Talk About Volatility: Bitcoin Hits $2806, Then Plunges Nearly $500 to $2346 Before Stabilizing at $2568, up 4% on the Day

by SGT, SGT Report:

Well this Bitcoin thing is not for the faint of heart, particularly if you got in today for the first time at the new intraday all-time high of $2,806. Shortly thereafter the crypto cliff dived nearly $500 to $2,346 before bouncing back half way to $2,568. The grandaddy of cryptos finished up 4% on the day. One wonders if today’s action counts as fulfillment of Clif High’s web bot prediction of a huge correction in Bitcoin, before resuming its march to $10,000 and beyond. We kinda doubt it. More volatility is likely dead ahead.

Clif High’s web bot data has long predicted the current run up in Bitcoin, actually the current run to $2,806 over shot Clif’s prediction of around $2,300. At that point the web bot data was indicating a huge correction, possibly taking Bitcoin back down to $1,500 or even lower, before bouncing back to $2,300 and then on to $10,000 in coming years.

The web bot data also indicates a continuing run higher for Ethereum (ETH). Ethereum now enjoys the second largest market cap in the crypto currency space with $17 billion in total market value VS Bitcoin’s $40 billion. The interest in Ethereum has propelled the crypto 1,453% higher over the past year. During the same period, Bitcoin increased 453% in value. A who’s who of some of the world’s largest corporations are interested in the Ethereum blockchain.

Recall that in February JPMorgan, Intel, Microsoft and others formed a Blockchain Alliance. In total, some 30 companies announced the formation of the Enterprise Ethereum Alliance, which according to Zero Hedge “will create a standard version of the Ethereum software that businesses around the world can use to track data and financial contracts.”

Zero Hedge continues, for those who are new to Ethereum and are curious about the distinctions between that technology and bitcoin, below is a quick primer courtesy of CryptoCompare:

1. In Ethereum the block time is set to 14 to 15 seconds compared to Bitcoins 10 minutes. This allows for faster transaction times. Ethereum does this by using the Ghost protocol.

2. Ethereum has a slightly different economic model than Bitcoin – Bitcoin block rewards halve every 4 years whilst Ethereum releases the same amount of Ether each year ad infinitum.

3. Ethereum has a different method for costing transactions depending on their computational complexity, bandwidth use and storage needs. Bitcoin transactions compete equally with each other. This is called Gas in Ethereum and is limited per block whilst in Bitcoin, it is limited by the block size.

4. Ethereum has its own Turing complete internal code… a Turing-complete code means that given enough computing power and enough time… anything can be calculated. With Bitcoin, there is not this form of flexibility.

5. Ethereum was crowd funded whilst Bitcoin was released and early miners own most of the coins that will ever be mined. With Ethereum 50% of the coins will be owned by miners in year five.

6. Ethereum discourages centralised pool mining through its Ghost protocol rewarding stale blocks. There is no advantage to being in a pool in terms of block propagation.

7. Ethereum uses a memory hard hashing algorithm called Ethash that mitigates against the use of ASICS and encourages decentralised mining by individuals using their GPU’s.

Ethereum appears to be poised for big things long term, so perhaps the action in ETH more than just fly by night tulip bubble.

SILVER

Unfortunately for silver bugs, the web bot predictions have not been nearly as accurate for the white metal. The most manipulated commodity on earth is silver, and with billions of ounces of paper silver thrown at the market via the Comex every year, silver has been brutally tied down, unable to soar like the cryptos. It’s a bitter pill for precious metals investors, particularly since Bitcoin and Ethereum have soared only higher day after day for months. And even worse, the web bot data has indicated time and time again that silver was set to soar many times its current price of $17.08.  Time will tell, but we remain hopeful that one day silver will see a real world price north of $600, it’s a price that has come up in web bot data often, and one that could be perfectly plausible if and when the Comex and international bank manipulation of the precious metal is finally brought to an end.

Please share your thoughts below. What do you think is the near term and long term outlook for Bitcoin, Ethereum and silver? And while we’re at it, for anyone who is interested in LiteCoin and DASH, or any other cryptos, please give us your thoughts as well. This is an important economic sea change and story that will continue to evolve and unfold for years to come.

image credit: coindesk.com