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Message Subject Time to board the Bitcoin train
Poster Handle Midwest Skeptic
Post Content
High $19,065 (on weekly chart)
Current $3,900

Nearly all people who have bought Bitcoin since 9/17/2017 are UPSIDE DOWN on their purchase. There have only been 5 weeks since then that Bitcoin has traded lower than it's present price, and all of those have been in the last 2 months. To top it off those prices haven't been much lower than the present price (meaning not much of a gain has been possible).

Following the 90/10 rule, a mania object will lose lose 90% of it's gains once the mania ceases leaving only 10% of the gains, AT MOST. With that knowledge one can easily calculate where a solid basing area for Bitcoin MIGHT come into play.

Weekly price high $19,065, the old long term basing ares before the "Bubble" was in the $600 to $950 range, so let's call it $1000 for shits and grins, leaving a BUBBLE GAIN of $18,000+-. 90% of that is $16,200. 19,065 less $16,200 gives an indicated HIGHEST LEVEL potential pricing base area in the $2,850 range, but it could easily be lower. (That is still a solid $1000 below the current level). Bitcoin could easily go all the way back to it's old basing area of $600 to $900 before it hits a solid foundation.

If you analyze risk, even if one believes in Bitcoin, one should NOT invest in Bitcoin until it hits that potential base area $2,850 (preferably lower), otherwise your RISK for further declines is way too high on a "risk adjusted basis".


(to condense MANY years and a lot of research of my looking at MANY Manias: ... in my review of major "mania's" over the centuries I have noted that some go all the way to ZERO ... only those with real economic substance can really form a "Base" and SLOWLY start back up from there. To add further ... usually the collapse off of a bubble top takes 24 to 60 months, with most of those collapses bottoming in the 36 to 48 month range)
 Quoting: Midwest Skeptic


You call it "a mania" as if it is something not unique and in its adoptive infancy. It is a black hole that has hardly approached the assets that may convert to it. The on-ramps are just starting to form. I'm admittedly biased though and could be wrong.
 Quoting: syncro


Yep ... your are 100% RIGHT.

I looked, and still look, upon the huge run of Bitcoin as a BUBBLE.


Being a BUBBLE at that stage doesn't mean the Bubble Object doesn't have long term real potential, just that expectations got so far out of hand with reality that it became a typical MANIA, of which there have been many in history.

The Tulip Bubble in Europe is a good example ... the BUBBLE collapsed, but growing Tulips is still a very large REAL industry in the Netherlands. (ditto the silver bubble of the late 70's early 80's, the US farmland bubble of the late 70's, gold bubble of the early 80's, oil bubble of the early 1980's ... all of those are REAL items that have intrinsic value in the real economy but each went through a strong "Bubble Phase")

The same thing happened with the entire Tech Industry in the 1998-2000 time frame, with most of those bubble MANIA driven stocks eventually crashing down, though those with a solid business plan and that were actually were making money subsequently went gangbusters (ie: Amazon, Apple, etc.).

Tony Plummer had a good book on the psychology of the "investors" from a Crowd Psychology perspective which he wrote in the early 1990's, which is still in print. "The Psychology of Technical Analysis" Great book then, still a great book today. Mass behavior psychology does NOT change with time imo. fwiw ALL of Tony's books are worth a read if you are interested in Markets. Read them and then you MUST throw in Michael Lewis's first book (imo his best - much better than "The Big Short") "Liar's Poker" to see how the trading houses and the entire financial industry, DRIVES people to invest in crap, and you will start to see an understandable outline of how mania's develop and collapse.

Cryptos, with blockchain technology, probably have a HUGE future in front of them ... and Bitcoin MAY be part of that, but when coming off of a "Bubble" one needs to be cautious as to one's timing wrt investing in a fallen star.
 
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