What does bitcoin mania teach us about the Dow?

The phenomenal rise in the bitcoin was only beaten by the digital currency's spectacular crash. Should Dow traders take note? John C Burford surveys the charts for clues.

Bitcoin, the digital currency, was on the cover of the FT last week. It's a terrific example of how widespread attention and the mass media eventually pop' a price bubble.

Bitcoin's value rocketed just this year by many multiples, and on Wednesday, the market crashed by a stunning Fibonacci 62% in a couple of hours (the red bar on the right in the below chart).

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Bulls19%-16%39
Bears55%+26%30
Neutral26%-10%31

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.