According to Coindesk.com, Bitcoin achieved a closing high of $3,018.55. This was +30% above our January 1, 2017 estimated upside target of $2,316.35, when Bitcoin was priced at $997.69. Now that Bitcoin has establish a new declining trend, we’ll provide our interpretation on the short-term moves in the price of Bitcoin and new upside/downside targets based on the $3,018.55 peak.
Our Take
On May 24, 2017, Bitcoin racked up a high of $2,476.30. Afterwards the price corrected to the low of $2,106.31, a decline of –14.94%. In our interpretation of the price movement, that decline of nearly –15% sets the precedent and tone for what Bitcoin holders are willing to accept when deciding if they should “buy the dip”, hold or sell.
Our guess is that as long as Bitcoin remains within the range of a decline of -15% to -20%, there will be little selling to push the price much lower. However, if Bitcoin manages to fall below that -20% price point ($2,414.85) then there is a good chance that the price will achieve the conservative downside target of $1,442.91. Below are all three of the downside targets based on the work of Edson Gould.
Upside/Downside Targets
As we write, Bitcoin is below the $2,414.85 price. What we’re looking for is follow-through to confirm our position on this matter. In this case, a sustained number of days below this price ($2,414.85) will put the recent speculators at a loss if they bought at or above the $2,476.30 level. Historically, there is a significant coincidence of price going parabolic and the most new participants getting involved. Usually, these new participants are not accustomed to holding a sizable loss on what was previously considered an “investment.”
The downside targets for Bitcoin are:
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$1,442.91 (conservative target)
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$1,224.55 (mid range target)
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$1,006.17 (extreme target)
In the past, we’ve given downside targets based on prices that were initially exceeded after a parabolic run. For example, on April 10, 2013, we called for a conservative downside target of $92.57 which was easily accomplished on April 16, 2013.
On November 19, 2013, after Bitcoin smashed to what we thought were amazing heights, we provided a conservative downside target of $384.83. Afterwards, Bitcoin jumped from above $600 to $1,147.25.
Our April 10, 2013 call of a downside target wasn’t all that special or prescient as the price was already in decline. However, in regards to the November 19, 2013 downside call, in spite of the sizable move to the upside for Bitcoin afterwards, it still managed to achieve our conservative downside target in the early second quarter of 2014. We’re not so much focused on the timing of the calls as much as what to expect in the aftermath of a parabolic jump. Again, the point being, parabolic moves are resolved with commensurate declines before correcting higher (if at all).
While we can’t expected that our downside targets will always be achieved, we are basing our view of the downside target on the general propensity of parabolic moves and how they are typically resolved. This does not rule out future upside targets but we do expect that there is a good chance that the current conservative downside target of $1,442 is possible.
Finally, based on the most recent peak price, we have the following upside targets before there is additional upside resistance:
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$3,246.56
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$4,328.74