Long Term Update: MtGox monthly chart

Monthly ChartFor the first time i show here a monthly chart, now that we have enough data since July 2010 when MtGox opened its “doors”. After a 9 months strong advance from 0.06$ to 31.91$ BTC/USD entered in a bear market that lasted 6 months down to 1.99$ in November 2011, since then we have seen a very strong rally and two accumulation phases spent at 5$ and 10-13$ up to January 2013. This year behaviour has been extraordinary with prices advancing from 13$ all the way up to 266$ that i consider it an  important top like the one seen in 2011. I don’t think that this year BTC/USD will go above 266$ again, what i expect now it is a mild correction.
Keep in mind that despite the massive negative money flow seen during the drop and record volume bitcoin is still well above 100$,because of this interesting divergence i don’t expect the same extreme correction happened in 2011; i’m more for a slow retracement with a final bottom above the 32$ 2011 top, and even above the recent 50$ double bottom.

Apart any considerations about volume activity there is also the fact that until mining power or network speed will not give signs of slowing down the price will not come down easily. In 2011 only in august the network speed started to fall and bitcoin crashed from 14$ to 2$ and even if now the network speed might slowdown and retrace a bit it is not excluded a flat phase of this market instead of a steep fall. It is interesting also that there are too many players out there waiting for a big drop to 30$ but the market isn’t here to satisfy all their desires and most of the time it follows its path and not what the masses expect.

Unlikely that there will be a repetition of 2011 “pump and dump” pattern but, just for your curiosity, it is easy to forecast the bottom, using a logarithmic scale and projecting the same extreme drop from this year top at 266$ the bottom should be around 18$.


12 thoughts on “Long Term Update: MtGox monthly chart

  1. > In 2011 only in august the network speed started to fall and bitcoin crashed…

    What’s exactly the relation between network speed and course? I assumed the logic is reverse: course started to fall -> people stopped investing in mining -> network speed dropped.

    1. there is a lag, mining speed topped 2 months later then the 2011 price top so if mining speed doesnt slowdown and drop we can’t say that we are in a bearish market or at least a pause in the long term uptrend. Same behaviour happened at the end of 2012 , mining speed dropped but then quickly reversed again, in the meantime we have had a consolidation phase from 10$ to 13$ but not a bear market.

    2. Andrea Chiavazza

      In less than three hours we are going to have one of the biggest increase (ever?) in difficulty: from 12153411 to 15616378.
      At present 25btc are mined every 7.7 minutes, as soon as the difficulty increases it will suddenly be every 10 minutes. This might be big enough to cause a noticeable price rise.
      Regarding the increase/decrease in hashrate: it all depends on whether the added/removed miners are hoarders or sell straight away to USD.
      In the next few months we are about to see a massive increase in miners due to BFL, Avalon and others delivering new batches of asics.
      Whether this new wave of miners will be hoarders or sellers could be an important factor.

      1. I agree with this assessment. I think as new ASICs come online, it will provide pricing support. It would not surprise me at all if Enky is completely wrong, and the linear upward curve we’ve seen in the Bitcoin market cap since February, continued on exactly the same trajectory.

        But Enky, I’m a little unclear on your prediction. You think long-term, coins will stay above $50, but in the final paragraph you seemed to contradict this?

      2. No, the last paragraph is just an exercise to see where it could be the next bottom if the same behaviour of 2011 will repeat this year.

  2. We already hit the bottom buddy. It was $50. You’re a little late to the party. The obvious projection was $18 or $33 but that time has passed. There’s so much more capital, ventures and plans around this now. Way too much to undervalue it like that. Bubbles burst and people panic and dispair, but that’s when it’s value is low or unrealized. We realized that it’s value already.

    1. As a side note to your comment what you think it’s a bottom in a monthly chart it is not, it could be a bottom on a SMALLER time frame like the daily chart. If the price from now on go up again for the rest of the year then NO correction took place on the monthly time frame, obviously. If you look my chart you will see that my moving average (red line) never reversed and this means that for now on the monthly time frame there is not any confirmed correction, thus you can’t say in advance that 50$ it’s a long term bottom for bitcoin, the last know long term botton it is still the one done at 2$ in Nov.2011.
      For the rest i agree with you, there is more capital around and interest in the currency compared to 2011 and this is why i’m skeptic it will fall back to the 20$ price zone; you should never say in this business “it’s impossible, it will never fall so much” because in 13 years of trading experience i learned the opposite:)

    2. That’s quite optimistic point of view. But if you mention fundamental factors, I think it would be fair also to point out the increasing efforts of US authorities to complicate BTC using. If they decide, they can effectively shut down bitcoin market in the US – and that could / would be a significant hit to BTC value (if not fatal).

      1. 3nrg

        Thanks as always Enky 😀 Just wanted to reply to Adam. Imo I don’t think the US government wants to shut down bitcoin as it solves a fundamental economic problem clearly stated in Satoshi’s paper. It would be foolish for a country in economic turmoil to ignore an innovative technology. Cracking down on criminals and cracking down on bitcoin are two very different things.

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