GaiusBaltar
Long

Russian Doll: five nested cup and handle pattern

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
657 2 10
Five nested cup and handle patterns are drawn in red, with the largest (outermost) beginning in late 2013 and ending early 2017. I am calling this a "Russian Doll" configuration, even though I am not aware of this name having been applied to cup and handles before. Since one cup and handle is considered a bullish indicator, for the sake of this idea, I am interpreting five cup and handles as being exceptionally bullish . This suggests that the months ahead, or perhaps the rest of 2017, could turn out to be a repeat of the second half of 2013, which saw a nearly 10-fold rise in bitcoin             price.

In terms of Elliott Waves , this idea sees the peak in November 2013 as the end of Grand Supercycle I, with Grand Supercycle ending January 2015. We are now in the midst of Grand Supercycle III             .

Today, the fundamentals are much stronger than they were in 2013. The Japanese legislature recently amended their Banking Act to recognize bitcoin             and other cryptocurrencies as being legal forms of payment. Now that the most likely culprit behind the 2-year deadlock in the scaling debate (I'm talking about AsicBOOST) has been discovered, it is only a matter of time before the community finds a way around this obstacle. SegWit is soon to be tested on Litecoin, and multiple other scaling solutions are also being considered (extended blocks). The world is slowly waking up to the realization that the biggest question for Bitcoin             is not "if" but "when."

Disclaimer: Take my T.A. with a huuuuuuuge grain of salt. I am very much a newbie when it comes to technical analysis . I know a lot more about fundamental analysis for cryptocurrency than I do about technical analysis .
Comment: Edit: I meant to say Grand Supercycle II ending January 2015.
Trade active: Looks like my analysis has played out pretty well so far. Well enough that I'm renaming my pattern the "cup and handle, energized by 5 shots of espresso."

Since my original analysis, fundamentals have improved significantly with the adoption of SegWit by bitcoin. Most importantly though, there seem to be many institutional investors who are interested / eager to get into bitcoin, but haven't yet figured out the legal or technical issues. Many of them will probably do so in the coming months and will be the fuel of Grand Supercycle III which we are in the midst of right now. Central banks are not yet making large purchases; I conjecture they will fuel Grand Supercycle V, still years away.

I'm sticking with my original projection of a 10x increase from the price on May 3, which should take us over $10,000. That's probably months away, although in bull runs bitcoin has been known to double on the order of weeks rather than months. $10k may be conservative.
Interesting take on things... but... I would have put the beginning of the second largest cup at the spike to 710, on around march 4, 2014. This would move the largest cups start point to replace the other, and leave us with a sixth cup. The handle of the sixth would appear to be about to form, meaning a drop to the 1150-1200 range.

That said, I have most of my buy orders at around 850, and expect them to be filled soon enough.
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GaiusBaltar JasonCampbell
@JasonCampbell, Good point about march 4, 2014, I can see that. Although that would make for a bigger difference between the beginning and the end of that cup -- start at 710, end at 1120.

One point I forgot to mention is that there is a general trend for the percentage retraced by the handles to decrease from inner to outer cups. Although perhaps we could have a drop to 850 or so as part of a wave 2 correction ...
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