That placement on the standard bubble roadmap posted earlier might be accurate. Although bubbles usually grow far bigger than expected, there are quite some reasons why this might finally end soon.
- Media attention was at an all-time high. Regional newspapers were running Bitcoin stories, papers in China were running daily Bitcoin stories. Metro announcement systems in Germany were showing news about Bitcoin. A friend of mine heard people talk about Bitcoin in the streets. By now everyone has heard about Bitcoin.
- Dollar volume and Bitcoin volume has subsided substantially across all exchanges.
- The latest boom upwards featured a 6 or 7 sigma event by going up 50% in a single day, that is, an event 6 to 7 times above the standard deviation of daily percentage change based on all daily data available. The likelihood of such a day are roughly 1 in 500,000,000 to 1 in 400,000,000,000 (rounded numbers). In a chart this looks like this, with the early part of Bitcoin history omitted:
Because I'm interested in bubbles and trade other, real markets anyway, I've got the same data on the 1980's gold bubble, the dot-com bubble, the South Sea bubble of the 1720's and a few others. Bitcoin looks and behaves a lot like them when they reached their highs. This craziness might go on for another month or so though, it’s almost impossible to get right, but the increasingly large swings in volatility are unsustainable and it’s only a matter of time before it spins out of control (December/January are good months for bubble pops; people and organizations tend to relocate funds for the new year).
This is also why I've killed my bubble portfolio. Yes. I’ve owned a bubble portfolio. It consisted of roughly 20 alt currencies and held a total value of about what I'd lose during a bad day of forex trading, meaning nothing I wasn't willing to lose anyway. It went up by roughly 780%, which is a windfall I didn't expect at all because I had written that money off as a potential loss the moment I threw it at some sketchy exchanges in Russia (BTC-E) and wherever the fuck Cryptsy is located.
I’ve found that alt currencies are pretty much leveraged Bitcoin. When Bitcoin goes up, the alts go up faster, when Bitcoin goes down, alts plunge faster. I've owned some pretty volatile shit back when I didn't know enough about trading not to do so (silver ETF's leveraged times 3, horrible amounts of leverage on Forex), but alt crypto's are the most insane stuff I've ever seen. Quarkcoin once was up 5000-6000% before plunging down again.
To anyone disappointed on ‘missing out’, don’t be. What you were missing out on is stress, doubt, and all sorts of risks. You can get hacked, the exchanges can get hacked, the exchanges can just disappear, the services that convert Bitcoins to money can (and do) stop working the moment a significant sell-off starts to protect themselves from capital loss, and if all of that bullshit isn’t enough, crypto currencies can just hurl up intestines and die, go to zero or multiply by 100 in terms of appreciation. Also, Bitcoin is horrible with transactions. I've had money stuck in transit for hours because Bitcoin refused to confirm my transaction. It's a fun ride on pocket change, but you don't ever want to experience the bullshit people who dumped their retirement fund into Bitcoin are going through. It's horrifying how stubborn people can be when they lose and keep losing money, just because they don't want to admit they made a mistake and were wrong.