Typically there are several periods of consolidation or 'bases' which are established with increasing range between each of the moves.
The final phase is a usually the most violent in its upside before a strong correction which breaks several of the previous levels of support.
I think its fair to say Bitcoin is within such a move and most likely coming to the end.
Im calling top at a maxout of this move being $20k but could end sooner.
A collapse could see bitcoin return to somewhere between $2 and $3k- i would lean towards $3k
Im certainly not quite yet, but we saw some serious at $10k - imagine what it will be like at $20k.
A lot of people will have made a lot of money and profits will be taken:
Just to put this in to perspective, lets say you bought 100 BTC at the start of the year for $100k. By $20k/BTC this will be $2m in holdings. This is enough for any average man to retire upon. Watch how quickly the libertarian hodl attitude melts away when they are literally kissing goodbye to their lottery ticket. The panic will be significant and is probably underestimated due to the euphoric feeling we all have today.
My advice would be not to short this beast. There is plenty of potential to nearly double in price. Take some profits on the way up.. You can’t go bust by doing that.
Hope you found this useful.
All the best.
I am not saying this is the asoloute top, but i will be very cautious above these levels.
You need to be on your toes to take action whether youre long or short!
Clearly this is a difficult thing to model and i will have a go at working out the weighted average cost at some point.
Im attaching a link below to some work which was done relatively recently to work out the cost of production. The Chinese miners are looking at c. $3-4k marginal cost to produce.
Bearing this in mind and just thinking logically; from a purely finance point of view, what a prudent mining company (btc or other) would do when planning production, is to hedge future production plans either partially or in full via futures markets or swap contracts. I have experience in this field as i used to do exactly this when working in finance for a coke and coal production company. If a company has committed to the investment of the capital required to produce the bitcoins (i.e. the miners) then they will short the futures market agressively, particulally when the futures prices are greatly above the cost of production in order to lock in gaurenteed gains. This has particular consiquenses when there is also other supply side issues like the mt Gox coins and demand side issues like the public losing interest due to dwindling prices.
It is reasonable to assume that there is a floor price which will be met in a market which is largely dictated by supply. Miners will contract their supply somewhat if the marginal cost then begins to exceed production.. simple economics therefore would suggest that there will be a self corrective mechanism which would keep the floor price around the cost of production which by all accounts appears to be $3-4k.
For this reason alone, this is a great place to have speculative bids in my opinion.
Another thing to consider is this SEC regulatory crack down which could bring down ICOs, altcoins etc. which will in turn bring Bitcoin down to some extent with it. So getting out now would be well-timed also. The situation with the SEC might be enough to sustain the 3-5k lows to allow MMs to really accumulate the bottom without pushing price up over a good few months.
This is my theory anyways. I'm not trading any of it btw. Too much of a pussy to risk losing any BTC.
Still, you could be very right. I just don't know. I respect your analysis and will be checking whatever you post. I will buy some more if the price gets to 3K but won't sell either.
Thanks for keeping us updated!
This tells me that we haven't see the capitulation yet...