Let’s do a quick review of the evidence so far.
July 2010 to November 2011 Bitcoin increases +36,900% and then declines –93.07% within a two year period.
November 2011 to July 2013 Bitcoin increases +9,771% and falls –70.93% in less than two years.
April 2013 to October 2014, Bitcoin increases +1,629% and falls –72.21% in less than two years.
Is A Crash Coming?
We can’t be certain that history will repeat. However, the evidence suggests that a decline of –70% to –90% is the norm. Let’s watch.
According to Coindesk.com, Bitcoin achieved a closing high of $3,018.55. This was +30% above our January 1, 2017 estimated upside target of $2,316.35, when Bitcoin was priced at $997.69. Now that Bitcoin has establish a new declining trend, we’ll provide our interpretation on the short-term moves in the price of Bitcoin and new upside/downside targets based on the $3,018.55 peak.
Bitcoin has been on a wild ride of late. While surprising to some, with estimates of how much you would be a billionaire if you held from the inception, we’ve been providing upside and downside targets that have been achieved with relative ease and accuracy well in advance of the move (see our January 1, 2017 posting).
Recently, Bitcoin has managed to rise as high as $2,476.30 on a closing basis according to Coindesk.com’s Bitcoin Price Index. The closing high is actually well below the intraday high of $2,791.69 set on May 25, 2017. We’re going to provide upside and downside targets based on the indicated closing high.
On January 12, 2017, after Bitcoin achieved our prior downside target of $772.12, we said the following:
“Those who wish to speculate on Bitcoin should assess the risks and consider buy[ing] at [the] current level.”
Anyone who bought based on our work should have known that on January 1, 2017, we had the following upside targets:
$1,737.26 (mid range)
What is important about our upside targets, issued on January 1, 2017, is that we emphasized a downside assessment was necessary after a parabolic run-up. We expected that the price would need to experience a large decline before any material rise could ensue. Shortly afterwards, on January 12, 2017, our downside targets were met.
On May 10, 2017, Bitcoin has achieved a new high of $1,750. If this level can be sustained, we think that the extreme upside target of $2,316.35 is possible. However, we have to acknowledge the downside targets that come with a parabolic increase.
Serious speculators (as opposed to investors) in Bitcoin should consider the inevitable decline that is to come as a reaction to the parabolic rise. Yes, there is a good chance that our target of $2,316.35 will be achieved. However, if, as a speculator, you have enjoyed some or all of the run-up since our January 12, 2017 recommendation, then you probably want to be able to enjoy it. We recommend selling now and watch for the ascending downside targets.
Below is a list of Bitcoin commentary that we believe is instructive in highlighting the valued of analysis (fundamental, technical or otherwise). The current run up in price was highlighted in our article titled “Bitcoin: Speculators Unite” published on October 7, 2014.
Our only third-party proof of the October 7, 2014 article can be found on SeekingAlpha.com under the stocktalks section under the symbol COIN. For reasons unknown, although the article is shown to have been posted an error appears at the provided link. Some of the other Bitcoin articles posted to our site can be found on SeekingAlpha.com at the blog section of our page.