I consider parabolic fitting a smoothing algorithm with poor forecasting results in most cases, but apart from theoretical considerations let see in detail if parabolic smoothing and forecasting can help us finding a strong long term resistance for BTC/USD.
Parabolic rise is also called an accelerated growth phase, so after it breaks out from a long basing pattern (for bitcoin the 16 months prior January 2013), it starts a rapid growth phase with a series of ever-steepening, rising trend lines. The acceleration of bitcoin price appears as a parabolic curve on the price chart, and can happen that the final stage of the move will end with a leg that is virtually straight up with a buying climax last bar.
Parabolics almost always collapse, this is what worries me at the moment, sometimes there is a bit of topping followed by a precipitous decline, but other times the straight up move reverses into a straight down move of equal or greater magnitude.
What is doing now bitcoin is a good example of a parabolic rise in an early stage, using last 10 weeks i derived the formula of the current parabolic that bitcoin is following:
y = 1.81 * x2 – 11* x + 35 where x2 is x to the power of 2
As i explained many times i think that normally a swing can last up to 25-30 bars, in this case weeks, extrapolating the above formula i can compute a target (you can do the same just substitute “x” with the number of weeks).
With 25 weeks i’ve a target of 890$, using 20 weeks i’ve a reasonable 540$ target; i think that a long term top beetween 500$ and 1000$ is likely to happen, all depends if bitcoin will reach the wall street crooks or not:)
Jokes apart, if this weekly upswing will last 25 bars then the top is due next August/September 2013.
Bitcoin Trading Ideas, Analysis 
So you expect price will stay in uptrend with increasing volatility for a half year. Will it keep growing with paralyzed economy? I can’t deal with programmers services as nobody knows how much bitcoin will cost on completion. And also many good brains are paralyzed by greed. Why to work, If they may just sit farting and get income from bitcoin growth…
if it come to 900, i’m millionaire, and i will send you a bottle of dom perignon
Out of curiosity, how did parabolic fitting and the analysis you’ve done in the past work for the first large rise back in 2011?
^^^ owned.
not to sound crass but there’s no way bitcoin is going to continue at this rate of acceleration for another several weeks. technical analysis indicate aTop somewhere around $180, however the smart money already knows this, is likely to get out befor the price ever reaches is this amount. after that, the price is likely to drop to the $10 to $15 range by early to mid September. it could go lower. in the long term, it is likely to trend towards zero, however there may be one or two more roller coasters left in the ride. bitCoin is nothing but an intermediate transaction, a transaction halfway complete. the bit coin infrastructure has value in its Anonymity, however holding bitcoins has absolutely no purpose or value. the only value is in their actual use in making purchases. This is why their rise is purely speculative purchasing and holding. many will be badly burned.
Hi Enky,
what do you think is funding this exponential gorwth? Are people buyng more and more btc because they feel it is a good investment.
In other words, is there a real value behind btcs or is it just a Ponzi scheme?
Hi Enky,
My question was more on the philosophical side of things, I am really wondering what is it that people are buying when they get themselves 1 btc and they pay 140$ for it. Are they only buying the hope that someone else will be willing to buy them back at a higher price? Or do they really feeel that the btc system is a thriving economy and that they will be able to buy some goods with that btc one day?
If the reason is the first (hope to sell them at a higher price) then I think we are talking about a bubble, no matter how much words we wrap around it.
To clarify, my question to you, and to the other readers of this blog, is the following: Why do you buy bitcoins? Do you feel it is a system than can really be used as a goods/services trading platform in the future or do you only see it as a commodity whose price is growing fast?
Btw, I am under the impression that there is a significant tension around 145$, the rate has approached this value several times in the last week but never broke it. What do you think about it?
Cheers,
Emme
It seems to me that the two goals are quite contradictory: I would not like to use an unstable asset to buy things and services. If the btc value is rising I have no incentive to spend them. If it is falling I am encouraged to empty my btc wallet and I would have none left to buy stuff.
In fact I hope the next criptocurrency addresses this point. A slightly inflationary currency, perhaps, one that let miners produce coins continuously so that the inflation is ~2% per year, could be a good alternative (of course the scalability issues should also be addressed).
I don’t think it is gonna work out like that. For the past 3 days, BTC still strucks around 133 – 142$ … Hope it goes up a lot 😀
$191 today wow….
Hi. The formula of the current parabolic is wrong. You often mistaken with the upper limit. If you’re right about 20-25 weeks, price will be a lot more than 1000. How much more?
Thanks for your blog. I’m bitcoin miner and a trader the layman.
y = 1.81 * x2 – 11* x + 35, at 11 y=133$; at 14 y=236$.
But now not 14th week and the 11th. Right?
Or 500$-1000$ will reach in June.
y=1.9359*x^2-10.6598*x+35.5762
if we are in the 11th week now then y=152-186. But now 1 btc=255$-262$.
The difference is about 100$.
What am I doing wrong?