Bitcoin And Tulip Crash Review

Dimon calls bitcoin ‘a fraud’ and may have delivered the biggest blow to the digital currency – MarketWatch

Bitcoin Crashes After Chinese Exchange Says It Will Halt Trading – Bloomberg

‘Dr Doom’ Faber says Trump is killing the dollar — and that’s why people are diving into bitcoin – MarketWatch

 

Those who have been speculating with Bitcoin are now experiencing a crash in its price. Bitcoin topped out on September 1st at $4950. In just a few weeks they say that Bitcoin shed $20 billion. $20b just disappeared in a puff of electronic smoke. At least when the Tulip bubble burst you could still eat the Tulip bulbs. In the book, “Extraordinary Popular Delusions and the Madness of Crowds”, they cover the Tulip Mania very well. At one time I tried to convert a single Tulip to grams of gold to see what a Tulip would be in todays prices, but I gave up after a few weeks of trying.

Tulips or Bitcoin, any bubble will burst when emotional people are involved, and right now the focus is on Bitcoin. The one year chart above does form a very nice Elliott Wave pattern with a potential 4th wave between $2000 and $3000.  At a previous 4th wave we would generally find support, but this is too optimistic, as crashes can go well below the previous 4th wave.

Before you know it, this Bitcoin chart will be back to being a flat line again. Some are betting that Bitcoin will still fall under $3000, but who says that Bitcoin will resume any bull market at all after it crashes?

On that September 1st peak the Gold/Bitcoin ratio hit 3.73:1. It took 3.73 gold ounces to buy one invisible Bitcoin. In early 2017 this ratio was compressed to  where it only took 1.14 gold ounces to buy one single Bitcoin. Could this happen again? Sure it can and it may stay like that forever.

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