Category Archives: Bitcoin

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.

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.

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. 

• 1/12/2017
• 1/1/2017
• 11/4/2015
• 10/7/2014
• 11/19/2013
• 6/26/2013
• 4/10/2013

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.

On January 1, 2017, we said the following:

“The $1,051 upside target appears to be within reach as the digital currency is currently trading around the $1,006 level.  It is at this time that we need reassess the prospects for Bitcoin both on the upside and the downside.  Starting with the latter, we have posted the downside targets based on the most recent price indicated.

“As we’ve indicated in the past, the downside targets are paramount as they are the best assessment of the risk a speculator or investor might be taking when they decide to take the plunge.  As highlighted on the chart above, the downside targets are as follows:

• $772.12 (conservative)
• $553.75 (mid range)
• $335.39 (extreme)

“Anyone considering being involved in Bitcoin for speculative or investment purposes should readily accept that the extreme downside targets are always in play.  This means that if you’re going to be involved in this currency you should always keep a portion of funds available for the prospect of the downside risk or accept that all funds invested could take a severe decline.”

On November 4, 2015, we said the following:

“It has taken some time but Bitcoin appears to be on the rebound.”

“If the current run-up is anything like those in the past, $1,051 could be a relatively small number.  However, each of the indicated upside targets must be achieved first before we can start giving estimates of how far beyond $1,051 Bitcoin could go.”

The $1,051 upside target appears to be within reach as the digital currency is currently trading around the $1,006 level.  It is at this time that we need reassess the prospects for Bitcoin both on the upside and the downside.  Starting with the latter, we have posted the downside targets based on the most recent price indicated.

Downside Targets

As we’ve indicated in the past, the downside targets are paramount as they are the best assessment of the risk a speculator or investor might be taking when they decide to take the plunge.  As highlighted on the chart above, the downside targets are as follows:

• $772.12 (conservative)
• $553.75 (mid range)
• $335.39 (extreme)

Anyone considering being involved in Bitcoin for speculative or investment purposes should readily accept that the extreme downside targets are always in play.  This means that if you’re going to be involved in this currency you should always keep a portion of funds available for the prospect of the downside risk or accept that all funds invested could take a severe decline.

Upside Targets

On November 4, 2015 we posted a chart providing downside targets of $350.33 and $245.83 when Bitcoin was priced at $408.74.  By November 11, 2015, Bitcoin had declined to $312.58 and we thought that there would be a continuation of the decline to $245.83.  The reality was that Bitcoin never went below the November 11th low. 

We were wrong about Bitcoin declining to the mid-range target, however, with the recent ascent in the price, we now need to focus on the conservative downside target based on the high of $538.15.  Below we’ve outlined the conservative and mid-range downside targets.

As the price of Bitcoin increases we will have to adjust the target.  For now, we’re looking to the $388.51 level based on the work on Edson Gould.

Our November 4, 2015 article on Bitcoin emphasized the need to watch for the potential downside targets.  So far, the first downside target of $350.33 has been achieved after the intraday high was set on the same day.

The next point to watch for is the $245.83 level where we should expect an intermediate bounce in the price.

On January 14, 2015, Bitcoin declined as low as $170 per U.S. dollar.  This comes three months after our October 7, 2014 article titled, “Bitcoin: Speculators Unite…” in which we proposed the following:

“with an increase in price from $99.81 to $1,147.25, participants should always step back and reassess the situation.  The reason why is because there have been few instances where a parabolic increase in price is sustained in the form of a new plateau.  With this consideration in mind, we believed that the prospects of the downside targets, dismal as they seemed at such heights, were a distinct reality.”

However, the nature of the October 7, 2014 piece implied that the price of Bitcoin was headed higher.  Little did we know that the actual trajectory would be a continuation of the declining trend.  Since the October 5th low, Bitcoin was only able to increase by as much as +33.66%.  Ultimately, the decline that ensued since October 5th has equaled –43.23%.

Below is the Edson Gould’s Speed Resistance Lines for Bitcoin with an updated chart.

All we can say is that the worst case scenario of $125 was always a distinct possibility.  A decline to the $125 level is now well within reach as the market for Bitcoin goes into panic mode.

…Investors need not apply. 

On October 5, 2014, the price of Bitcoins dropped as low as $286.56.  Reporting on it the next day, MarketWatch.com suggested that the reason for the decline was due to “…the sudden volatility to a large sell order for 26,000 bitcoin that was placed on the Bitstamp exchange, according to a story on CoinDesk.”

The explanations are always very interesting and may be the essential contributing factor that caused the decline.  However, when it comes to the projecting of downside targets, Edson Gould’s Speed Resistance Lines (SRL) have provided the clearest estimates of downside risk.  What follows is the chronicle of our analysis that preceded, well in advance, the price movement of bitcoin along with updated targets.