A reader asked if I have any price targets for bitcoin. In my last (and only) post about bitcoin: What will replace bitcoin?, I pointed out how an unlimited number of different cryptocurrencies can be created. Then what is their value? There is now actually a service that lets you do just that: Coingen. Of course, everybody can also start a new search engine or social network, but that doesn’t mean that Google or Twitter will disappear.
So, will bitcoin remain the #1 cryptocurrency? I still think a 2nd or 3rd incarnation will take over after a few years. Google was not the first search engine and Facebook was not the first social network. They started a bit later and benefited from the mistakes that their predecessors had made.
As for bitcoin price targets, the technical situation is rather clear for the moment. Here is a long term weekly chart (click for larger image):
The long term up trend in bitcoin is still intact, but if the red trend line gets broken, then price action is likely to continue within the green channel. We are then likely to see it drop below $200 to meet with the bottom trend line.
On the daily chart we have an equally clear situation (click for larger image):
Since peaking in December 2013 bitcoins are stuck in a triangle formation, just like they did in the first half of 2013. But that doesn’t mean they will come out of it in the same way. In fact, by the principle of alternation they are more likely to come out of it in a different way. For example, a failed breakout to the upside followed by another steep decline. We will find out before the end of March.
Based on my key reversal system I get several major price targets. The current Top targets are at $2457 and $4246. The bottom targets are $431 and $183. I think we will see $431 or even $183 before possibly heading towards the higher targets.