Bitcoin reached $2300! How high can it go?

in bitcoin •  last year

The cryptocurrency market has been on an absolute tear lately and is in a clear bubble. But the question really is how high can it go?! I made a video yesterday to answer just that question. For myself and for you of course. Check it our and please tell me what you think after you've seen it.

The bubble is good!

Bitcoin has more than doubled, ethereum went from $12 to $180 and pretty much any other currency or token has multiplied. This year. In fact I am not aware of anything that is not up this year. It is obvious to me that we are in a bubble. Any time all prices of a market shoot up parabolic, you know we are in a bubble.

But a bubble is not a bad thing. It shows that tremendous amount of economic energy is flowing into the market. Maybe a little too fast at this moment, but in general that is a good thing.

Screen Shot 2017-05-23 at 3.32.32 PM.png

The internet was in a bubble in 2000. Today the internet is the backbone our our economy. I believe with the internet and crypto the bubbles are simply showing the potential. Nonetheless we have to understand that bubbles will pop and if we are invested in the market we have to be prepared for it. By it I mean a 50% to 80% crash.

It's early and tangible evaluations are impossible

This market as a whole is still a baby. We cannot even begin to predict its potential. There are very few solutions that are production ready and out on the market. How do you evaluate bitcoin? Well you think about what could happen if it becomes a major global currency or what it could be like toward the end of its lifecycle. Pretty much any other crypto tech is so new and revolutionary that the endgame is really hard to envision as well.
Screen Shot 2017-05-23 at 3.36.02 PM.png

As a result valuations fluctuate and are very emotional on the one hand, while professional traders are riding these up and down waves and encourage the bubbles.

While this may seem very wild, I think these are normal growing pains for a new rapidly growing technology that may change the very structure of how human societies will work.

Where are we in the bubble

If we look at the market with a short term view, it looks like this rocket is about to explode.
Screen Shot 2017-05-23 at 3.49.26 PM.png
Any time the market goes up in a straight line, it is cause for concern as this type of trend can never hold for very long.

But because this market is growing exponentially it is much better to look at it in a log chart.Screen Shot 2017-05-23 at 3.55.32 PM.png

Looking at the log chart we can see that bitcoin has been growing very steadily since the summer of 2015, for two years now and just recently broken out of this trend. Every bubble has this straight up or parabolic chart that we can see in previous bubbles. In this years bubble even though we have had huge gains this is not visible in the bitcoin chart, but now we have just recently (last week) broken out of steady trend. This to me means now the parabolic price explosion may only just be starting. That said the higher we go in bubbles the smaller the upticks have become recently so according to this we may be close to the top already! It's never easy and simple. Please keep that in mind.

However bitcoin has a key advantage: it has not exploded relative to other cryptocurrencies. The log chart shows this clearly. Also currently volumes are at absolute high. Even for alts. Check out the volumes for the alt market in the screenshot above, it looks like the volumes were non existent a few months ago. This is only because they are so ridiculously high at the moment. $2B of bitcoins were traded the other day. That's insane growth from a few hundred millions usually per day last year. I don't think that the bubble will pop when the volume on green candles are at a maximum.

Extrapolations from previous bubbles

I put together a spreadsheet that contains data from all the bitcoin bubbles. We are now in the 6th bubble. Then I calculated some metrics, such as in each bubble what was the high to low and high to high price movement. From that I calculated the possible outcomes given min, max and averages. I also looked at what would happen if this bubble only went 1/2 as well as the previous one, since the trend seems to be going downwards in that regard.

Screen Shot 2017-05-23 at 4.06.21 PM.png

The range is wide

From the spreadsheet alone we get a range of possibilities that is very wide. From $3k to $30K. The lower targets are much more realistic because of reduced volatility, however it seems rather likely that bitcoin will rise further than where we are today. While the crash may happen tomorrow a few more double ups are also possible.

I hope this was all helpful info. Please let me know what you think and give me some feedback so I can become a better writer and video creator in the future. Thank you for all your valuable up-votes and shares or re-steems.

Be careful out there. And may the profits be with you all!

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You said you're staying in the market. Are you staying in 100% for now? I'm selling a significant portion of my stake and planning to buy back in after it crashes.

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I do think there is still much energy in this run, so I am not ready to sell yet. I think it might be a good idea to liquidate some winnings at this point. For me personally that does not make sense because of taxes (I live in the US ). I need a crash beyond 50% for it to make sense for me. So in generally i need to be very sure that its over before i want to sell. A different tax situation would make me have a different strategy also.

But I am planning to take some profits a bit later or when the trend is over. I just don't think we are there yet, even though i'm convinced we are in a bubble.

Does this make sense? I did sell 10% when eth was at 70-75 already. That has cost me a lot. But eventually u have to take some profits.

Thanks a lot. Very interesting; espcially the extrapolations. The crutial question is: Who is already in? I think the big money is not. But if it wants to be in, an incredible mania will take place. Although all looks like madness, the next highs will be far away from here.

The trend is your friend, early days in my opinion, hardly anyone owns a Bitcoin yet.

Bitcoin is not a bubble. FIAT currencies are. Bitcoin is just reflecting their falling value. Even gold can't do that, because gold is physical and therefore can be controlled. Bitcoin can't. What you see is not a Bitcoin bubble, but bursting bubble of paper

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I agree. I also think it doesn't matter. As the true value of all fiat money is revealed (headed to zero) having multiple cryptos coupled with some physical assets on hand (Gold, Silver, Land, tools, etc.) is our best bet. I think the OP has a great analysis here, I just disagree with the postulation.

fantastic post @knircky, excited to see where the price action takes us. no matter what HODL!

I had not seen the BTC/USD on a log scale before!

Great analysis. Does the fact that it broke out of the log range scare you that a correction may be in the cards?

Now Following!

Hi Phil. Really good vid.
I've been a fan of your youtube channel for a while. In fact before I even knew what steem was.
May I ask, do oyu mind if i reference your video in a post im writing? It has to do with your bullet points near the beginning.
cheers

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Thank you so much for the kind words!!! I would be honored if u reference my work! Send me a link when u do so I can check it out.

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Good analysis... but unlike previous bubbles the BTC rise has been fairly stable... I don't see the price crashing 50% at $2400. I agree with you it has more room to go but I think it has a LOT of room to go. Wouldn't be surprised if the BTC bubble lasts for another few months with prices going well beyond $3-$4K. When alt coin bubble pops there will be a lot of $ coming back into BTC. If consensus is actually reached BTC price will rally. The rising transaction rate and coinbase users indicate real growth unlike what we've seen in 2013. I think BTC will still need to have a boom and bust cycle... a slow and steady rise for the last year isn't much of a boom.... although price doubled in 1 month I think the top of this bubble will be more clear after we see much larger weekly candles

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Great analysis. Following. Agree with you also.