back to make even more profits to them.
That's why it looks like that:
But that is just a hypothesis. The other hypothesis might include some kind of conspiracy and manipulators.
long story short: Consolidation.
The longer the consolidation, the more dramatic the eventual breakout.
And now for a rhetorical question: Which direction will price breakout toward?
You have a 50/50 chance of being correct by a completely uneducated guess ...
