Yesterday we wrote about the low volatility after Mt. Gox’s accounts were seized. The following graph from that article illustrates how we haven’t seen volatility this low on Mt. Gox since December of 2012.
Looking back to that December low, there was a clear consolidation phase before the major run-up. Notably, the broader consolidation at that time lasted several months. The same pattern occurred in mid-March 2013 around $45, with a tempered ramp before a consolidation, followed by an upward inflection in prices.
December 2012 price consolidation
March 2013 Price Consolidation
May 2013 Price Consolidation
Markets frequently see periods of low volatility and consolidation around a price level before making large moves higher. These consolidations help establish a foundation and confidence around a given price and burn off resistance sellers. There’s also another analogous situation unfolding: the current price level is roughly 50% of the peak high in April. The 2011 high saw consolidation around the 50% mark, at $14.
Not to be discounted in these considerations are the externalities adding to the current market dynamic. Headwinds for newcomers who may have used Dwolla to enter the market will slow inflow to the primary exchange, while tremendous momentum from new companies and the related growth in committed venture capital will drive positive underlying fundamentals.
buy baby buy!!
I’m looking forward to another spike. I only bought a few Bitcoins in April, so I wasn’t there for all of the rise and crash. I’d love to be a part of the next rise, but this time I’d assume that the “crash” would drop to a higher amount, not $70 like what happened last time.
Good article.
This is wishfull thinking par exellance. Nobody can predict a market by chart analysis. Anectotal evidence of two events in the past of a low liquid market should predict the future? Think about it again.
The past does not predict the future. having said that, I am still bullish on bitcoin and am sure it will go up.
After reading article I see comments calling him crazy but price is already doing what he says. $126 in article yesterday to $130 today with steeper slope.
Yer a wizard Harry!
In order to be statistical meaningful in any way, the analysis would need an assessment of all previous episodes of (well defined) low volatility, and the subsequent market movements.
Spotting patterns in data and attributing meaning to them in the absence of sceptical and statistical analysis is very ‘human’, but not necessarily very ‘helpful’.
Didn’t Mt get new hardware to prevent or greatly reduce denial of service attacks? Would this not be a better reason for recent stability? Chart predictions are dubious at best, and with something as small as Bitcoin, surely worse than useless. I haven’t decided to fully buy in now or wait until the inevitable full on attack by US govt, and use that shake out to buy even more.