Category Archives: Bitcoin

Bitcoin: November 2017

On October 13, 2017, when Bitcoin was quoted at $5,640, we said the following:

“We are throwing in the towel on taking the $7,166.29 [our upside target] figure, and any future upside targets that go uncorrected to the tune of –50% or more, as something we can feel confident is worth the speculation.”

Our upside target of $7,166.29 has come and gone.  Now comes our updated downside targets for those mindful of the risks.

Bitcoin: Upside Targets Achieved, Now What?

If anyone has managed to follow our work on the topic of Bitcoin, we can only lay claim to the October 7, 2014 call for “Speculators to Unite” when the cryptocurrency was priced at $334.09.  At the time, we said the following:

“…bitcoin is worth the plunge.  Based on the revised price peak of $1,147.25, bitcoin has a conservative upside target price of $723.34 and an extreme upside target of $1,446.68.”

Since October 7, 2014, we have issued revised upside targets and downside targets that have been generally within the range of expectation.  Our last published upside target for Bitcoin was $6,260.91 as seen in the September 5, 2017 posting titled “Bitcoin: Setting the Stage.”  The graphical representation of the price of Bitcoin since October 7, 2014 is staggering and worth a refresher view.

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At this point, as Bitcoin sits within 7% of the last published target, we cannot take seriously the updated target that has been generated ($7,166.29) based on our Speed Resistance Line calculations.  We are throwing in the towel on taking the $7,166.29 figure, and any future upside targets that go uncorrected to the tune of –50% or more, as something we can feel confident is worth the speculation.

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Crypto Bubble? What Makes You Say That?

In a graphic provided by the cost information website HowMuch.net, there is a eye opening review of crypto currencies compared to well known companies like Facebook,PayPal, and others. 

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On one side are companies providing services that seems to be increasing in demand. PayPal is an online payment system, Expedia is an online travel agency, Zillow is an online real estate resource, Brighthouse Financial is an insurance company, Groupon is an e-commerce marketing company.  On the other side, there are five different crypto currencies.

There is no way that so many cryptocurrencies can exist, simply to do the same thing.  There will have to be winners and losers.  This reminds us about the market share of cell/smart phones and the change that occurred over time.  In our November 7, 2010 article titled “Market Price and Market Share” we highlighted how much the cell phone market change from the the peak of the dot-com bubble to 2010.  In that time, the top cell phone makers (now called “smart” phones) changed in unexpected ways.

Top Mobile Phone Vendors 1999
Vendor market share
Nokia 32.00%
Qualcomm 14.80%
Ericsson 12.70%
Motorola 11.20%
Audiovox 7.40%
Samsung 6.70%
Sony 6.60%
source: RCR. July 5, 1999. Dataquest Inc. page 1. 
Top Mobile Phone Vendors 2010
Vendor 3Q market share
Nokia 32.40%
Samsung 21.00%
LG Electronics 8.30%
Apple 4.10%
R.I.M. 3.60%
Others 30.50%
Total 99.90%
Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 28, 2010
Top Mobile Phone Vendors 2016
Vendor 3Q market share
Samsung 20.00%
Apple 12.50%
Huawei 9.30%
OPPO 7.00%
Vivo 5.80%
Others 45.40%
Total 100.00%
Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 26, 2016

What we always like to point out is that Nokia was the biggest by market share in 1999 and 2010 and yet it wasn’t the most innovative.  Also, in 1999, Apple was nowhere to be found on the list of top five mobile phone vendors and yet it is among the top two today.  Samsung has managed to stay among the top 6 in spite of not having the cache of Apple or (dare we say it) Rimm.

Which brings us back to the cryptocurrencies.  Whoever is on top today is likely to not be a contender down the road.  In fact, we believe that a yet-to-be-determined entrant will likely supplant Bitcoin as the “it” cryptocurrency.  How are we going to find out the latest and greatest cryptocurrency?  It will take a deflation and inflation cycle to get us there. 

For now, keep in mind that there were hundreds of manufacturers of planes, trains, automobiles and mobiles phones before there were the big three.  Deflation of the boom in cryptocurrencies will go a long way towards separating the wheat from the chaff.

Bitcoin: How Much Pain Before Fear Sets In?

Bitcoin is going through the customary pullback in the price.  The new threshold to watch for is –35.77% on the downside.  This was the amount of loss that speculators and investors were willing to accept from the June 11, 2017 high of $3,018.55 to the July 16, 2017 low of $1,938.94 before a new bull run to the upside ensued.  Most traditionalist say that a bear market starts at or near a decline of –20% or more.  At which point, it takes some time before the “investment” gets back to the previous high (example: Nasdaq Composite took 15 years to get back to the 2000 high). 

In this case, we’re not talking about a stodgy technology stock index, we’re talking about a potentially new currency mechanism which will likely supplant many existing currencies.  Bitcoin is only one among many competing to be the final choice of a new money.  However, in order to get that prize, Bitcoin will need to survive the high risk phase of speculative boom and bust.

Right now, we’re watching Bitcoin investors test their tolerance for pain as the price swoons from the high of $4,950.72, as report by Coindesk.com, to the current level of $3,390.  As we said in our August 21, 2017 posting:

“…participants will accept even larger declines if the expectation is that it will exceed the prior peak.  So far, Bitcoin participants accepted a –14.94% decline followed by a –35.76%.  In each instance, these declines were followed by new highs in the price of Bitcoin. By our rationale, Bitcoin will now fall as much as –35% and possibly more as participants become inured to the pain of loss in anticipation of new highs.”

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Bitcoin: Setting the Stage

This is all you need to know, Bitcoin is setting the stage for dramatic fireworks.  We’re sticking to our call that “parabolic moves are resolved through dramatic declines. We believe that the conservative downside target of $1,911.83 will be achieved.”  This outrageous claim is not based in hope or fear, it derived for the previous accurate tracking of price declines well in advance of the fall. However, based on the new high at $4,950.72, below we have included updated Speed Resistance Lines for those that are following along with us.