What the fractal relationship inbetween bitcoin’s very first two bubbles might tell us about a third

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I began staring at bitcoin charts just over five years ago.

I’d already spent years staring at all sorts of charts as a derivatives trader so I thought I’d recount to you just why I thought that very first bitcoin chart I spotted in September two thousand eleven looked so interesting to me.

I liked to use Elliott Wave Theory when doing my own technical analysis — the idea that financial charts depict, as fractals, the repetition of humanity’s collective behaviour at any given scale, over any given timeframe.

The wisdom and madness of the crowd repeating over and over again.

Before I carry on, if you’re not familiar with the basic rules of Elliott Swings, click here for a brief goes up.

To help your reading of this post, note that I will label my “waves” as goes after:

Also note the final section in that article entitled “Criticism” — with which I absolutely agree. Predicting where the value of an asset sits within an Elliott Wave cycle in mature markets (such as equities, bonds and traditional commodities) can be very difficult indeed, especially where patterns may be taking years or even decades to form.

Elliott Flaps, more often than not, only become apparent in hindsight but, used correctly, they can be a useful implement to help a trader define their entry and exit points so as to skew risk vs prize in their favour.

Hitting the “sweet spot” of certain sub-waves can yield uncannily accurate results but repeated and consistent success in those mature markets is far from ensured, if possible at all.

However, this post is looking at bitcoin which has provided a much rarer chance for us to plot its market-driven value (virtually) since inception. Even most publicly traded companies have a hidden pre-IPO track record.

As such, we know exactly where we sit within any possible Elliott Wave cycle(s) as we’re still within touching distance of its very beginning.

Since Elliott documented his ideas in the 1930’s, many others have identified similar patterns of repetitive crowd behaviour — whether it be Jean-Paul Rodrigue’s Stages of a Bubble in markets….

…or, technology hype cycles as identified by Gartner.

Given that bitcoin is a nosey mix of both technology and tradable asset, it’s surely worth taking a look to see if these patterns apply to bitcoin from an Elliott Wave perspective.

So when I very first looked at that bitcoin chart in 2011, I found the textbook “Impulse Wave” that the world’s very first digital commodity had plotted during its inaugural bubble routine (inbetween June ’10 and June ’11) somewhat intriguing.

This was my thinking back then:

  1. I know the market-driven value of this asset since its inception (virtually)
  2. I know exactly where we sit within any forthcoming cycle (that may be predictable) within a timeframe that is actually useful to me (i.e. it won’t take my entire life to map out)
  3. This market has not yet become co-opted by insiders or central planners so the patterns it forms might truly reflect the mood of “the crowd” — for now at least
  4. This could, without doubt, crash and burn at any time
  5. Identically possible is the notion that the pattern plotted during that initial bubble could well (as Elliott Wave Theory proposes) repeat itself proportionately at a far greater scale(s)
  6. If so, clues as to where that larger fractal might take us could potentially be deduced from the price act so far

The chart below shows the Minor Sways (i), (ii), (iii), (iv) and (v) pattern that, in hindsight, formed a accomplish and valid Wave i bubble.

Note that Wave (v) was by far the longest of the three advancing sways — something that has previously been identified as common during physical commodity hype cycles.

As I said, five very typical Elliott Swings with the table below demonstrating the key peaks and troughs that made up what clearly looked like a bubble given that this market had began trading on Mt Gox at just $0.Ten a year earlier.

The notion here was that Wave i would itself potentially become the very first wave of a subsequent larger (and valid) five wave pattern over time.

But then, as the chart below shows, the market crashed violently — ultimately providing back some 95% of its gains (with 80–90% being identified by others such as Rodrigue as typical of bubbles) when it eventually made a low some five months later when it touched $1.90.

This crash, however, was (again in hindsight) simply the commence of a Wave ii correction (with Sways iii, iv and v possibly still to come if Elliott’s theory was to prove correct).

So, having stared at that chart for some considerable time it made sense to me to look at the relationships in scale inbetween Sways (i) and (iii) and Flaps (i) and (iv) during Wave i in order to see what a well formed larger analogue of this initial fractal might look like in terms of future peaks & troughs.

So, as highlighted in the table above, Wave (iii) ($8.90) had peaked at 8x Wave (i) ($1.Ten).

Therefore if Wave i had itself peaked at $31.90, a forthcoming Wave iii might well also peak at 8x Wave i :

So a forthcoming Wave v might well also peak at 29x Wave i:

In inbetween those two forthcoming advancing flaps one would then expect to see a Wave iv correction that would, as in the case of Wave (iv):

  1. abide by “the rules” and not submerge below the Wave i peak (i.e $31.90)
  2. perhaps also form a Five wave triangle that Elliott theorised as the pattern that most commonly formed during fourth wave corrections.

Taking all of that into account, the chart below shows harshly what I scribbled down some time in late two thousand eleven as my “prediction” for what, in a ideal world, might be about to pan out in this market over the next duo of years.

I was guessing “a duo of years” based on the time it had already taken Wave i and (an as yet unconfirmed and possibly incomplete) Wave ii to play out. There weren’t truly enough previous reference points to estimate forthcoming timeframes even tho’ those relationships do often exist — I therefore just assumed there might be some symmetry in terms of duration inbetween Swings ii and iv:

And then, like any sane person would, I chuckled to myself, screwed it up and threw in in the bin. A 200x comeback from the current price in two years? Yeah, right….

Not that I wasn’t still certain that this initial Elliott Wave pattern could repeat itself at a greater scale.

Just surely not that scale!

So, after downing a dose of reality, I re-drew the same five wave chart but, this time, with a predicted Wave v peaking at a more realistic $100 over the same two year timeframe.

Still a very high risk long shot but ya never know.

The rest, as they say, is history and, as is now clear for all to see, this is what did happen over those next two years.

Swings i, ii, iii, iv and v themselves forming what I’ve now labelled as the next (larger) Primary Degree Wave 1. Sound familiar?

And (with much self-kicking) this is the same chart with the rough copy of my original scribbled chart overlaid on top:

OK, so my timings were a little off. The duration of Swings ii & iii ended up being longer than predicted; Wave’s iv & v shorter than predicted; and the Wave iv correction deeper than my expected (typical) 50% retracement of Wave iii.

Even so, the form and price targets had proven to be pretty damn accurate all the same.

Elliott’s theory (and not I) had predicted that:

  • Wave iii might peak at $255.20 vs an actual $259.34 (almost exactly the predicted 8x Wave i);
  • Wave v might top at $925.Ten vs an actual $1,163 (an overshoot at 36x Wave i instead of the predicted 29x — I’ll let you determine if you think a 20% margin of error is acceptable at the peak of a bubble mania phase)
  • the low point of Wave iv ($50) wouldn’t encroach on the peak point of Wave i ($31.90) whilst, at the same time, forming a five wave triangle pattern

As noted above, after the June ’11 $31.90 Wave i peak, the market gave back 95% of its gains to make an eventual low at $1.90 in Nov ‘11.

Now that you’re very likely getting the string up of this, you’ll know that one possible assumption after the Nov ’13 Wave 1 bubble peaked at $1,163 might be, according to Elliott’s theory, that the market would again give back 95% of those gains.

As it turns out the Wave Two correction ultimately gave back a mere 87% when it made a low at $152.40 in January ’15 as shown on the chart below.

It was unlikely to know for sure that that would mark a significant turning point at the time but, in hindsight, I guess we can say that it was an improvement on 2011!

Still, it’s always fairly subjective in terms of where one determines to label the endpoint of a correction but by now we did have some clues as to where Wave Two might have been due to end — around June ’16 as labelled on the chart above (we’ll only ever be sure if this is true in distant hindsight, however).

So far I’ve only looked at the amplitudes of the flaps so as to identify peaks and troughs.

I mentioned earlier that, in terms of attempting to predict the durations (or wavelengths) of forthcoming swings, there weren’t indeed enough previous reference points back in 2011.

By now, however, we had a few and so I’ll quickly explain.

It took five months (after the June ’11 Wave i bubble popped) for the market to hit a low at $1.90.

After an initial bounce to

$7.20 the market lodged down and dangled around at just under $Five.00 until May ’12. It was the break up through that resistance (11 months after the June ’11 peak) that felt significant to me at the time which is why I labelled that as the end of Wave ii.

Wave iii then peaked at $259.34 in early April ‘13.

So the time inbetween the Wave ii low and the Wave iii peak was

Prompt forward to the popping of the Nov ’13 bubble peak ($1,163).

This time it took 13.Five months to reach what I’ve labelled as the Wave Two low in Jan ’15 at $152.40 (or Two.7x the Five months it took for Wave ii to make its low).

So let’s use the factor of Two.7 to look at future wavelengths (durations).

If Wave ii lasted eleven months, perhaps Wave Two would last 30 months (11 x Two.7).

That would take us from the late Nov ’13 peak through to June ’16.

As it turned out, the period inbetween Nov ’13 to the Wave Two low in Jan ’15 and then through to June ’16 displayed similar price act to that which occurred during Wave ii inbetween June ’11 and May ’12 — i.e an initial strong bounce from the low point (this time to

$500 then consolidating at

$400) before violating out to the upside just before the two thousand sixteen block prize halving in July ‘16.

It’s certainly slightly arbitrary but it’s the only clue we have so the table below shows what that Two.7 factor might tell us about any forthcoming wavelengths and the timings of future peaks for this current Primary Degree Cycle.

We’ll come back to this later….

However, as we now embark to flirt with the Wave 1 high (in USD terms at least — most other currencies have already exceeded it) we can begin to postulate that Wave Trio might have commenced in June ’16 on its merry march upwards (albeit we’d want to see that old high surpassed as an initial confirmation).

Note for reference that, when each of the Wave (i) and Wave i peaks were subsequently breached, those prices were never touched again.

Only time will tell if a breach of the Wave 1 peak supplies a similar result.

Just for comparison’s sake at this point:

Bitcoin chart on 4th Jan ’17 as we head back towards the Wave 1 peak

And here’s what a bitcoin chart looked like just before we breached the Wave i peak in late Feb ‘13.

Edit: Writing this post whilst the bitcoin price has been so volatile this week ain’t effortless! As of this morning (6th Jan) we’ve had a very strong two day sell off when the market failed to take out the previous $1163 high. We witnessed very similar price activity in Feb ’13 as the market got back to within a whisker of its two thousand eleven all time high at $31.90 before correcting sharply but then taking it out at a 2nd attempt.

Now, ultimately, let’s get to the crux of what this (hopefully not too) rambling post might tell us about bitcoin’s next bubble — IF that bubble materialises at all.

Of course, the correlations I’ve highlighted may have just been unspoiled coincidence.

Furthermore, without that original scribbled chart to validate my two thousand eleven thoughts it’s harsh for me to prove to you that I’m not simply surmising this analysis in retrospect. No matter indeed as the resulting numbers are there in black and white and you can click here to get a hint at my previous thinking in my last post on the subject in May ‘13.

Bitcoin may well sustain and grow and, indeed, proceed plotting valid Elliott Wave forms that bear little resemblance to the two I’ve identified here.

There is, of course, no assure that those patterns will repeat again at a grander scale — recall that during bubbles #1 and #Two, and unlike today, there was virtually no capacity to brief the market at any of the exchanges to exert any counter pressure as the bulls ran wild.

Also, bitcoin’s ongoing and unresolved scaling issues have so far been left at the door in this latest run up and the outcome of that remains to be seen.

And, without doubt, bitcoin could still just as lightly crash and burn as has been predicted one hundred nineteen times already — consigned to history along with this post.

But, just for laughs, and so you can get back to doing something useful, let’s stick with it and see what those previous peaks and troughs might just predict today.

As I’m sure you’ve now guessed, the maths are fairly elementary.

In brief, we’re simply looking for another larger fractal of our original Flaps (i), (ii), (iii), (iv) and (v) that formed the original 2010–11 bubble.

Our original Wave (i) peaked at $1.Ten

Our eventual Wave 1 peaked at (an almost exact three orders of magnitude greater) $1,163.

So will our forthcoming (?) Swings Trio, Four, and Five simply also be three orders of magnitude greater in scale than Swings (i), (ii), (iii), (iv) and (v) and will the wavelengths I projected earlier be relevant too?

The previous peaks gave us an almost exact prediction of Wave iii reaching

$255 whilst providing us a 20% overshoot on on the predicted $925 target when Wave v peaked at $1,163.

That gives us the plain outcome that:

Or £1163 x8 = $9,304

And Wave Five might again, look to reach a price at 29x Wave 1.

Or £1163 x29 = $33,727 (+/- 20%)

And, eventually, in inbetween those two advancing flaps we might again see a Wave Four correction, that, if analogous to Wave i in 2011, corrects back down to around $Five,500, possibly by forming yet another Five wave triangle pattern, before a subsequent Wave Five mania commences.

My scribbled chart this time looks like this:

And that, intrepid reader, would finish our fresh Cycle Degree Wave I before — you guessed it — crashing again, providing back 80–90% of its gains as we progress through Cycle Degree Sways II, III, IV and V over the course of many, many years as wavelengths broaden whilst amplitudes increase in size.

Of course. Bubbles and hype-cycles always are (in hindsight).

If it ever gets to that stage the market will no doubt begin to behave much like any other maturing market with far more outside (and inwards) influences to truly reflect “the crowd” with predictions becoming firmer and firmer.

I’m simply drawing past patterns to your attention and, as any good disclaimer should say:

Past spectacle is not an indicator of future outcomes.

These are only the opinions of the author and do not constitute investment advice.

Only invest what you can afford to lose as your investments can go down as well as up (or more often than not, down as well as down).

It’s just for laughs…

Formerly a derivatives trader for twenty years, I’ve been organising the UK’s largest bitcoin/blockchain meetup group, Coinscrum, since 2012.

What the fractal relationship inbetween bitcoin’s very first two bubbles might tell us about a third

Без кейворда

I commenced staring at bitcoin charts just over five years ago.

I’d already spent years staring at all sorts of charts as a derivatives trader so I thought I’d recount to you just why I thought that very first bitcoin chart I spotted in September two thousand eleven looked so interesting to me.

I liked to use Elliott Wave Theory when doing my own technical analysis — the idea that financial charts depict, as fractals, the repetition of humanity’s collective behaviour at any given scale, over any given timeframe.

The wisdom and madness of the crowd repeating over and over again.

Before I carry on, if you’re not familiar with the basic rules of Elliott Flaps, click here for a brief goes up.

To help your reading of this post, note that I will label my “waves” as goes after:

Also note the final section in that article entitled “Criticism” — with which I absolutely agree. Predicting where the value of an asset sits within an Elliott Wave cycle in mature markets (such as equities, bonds and traditional commodities) can be very difficult indeed, especially where patterns may be taking years or even decades to form.

Elliott Flaps, more often than not, only become apparent in hindsight but, used correctly, they can be a useful device to help a trader define their entry and exit points so as to skew risk vs prize in their favour.

Hitting the “sweet spot” of certain sub-waves can yield uncannily accurate results but repeated and consistent success in those mature markets is far from ensured, if possible at all.

However, this post is looking at bitcoin which has provided a much rarer chance for us to plot its market-driven value (virtually) since inception. Even most publicly traded companies have a hidden pre-IPO track record.

As such, we know exactly where we sit within any possible Elliott Wave cycle(s) as we’re still within touching distance of its very beginning.

Since Elliott documented his ideas in the 1930’s, many others have identified similar patterns of repetitive crowd behaviour — whether it be Jean-Paul Rodrigue’s Stages of a Bubble in markets….

…or, technology hype cycles as identified by Gartner.

Given that bitcoin is a nosey mix of both technology and tradable asset, it’s surely worth taking a look to see if these patterns apply to bitcoin from an Elliott Wave perspective.

So when I very first looked at that bitcoin chart in 2011, I found the textbook “Impulse Wave” that the world’s very first digital commodity had plotted during its inaugural bubble routine (inbetween June ’10 and June ’11) somewhat intriguing.

This was my thinking back then:

  1. I know the market-driven value of this asset since its inception (virtually)
  2. I know exactly where we sit within any forthcoming cycle (that may be predictable) within a timeframe that is actually useful to me (i.e. it won’t take my entire life to map out)
  3. This market has not yet become co-opted by insiders or central planners so the patterns it forms might truly reflect the mood of “the crowd” — for now at least
  4. This could, without doubt, crash and burn at any time
  5. Identically possible is the notion that the pattern plotted during that initial bubble could well (as Elliott Wave Theory proposes) repeat itself proportionately at a far greater scale(s)
  6. If so, clues as to where that larger fractal might take us could potentially be deduced from the price act so far

The chart below shows the Minor Sways (i), (ii), (iii), (iv) and (v) pattern that, in hindsight, formed a finish and valid Wave i bubble.

Note that Wave (v) was by far the longest of the three advancing flaps — something that has previously been identified as common during physical commodity hype cycles.

As I said, five very typical Elliott Flaps with the table below displaying the key peaks and troughs that made up what clearly looked like a bubble given that this market had commenced trading on Mt Gox at just $0.Ten a year earlier.

The notion here was that Wave i would itself potentially become the very first wave of a subsequent larger (and valid) five wave pattern over time.

But then, as the chart below shows, the market crashed violently — ultimately providing back some 95% of its gains (with 80–90% being identified by others such as Rodrigue as typical of bubbles) when it eventually made a low some five months later when it touched $1.90.

This crash, however, was (again in hindsight) simply the begin of a Wave ii correction (with Swings iii, iv and v possibly still to come if Elliott’s theory was to prove correct).

So, having stared at that chart for some considerable time it made sense to me to look at the relationships in scale inbetween Swings (i) and (iii) and Swings (i) and (iv) during Wave i in order to see what a well formed larger analogue of this initial fractal might look like in terms of future peaks & troughs.

So, as highlighted in the table above, Wave (iii) ($8.90) had peaked at 8x Wave (i) ($1.Ten).

Therefore if Wave i had itself peaked at $31.90, a forthcoming Wave iii might well also peak at 8x Wave i :

So a forthcoming Wave v might well also peak at 29x Wave i:

In inbetween those two forthcoming advancing swings one would then expect to see a Wave iv correction that would, as in the case of Wave (iv):

  1. abide by “the rules” and not drown below the Wave i peak (i.e $31.90)
  2. perhaps also form a Five wave triangle that Elliott theorised as the pattern that most commonly formed during fourth wave corrections.

Taking all of that into account, the chart below shows toughly what I scribbled down some time in late two thousand eleven as my “prediction” for what, in a ideal world, might be about to pan out in this market over the next duo of years.

I was guessing “a duo of years” based on the time it had already taken Wave i and (an as yet unconfirmed and possibly incomplete) Wave ii to play out. There weren’t indeed enough previous reference points to estimate forthcoming timeframes even however those relationships do often exist — I therefore just assumed there might be some symmetry in terms of duration inbetween Swings ii and iv:

And then, like any sane person would, I chuckled to myself, screwed it up and threw in in the bin. A 200x comeback from the current price in two years? Yeah, right….

Not that I wasn’t still certain that this initial Elliott Wave pattern could repeat itself at a greater scale.

Just surely not that scale!

So, after downing a dose of reality, I re-drew the same five wave chart but, this time, with a predicted Wave v peaking at a more realistic $100 over the same two year timeframe.

Still a very high risk long shot but ya never know.

The rest, as they say, is history and, as is now clear for all to see, this is what did happen over those next two years.

Sways i, ii, iii, iv and v themselves forming what I’ve now labelled as the next (larger) Primary Degree Wave 1. Sound familiar?

And (with much self-kicking) this is the same chart with the rough copy of my original scribbled chart overlaid on top:

OK, so my timings were a little off. The duration of Flaps ii & iii ended up being longer than predicted; Wave’s iv & v shorter than predicted; and the Wave iv correction deeper than my expected (typical) 50% retracement of Wave iii.

Even so, the form and price targets had proven to be pretty damn accurate all the same.

Elliott’s theory (and not I) had predicted that:

  • Wave iii might peak at $255.20 vs an actual $259.34 (almost exactly the predicted 8x Wave i);
  • Wave v might top at $925.Ten vs an actual $1,163 (an overshoot at 36x Wave i instead of the predicted 29x — I’ll let you determine if you think a 20% margin of error is acceptable at the peak of a bubble mania phase)
  • the low point of Wave iv ($50) wouldn’t encroach on the peak point of Wave i ($31.90) whilst, at the same time, forming a five wave triangle pattern

As noted above, after the June ’11 $31.90 Wave i peak, the market gave back 95% of its gains to make an eventual low at $1.90 in Nov ‘11.

Now that you’re very likely getting the dangle of this, you’ll know that one possible assumption after the Nov ’13 Wave 1 bubble peaked at $1,163 might be, according to Elliott’s theory, that the market would again give back 95% of those gains.

As it turns out the Wave Two correction ultimately gave back a mere 87% when it made a low at $152.40 in January ’15 as shown on the chart below.

It was unlikely to know for sure that that would mark a significant turning point at the time but, in hindsight, I guess we can say that it was an improvement on 2011!

Still, it’s always fairly subjective in terms of where one determines to label the endpoint of a correction but by now we did have some clues as to where Wave Two might have been due to end — around June ’16 as labelled on the chart above (we’ll only ever be sure if this is true in distant hindsight, however).

So far I’ve only looked at the amplitudes of the flaps so as to identify peaks and troughs.

I mentioned earlier that, in terms of attempting to predict the durations (or wavelengths) of forthcoming sways, there weren’t truly enough previous reference points back in 2011.

By now, however, we had a few and so I’ll quickly explain.

It took five months (after the June ’11 Wave i bubble popped) for the market to hit a low at $1.90.

After an initial bounce to

$7.20 the market lodged down and strung up around at just under $Five.00 until May ’12. It was the break up through that resistance (11 months after the June ’11 peak) that felt significant to me at the time which is why I labelled that as the end of Wave ii.

Wave iii then peaked at $259.34 in early April ‘13.

So the time inbetween the Wave ii low and the Wave iii peak was

Quick forward to the popping of the Nov ’13 bubble peak ($1,163).

This time it took 13.Five months to reach what I’ve labelled as the Wave Two low in Jan ’15 at $152.40 (or Two.7x the Five months it took for Wave ii to make its low).

So let’s use the factor of Two.7 to look at future wavelengths (durations).

If Wave ii lasted eleven months, perhaps Wave Two would last 30 months (11 x Two.7).

That would take us from the late Nov ’13 peak through to June ’16.

As it turned out, the period inbetween Nov ’13 to the Wave Two low in Jan ’15 and then through to June ’16 displayed similar price activity to that which occurred during Wave ii inbetween June ’11 and May ’12 — i.e an initial strong bounce from the low point (this time to

$500 then consolidating at

$400) before violating out to the upside just before the two thousand sixteen block prize halving in July ‘16.

It’s certainly slightly arbitrary but it’s the only clue we have so the table below shows what that Two.7 factor might tell us about any forthcoming wavelengths and the timings of future peaks for this current Primary Degree Cycle.

We’ll come back to this later….

However, as we now embark to flirt with the Wave 1 high (in USD terms at least — most other currencies have already exceeded it) we can begin to postulate that Wave Three might have commenced in June ’16 on its merry march upwards (albeit we’d want to see that old high surpassed as an initial confirmation).

Note for reference that, when each of the Wave (i) and Wave i peaks were subsequently breached, those prices were never touched again.

Only time will tell if a breach of the Wave 1 peak supplies a similar result.

Just for comparison’s sake at this point:

Bitcoin chart on 4th Jan ’17 as we head back towards the Wave 1 peak

And here’s what a bitcoin chart looked like just before we breached the Wave i peak in late Feb ‘13.

Edit: Writing this post whilst the bitcoin price has been so volatile this week ain’t effortless! As of this morning (6th Jan) we’ve had a very strong two day sell off when the market failed to take out the previous $1163 high. We spotted very similar price act in Feb ’13 as the market got back to within a whisker of its two thousand eleven all time high at $31.90 before correcting sharply but then taking it out at a 2nd attempt.

Now, ultimately, let’s get to the crux of what this (hopefully not too) rambling post might tell us about bitcoin’s next bubble — IF that bubble materialises at all.

Of course, the correlations I’ve highlighted may have just been unspoiled coincidence.

Furthermore, without that original scribbled chart to validate my two thousand eleven thoughts it’s rough for me to prove to you that I’m not simply surmising this analysis in retrospect. No matter truly as the resulting numbers are there in black and white and you can click here to get a hint at my previous thinking in my last post on the subject in May ‘13.

Bitcoin may well sustain and grow and, indeed, proceed plotting valid Elliott Wave forms that bear little resemblance to the two I’ve identified here.

There is, of course, no ensure that those patterns will repeat again at a grander scale — recall that during bubbles #1 and #Two, and unlike today, there was virtually no capacity to brief the market at any of the exchanges to exert any counter pressure as the bulls ran wild.

Also, bitcoin’s ongoing and unresolved scaling issues have so far been left at the door in this latest run up and the outcome of that remains to be seen.

And, without doubt, bitcoin could still just as lightly crash and burn as has been predicted one hundred nineteen times already — consigned to history along with this post.

But, just for laughs, and so you can get back to doing something useful, let’s stick with it and see what those previous peaks and troughs might just predict today.

As I’m sure you’ve now guessed, the maths are fairly plain.

In brief, we’re simply looking for another larger fractal of our original Flaps (i), (ii), (iii), (iv) and (v) that formed the original 2010–11 bubble.

Our original Wave (i) peaked at $1.Ten

Our eventual Wave 1 peaked at (an almost exact three orders of magnitude greater) $1,163.

So will our forthcoming (?) Flaps Three, Four, and Five simply also be three orders of magnitude greater in scale than Swings (i), (ii), (iii), (iv) and (v) and will the wavelengths I projected earlier be relevant too?

The previous peaks gave us an almost exact prediction of Wave iii reaching

$255 whilst providing us a 20% overshoot on on the predicted $925 target when Wave v peaked at $1,163.

That gives us the elementary outcome that:

Or £1163 x8 = $9,304

And Wave Five might again, look to reach a price at 29x Wave 1.

Or £1163 x29 = $33,727 (+/- 20%)

And, ultimately, in inbetween those two advancing sways we might again see a Wave Four correction, that, if analogous to Wave i in 2011, corrects back down to around $Five,500, possibly by forming yet another Five wave triangle pattern, before a subsequent Wave Five mania embarks.

My scribbled chart this time looks like this:

And that, intrepid reader, would finish our fresh Cycle Degree Wave I before — you guessed it — crashing again, providing back 80–90% of its gains as we progress through Cycle Degree Flaps II, III, IV and V over the course of many, many years as wavelengths broaden whilst amplitudes increase in size.

Of course. Bubbles and hype-cycles always are (in hindsight).

If it ever gets to that stage the market will no doubt begin to behave much like any other maturing market with far more outside (and inwards) influences to truly reflect “the crowd” with predictions becoming firmer and tighter.

I’m simply drawing past patterns to your attention and, as any good disclaimer should say:

Past spectacle is not an indicator of future outcomes.

These are only the opinions of the author and do not constitute investment advice.

Only invest what you can afford to lose as your investments can go down as well as up (or more often than not, down as well as down).

It’s just for laughs…

Formerly a derivatives trader for twenty years, I’ve been organising the UK’s largest bitcoin/blockchain meetup group, Coinscrum, since 2012.

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