Bitcoin: January 2018

On December 22, 2017, we said the following of Bitcoin:

  • “We believe that there is going to be limited upside in the near term.”
  • “We think that the conservative downside target ($6,884.31) will be achieved before a new high is seen.”
  • “In all prior booms, the subsequent bust AVERAGED –70% (data found here).”

Below is an updated review of Bitcoin and our thoughts for the price going forward.

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In the chart above, we have outlined the course of the price of Bitcoin since our October 7, 2014 article titled “Speculators Unite.”  Since that time, we’ve seen unimagined increases in the price of Bitcoin, even at the current price of $10,600.  However, along the way, we have provided downside targets that are adjusted higher with the increase in the price.

As indicated above, the 19,343.04 peak was followed with a conservative downside target of $6,884.31.  A conservative downside target is the minimum low that we expect the price to achieve as a natural reaction to the previous price increase.  However, there is more that we can do to achieve better downside numbers for a more realistic expectation of where the price of Bitcoin will go. Below are the revised downside targets and expected times that each target will be achieved.

Price Targets

  • $5,579.21
  • $2,965.41
  • $1,339.64

Time Targets

  • 1/26/2019
  • 7/22/2018
  • 3/13/2018

How to Use the Targets

The best way to utilized the above targets is to assume the worst case scenario.  For example, in the price target category, the worst case is the $1,339.64 price level.  This is the equivalent that was achieved in the period when the price peaked at $29.60 and crashed to the $2.05 level (-93.07% decline).  We’d we huge speculative buyers if the price managed to achieve this level on the downside.

Likewise, in the time target category, the worst case scenario is January 26, 2019.  Assuming that the price of Bitcoin declines to any of the four levels indicated ($6,884.31, $5,579.21, 2,965.41, or $1,339.64), a speculator would have to be willing to accept that early 2019 could be the amount of time needed to wait before any material increase would take place.  This would be the equivalent to the amount of time it took for the price of Bitcoin to reach the low in the period from the high of $1,147.25 in December 2013 to the low at $177.28 in January 14, 2015 (-89.77% decline).

Conclusion

Anyone willing to participate in Bitcoin should be willing to accept that the price could easily decline –70%, as has been the average of all previous Bitcoin busts (found here).  Anyone who participates in anything other than Bitcoin should expect a minimum –90% to –99% decline if, at the same time, Bitcoin declines –70% or more.

We see the current decline consistent with all prior crashes in Bitcoin and therefore see no reason to panic if you are out already.  Alternatively, if you are currently in Bitcoins, you should be willing to accept that the price routinely declines to the levels mentioned above.

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