Bitcoin Bubble Explanation
As I was thinking about Bitcoins and the mania going on and how much money I could make something struck me that sent chills down my spine. A few months ago when talking to my Dad about the tech bubble and how no one saw it he told me how everyone was talking about how the internet would
change the world forever. I told myself if I ever hear
change the world to step back and pause. Well sound familiar? The internet would change the world forever but it was not ready yet and certainly not at that price. So I found this chart showing what a classic bubble looks like.
http://i.imgur.com/ag4I6or.jpgThis makes a lot of sense doesnt it? Lets look at a 2 month chart of the Bitcoin price.
http://i.imgur.com/u4RkU8N.pngThis looks very similar. Lets put a SMA of 2 to smooth the line.
http://i.imgur.com/Tp91A5x.pnghttp://i.imgur.com/ag4I6or.jpgThis looks eerily similar. If the fork error never happened it would look almost identical. The new media attention and enthusiasm people have match up too. The sell off from the fork error isnt perfectly matched timing wise but it satisfies the need for one just fine.
Yes people brought this chart up on the run to $50 but it never quite had a sell off and the Cyprus bank bailout reset the run. To me it looks like were right at enthusiasm. My future predictions. Run up to lower $200s heck even mid $200s then sell of all the way to the $30s recover to $40s quickly, then slowly move to $50. Yes I believe the Bitcoin will change the world. It is not ready
yet. Normal valuation techniques go out the window with Bitcoin but logically thinking What can I do with a Bitcoin today? returns hold it for the future when it is used in commerce and cost more to buy. Btw interesting fact during the Tulip mania there was no short selling allowed. Shorting brings some balance to the market and slows it down. With Bitcoins I cant go to Mt.Gox and say short Bitcoins please. For you current shorters that could very well be proven right in the end but not before Bitcoin $250
The market can stay irrational longer than you can stay solvent.-some smart guy.
Edit: I'm thinking now a Dollar price top might be too hard to figure out so listening to rhetoric might be a better way.
Edit2: Many more news outlets are talking about Bitcoin. Perhaps were are still only in the media attention phase.
