What Goes Up, Must Come Down! (Similarities to 1998?)

in #bitcoin7 years ago

As was noted yesterday, Bitcoin continued it's impressive run. 

On the way to record high after record high. 

However, something happened today that changed things for Bitcoin, at least in the short term.

This morning Bitcoin surged yet again, climbing all the way to just under $2800 per Bitcoin. 

Soon after, the price rolled over and then the bottom fell out. The price dropped more than $400 in a matter of hours. 

Briefly breaking the $2400 mark and trading down in the $2300's.

Right now the price is clinging to the $2400 price point undecided on where it wants to go next. 

Drops like this are scary for anyone, and reminds me of some of the things we witnessed in the late 90's as part of the Tech bubble.

Brock Pierce (managing partner of Blockchain Capital) agreed with my thoughts and had this to say:

"It feels like 1999 right now. We may end up having a similar outcome. We could really see a big correction here."

I think a lot of people feel that way, but the question has always been from what level will that correction take place?

That comparison to 1999 was very interesting and got me looking at a couple of charts to help better understand what part of the bubble we might currently find ourselves in. 

This is a good timeline of some of the major events during the Tech boom.

Comparing this with a chart of Bitcoin, what price point might we be at today?

After looking at the charts a bit, my best guess is that we are somewhere around the 1998 pullback. I circled it in red to help highlight it:

As you can see it was a pretty significant pullback that happened after a pronounced move up. However, take a look at what the price did afterwards. 

It continued to make higher highs and the entire index eventually went on to more than double from that level. 

So, yes this dip is scary and it very well might not be done yet, however, my best guess is that the moon shot in Bitcoin and the crypto space is far from over. 

Brian Kelly of BKCM (and CNBC) had this to add:

"There is no question we are in the middle of a price frenzy. There will be a correction and it could be severe, but it's unclear if that correction will start from current prices of $2700 of from some place much higher."

I think he shares the thoughts of just about every cryptocurrency investor I have talked to out there. 

The traders all think we are due for a correction and the technology geeks think we have much much higher to go. 

The truth probably lies somewhere in between.

Which part of the cycle do you think we are in?

Is this the "Bear Trap" or the "Bull Trap"?

Stay safe out there my friends!

Sources:

http://www.cnbc.com/2017/05/25/bitcoin-surges-10-percent-to-all-time-high-above-2700.html

Image Sources:

http://www.cnbc.com/2017/05/25/bitcoin-surges-10-percent-to-all-time-high-above-2700.html

http://bellaj.freehostia.com/index.php/2017/03/15/analysis-the-blockchain-mania-and-the-dot-com-bubble/

Follow me: @jrcornel

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Yes, the BTC move went especially parabolic this week. Anyone not expecting a hard pullback is in la la land. The real question is how price will play out over the next several weeks. There are a few key levels to hold, honestly, it could pull all the back to 1500 and hold that support and I'd still feel good about it's long term price action.

As for STEEM, the .00040 level is important as it's our most recent established support on the uptrend. Holding that while everything else is falling would be positive for steem.

great post....

Yep I agree. It is import psychologically (and earnigns wise), that steem hold it's dollar support levels as well. If Bitcoin is falling hard we don't want Steem falling in unison or just a little bit slower...

hmmm.. relax.. breathe in .. breathe out
it's not time to sell - intel says but we'll see :D
though it has dropped $400 - isn't this still normal? :D
crypto drops and ascends in $100s - I mean BTC and a few does too
I thought it's normalcy .. it's climbing again ..
maybe - slippery road ahead it slipped :D

I am hoping it is just a garden variety pullback, albeit bigger than most in dollar terms.

I hope so too :)

Very true. I decided to watch it against the BTC for now since it kind of dictates the outlook for crypto space, for the time being atleast.

Yes it does. Good point.

Didn't you get the memo that you're only supposed to cheerlead price rises? You're not allowed to say these prices have to come down.

I'm only being facetious because, before the $400 correction this morning, I made a similar post, which ended up having the worst view/upvote ratio of just about any post I've made.

I've seen enough bubbles to know what happens when a price chart starts to look like a hockey stick.

I read through the post you mentioned and saw a comment about silver. I think silver is vastly undervalued at current prices. I remember when silver was approaching $50 back in 2011. At that time everyone and their mother was heading down to the LCS to pick up some silver. I am sure many sold off when it was bleeding not long after

Yea I have been getting some family members into silver for a few years now. I think they did most of their buying around the $13 level. At some point Silver will have it's day in the sun again.

It's one of the most undervalued assets in the world in my opinion! Once the criminals over at the LBMA get exposed it might (hopefully) break free. Until then, they will continue to dump paper on the markets to suppress the price

Yea, people don't want to read downers... although I am hoping this isn't the second trap and hoping it is more along the lines of the first one! Which would mean in a round about way, I am still cheerleading ;)

If I had to guess, this is just a profit-taking correction, and the price will continue pumping a while longer. But don't listen to me, I'm not a trader.

That is my guess as well. My crystal ball is a bit hazy as well though, so it's just a guess :)

"people don't want to read downers " I feel like this is especially true for steemit, almost all posts I see in the "hot" category related to crypto-currencies and/or steemit are definitely biased and unjustifiably optimistic for the future of steemit (and other cryptos). Not much objective analysis going on there

But you can't fault them completely because the positive posts in some way actually do help the community too, keeping the enthusiasm alive, attracting new users etc. So this "positive" analysis may work like a self-fulfilling prophecy ;)

That is a great way to look at it! Nice point :)

Is this the "Bear Trap" or the "Bull Trap"?

Markets are fractal so it could be both at the same time: a bull trap on the way down from the heights of a small bubble nested in the rising slope of a longer term larger crypto bubble. In retrospect, it seems like the Bitcoin bubble and crash of 2013 were the "first take off" and "early selloff". But back then, it felt already like the bubble and crash of 2011 were playing this role. And in a few years, it will seem that today's bubble and upcoming crash were the real "first take off" and "early selloff". And so on, until the music stops for good at the top.

Great comment. How close (or far) are we, do you think, from the music stopping?

Somewhere in this range

Realistically I think here

Haha clever! Yes that is my thoughts as well.

Media attention is just now coming..

Yep. The naysayers can say, well that was it, that's all she wrote. Meanwhile the believers can load up on discounted prices.

Or the people who panic sell at the first sign of correction. They are usually the ones who bought at the top

Yep, it makes people do strange things when they start to lose money...

The emotions start to mess with people! You live and you learn, right?

I guess, to answer you last question, that we are in the Institutional Investors phase right now with Steem and, with Bitcoins, I would have to say in the Public domain of Media Attention as it is on the rise all over the world.

Great article and I really look forward to seeing what is going to happen with Bitcoins and, even more so, with Steem as I believe there is so much more potential with STEEM... Time will tell us all. Namaste :)

The LOG graphs show, that today we are yet so much behind the LOG scale trend of the first four years. Otherwise we should see BTC between $2 and $20 mln. Yes, sound absurd, but... that what the growth trend on a LOG scale was telling me 3-4 years ago:

Maybe, the Bitcoin price has simply lost the LOG trend, and will never come to that again? Who knows.

Or maybe it will test that line and attempt a re-enter at some point?! ;)

We are just around media attention. But someone forgot to add, cashing-in on this chart. TIme to buy :D

Yes, if we are just at that first major dip point. That means the price still can easily go up many times from here.

For the longest time, bitcoin has sold on exchanges at prices far higher than the main exchanges. Those of us who know that know that Bitcoin is bull and some people don't seem to remember, Bitcoin hit $11,000 just before Mt Gox. Bitcoin is bull for the future and love your post my friend @jrcornel (I hope I am right!) ;oD

You make a great point here. In fact that is part of the reason for some of the rally. When the markets with the heaviest trading volume are trading at different prices, all other markets eventually get dragged to their price points. Bitcoin had been seeing it's most trading volume in Asia as of late. The price over there was also about 10% higher than on US exchanges. They were pulling up the price of Bitcoin in a way.

I noticed what you say and it was like when I bought Bitcoin yesterday on Coinbase. It was a hundred dollars higher than at Poloniex. Then I bought. It dropped along with all the other coins I bought. Then it bounced to $2698. Meanwhile, it is selling on places when one person suggested I buy it at $3,000 to $4,000 dollars. I did not buy it there but for some reason many exchanges get away with selling Bitcoin at double the price or near that and they always have got away with it.

They get away with it for a while, but eventually enough people play the arbitrage game that it closes the gap and the prices all gravitate towards the exchange where the most volume is taking place.

Here is what you do not understand - I just talked to a guy today who had no idea what it was and will never understand it. I had to spell Bitcoin for him so he could look it up on his computer if he did that. Yesterday, I talked to three that stopped by my house and they had heard of Reddit not Steemit and they knew nothing of Steem or Bitcoin. No one know s about it except the very few my friend @jrcornel and most never will know about it nor will they care.

It will go back up. Wealthy Chinese still need to get their money out of China.

Yep, and India as well as several other major countries haven't really gotten involved in a major way yet. This rally was mostly driven by parts of Asia.

Bitcoin coin is going to be a exciting ride, I will be enjoying all the ups and downs. Even though some of the downs might make me sick.

Keep a paper bag handy!

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