The first chart below was posted on our Facebook page on November 27th 2013. Bitcoin was at its record highs around 1100-1200 back then, but we were warning you that it is already in corrective mode and a steep decline has to be expected.
In the days after, the virtual currency peaked higher twice, but maintained its corrective structure, so it was not the time to be a buyer, despite all the news about bitcoin’s sky-rocketing. The next chart shows those two tops and the steep crash that followed. We have to say that we warned you about it.
We’ve stated many times that, in our opinion, Bitcoin is a modern mania, just like The Tulip Mania during the 17th century. From an Elliott Wave point of view, manias are nothing more than extended fifth waves, caused by greed. There is nothing rational about them, so they often end with a crash, leading prices back to the level, where the extended 5th wave had started. In other words, the decline from 1240 to 600 was only the middle of the journey, prices were supposed to go even lower… And they did:
Prices sunk to the 100 mark, thus fulfilling the expectation to wipe out almost all of bitcoin’s glory. The question about the future of the virtual currency remains. In 1637 one single tulip bulb sold for more than 10 times the annual income of a skilled craftsman. After the end of that mania tulip bulbs never reached those highs again.
Charts by: www.tradingview.com