Mt Gox Bitcoins officially a mania. But are they done yet? The model might surprise you.

Here is the back link to my last post on the Mt Gox Bitcoin model.  The whole thread is worth your time to read if I do say so myself.  My model clearly predicted the possibility of a full mania retracement and my understanding of socioeconomics clearly pointed to government intervention as a likely reason.  Still, as I initially wrote, there is a lot to like about the Bitcoin model.  Governments really love electronic money because they own NSA supercomputers that can EASILY track all of it. 

In addition, if you need to generate a crisis, imagine how easy it would be to do if everyone used fake electronic money that you had ultimate control over.  Do you think the government is incapable of hacking Mt Gox and other exchanges "for the good of our chiiiiidren"??  Do you think they are above outright theft of these assets if their budget is cut?  THINK AGAIN, SHEEPLE!  It is exactly what I would do if I were a morals-free SOB like we have running this show.  It would be laughably easy to do.  I would show restraint as well.  I would take down the big player and then cause minor damage to a few others so that the sheeple would come running to me to add rules, legislation, oversight.  All of these things would add CONFIDENCE and that is what is needed to kick start the fake electronic money CON GAME.

I do not think digital currency is dead.  I think Mt Gox failure was the end of the beginning.  Does that mean I like it for myself?  Not for retirement savings, that is for sure.  But for speculation???  Well, we all have to have our entertainment, don't we.  What, pray tell, is the difference between between market speculation and betting on the ponies or the puppies or the series or the boxing or the football?  NONE.

And so I present to you my potentially surprising model of the Mt Gox bitcoins.  First of all, the mania is completed.  The chart has retraced to a level lower than where it began.  However, this does not look like the typical 5 wave down collapse to me.  In fact, it looks like a huge ending diagonal followed by an a-b-c retracement.  Then the shares bounced 300% into what I think is a new wave 1 up.  Then back down into a vee wave retracement.  If I were a gambling man I would buy Mt Gox Bitcons (sic) at this price and look for a violent 3rd wave up to perhaps the $500-$600 level.

That's right, I see a very possible inverted Owl in that chart, an inclining double bottom.  Manias are known to bounce hard after bottoming out.  The sentiment is hyper-negative with many like Gary North claiming the death of all electronic currencies.   I highly doubt that.  I think they are here to stay and eventually there will be a dollar crisis in which all of that much beloved green paper becomes nearly worthless.  This is all part of the grand plan anyway.  First they removed gold from the system and then silver.  And then all paper backed by gold and silver.  At some point they will remove the paper completely thus enabling 100% tracking of everything you think, say, do, purchase, and sell.  Again, it is what I would do if I were them so it is foolish to put it past them.  It is worse than foolish.  It is sheeple-ish.

In any case, this is a highly speculative chart model but what do you expect for something so ethereal and hard to value like digital currency?   It will be fun to see if my EW mojo is up to task on this one.