Bitcoin: A Long Tern Market Analysis
Updated
Here i present an updated version of what was a very popular chart shared back in May of 2017, highlighting the market cycles bitcoin goes through, and how I thought we would see a c.20k top on the current run before a significant reversion. Please check this out in the attached.
I use that chart as my framework for BTC and this represents an update to that mainly due to request but also because I want to put out there advancement on the original idea, which ultimately proved to be so profitable.
Once again I illustrate the trading range progression, which BTC has maintained to date, and I believe will retain. This is mainly due to psychology of the market and the ultimate exhaustion and accumulation, which must occur. Im now calling out the different parabolic phases we have gone through. Its important to note that these phases, although shown on a logarithmic chart, will not continue in a linear fashion (while BTC is the asset which it is forging). The reason for this is that its easy to double a market cap when in its infancy but it gets increasingly difficult (or time consuming) to double price as market gains significant value.
I have introduced two elements to this chart which I believe to be very important..
i) The super guppy indicator illustrates shows us that historical breakdowns have signaled a breakdown into a new accumulation range, with the 200 EMA serving as an average floor price. I believe this to be hugely important in this current correction and should serve as a floor but may be front run to some extent. The 200 EMA is currently around $3800
ii) The BTC Halvening or whereby the Bitcoin protocol forces minting of new coins to halve is probably only secondary to fixed supply in being an economic influencer in the price of Bitcoin. As illustrated by the arrows, on face value, its clear that this has been a major influencer in igniting the new bull runs.
With these two factors in mind and having a minor reevaluation of the original chart’s outlying trajectory, I forecast the following scenarios A and B that are ultimately influenced by what this market has learned
In both instances the basic illustration shows another parabolic advance, either in one or two phases as we have seen historically. The lines would represent the bottom of the parabola rather than the top, i.e. these would be the bottom prices in the bull market runs.
Correction/Accumulation:
I expect the accumulation phase to occur largely in the 3.8k -5.8k range, below where the market cheerleaders currently are calling. The main reason for this is purely based upon historic market performance which is critical to this model, and because everyone thinks the bottom is in – meaning we probably have some way to go because its easy to sense its out of bias rather than logic.
Earliest I expect this period to end would be the end of 2018 and the latest could be towards the end of the second quarter 2019.
CONTINUED IN COMMENTS DUE TO CHARACTER CONSTRAINTS
I use that chart as my framework for BTC and this represents an update to that mainly due to request but also because I want to put out there advancement on the original idea, which ultimately proved to be so profitable.
Once again I illustrate the trading range progression, which BTC has maintained to date, and I believe will retain. This is mainly due to psychology of the market and the ultimate exhaustion and accumulation, which must occur. Im now calling out the different parabolic phases we have gone through. Its important to note that these phases, although shown on a logarithmic chart, will not continue in a linear fashion (while BTC is the asset which it is forging). The reason for this is that its easy to double a market cap when in its infancy but it gets increasingly difficult (or time consuming) to double price as market gains significant value.
I have introduced two elements to this chart which I believe to be very important..
i) The super guppy indicator illustrates shows us that historical breakdowns have signaled a breakdown into a new accumulation range, with the 200 EMA serving as an average floor price. I believe this to be hugely important in this current correction and should serve as a floor but may be front run to some extent. The 200 EMA is currently around $3800
ii) The BTC Halvening or whereby the Bitcoin protocol forces minting of new coins to halve is probably only secondary to fixed supply in being an economic influencer in the price of Bitcoin. As illustrated by the arrows, on face value, its clear that this has been a major influencer in igniting the new bull runs.
With these two factors in mind and having a minor reevaluation of the original chart’s outlying trajectory, I forecast the following scenarios A and B that are ultimately influenced by what this market has learned
In both instances the basic illustration shows another parabolic advance, either in one or two phases as we have seen historically. The lines would represent the bottom of the parabola rather than the top, i.e. these would be the bottom prices in the bull market runs.
Correction/Accumulation:
I expect the accumulation phase to occur largely in the 3.8k -5.8k range, below where the market cheerleaders currently are calling. The main reason for this is purely based upon historic market performance which is critical to this model, and because everyone thinks the bottom is in – meaning we probably have some way to go because its easy to sense its out of bias rather than logic.
Earliest I expect this period to end would be the end of 2018 and the latest could be towards the end of the second quarter 2019.
CONTINUED IN COMMENTS DUE TO CHARACTER CONSTRAINTS
Note
Sustained Parabolic Advance mk4a)
This is a best-case early scenario for me. This would assume that the market is aware of the impact on price and an advance would begin c.12 months ahead of the halvening. Miners will likely begin restricting supply on the basis the can sell later as scarcity increases and the risk premium on holding has reduced. A coupling of speculative demand in the market and a supply side restriction would push prices early than historically as there is now more savvy investors in the arena, as well as natural advancement of interest in crypto although organic growth in crypto will naturally have been affected by the bear market.
Fundamentally I could see an outcome of a Bitcoin price reacing out towards 100k but strongly suspect that will not be achieved due to investors starting to cash out before the psychological resistance. One thing to support 100k however, would be the linear regression mean suggests a 100k$ btc c. May/june 2020. (again see chart attached). Another realistic factor that could pull this forward would be an ETF announcement which would likely spark a much earlier hype cycle and could frankly completely change the outlook of this chart.
b)
This is a more likely scenario for me. Each previous parabolic advance has been less vertical in its trajectory for the reasons explained. Time is dictated by supply and organic adoption, so is largely predicable. Therefore unless the market is going to change fundamentally due to an early ETF inherently creating additional demand, or the market becoming wiser to the price cycles, I would favor this approach.
Here we would break the bear market in the same time frame but take longer to establish a full bear market which would be defined by the supply halvening in May 2020, which would signify the beginning rather than the end of the run, as presented in a). Due to the lengthy tme based base just below 10k, I would expect a slower move which would ultimately carry more weight behind it, with $100 – 150k being the expected top sometime in the second half 2021. I much prefer this outcome as we will have more development time behind the technology and we will have ‘been around’ for longer, something that is obviously important when discussing store of value asset qualities etc.
So that is it. Ill be making no more fundamental views of the world. I will update this model and let you know if ive capitulated on this idea, but as we stand today it’s got the most time behind it and more importantly, it dictates my personal strategy.. You must of corse do your own research and only take on investments within your own risk reward profile.
I full expect to be trolled for this work because people want moon lambo etc yesterday, however I can tell you first hand that well found patience in this market pays off and frankly if you cant wait up to 3 years to potentially 20-30x your investment, you need to go and take a reality check, because these are lifetime gains you could only normally dream of. Smart accumulation will pay dividends here.
Any way I hope you found this useful.
Best,
filbfilb
Note
So I picked up a bit of btc at 5.8k on Friday and since then we have pumped through $800. Can expect to see us have a run up from here but it would take a lot to convince me we are bullish. I tweet updates so I’ll try cross reference them here is I don’t post direct to TVtwitter.com/filbfilb/status/1013756832207302657?s=21
Note
Ive had a number of comments about what I think will happen with the ETF , primarily because if it were to be accepted / approved I have mentioned that I think that it will mean we have seen the bottom already. I played the previous ETF announcement very well (link attached) and I anticipate a similar level of relative hype could occur.
The situation isn’t hugely different to 2017 – we were in a state of consolidation having made new all-time highs followed by a large amount of China bans bitcoin -0.46% FUD.
We had a Head and shoulders pattern at the bottom, which we proceeded to break out of and realise the full measured move, following which there was an expected sell off and then a final panic speculative push to find new all-time highs at +40% from the breakout, which was subsequently fully retraced to the breakout.
Today we are presented with a shorter timeframe but with a Head and shoulders bottom. Should we break out of this, it would seem reasonable to me to expect us to realise the measured move of c.$7.5-7.7k, which I have been expecting as a mid-term upside for some time. This also coincides with the first level of horizontal resistance and the heavy level of diagonal resistance. As such I believe this area to be a good region to speculate for if we can break out of the Head and Shoulders with conviction Volume .
A similar move to the +40% as in prior year would take BTC -0.46% up towards 9.5k, but unlike last time we have fallen further and harder from our last experience of this hype so I would see this as a very stretched target given the time frame and the fact that we have more people active with short interest and the vehicles to deliver the shorts. It might be worth a look at this but it would all have to happen very fast. Possible but improbable.
On that actual decision itself, this Is the only thing which could change my mid-term view from being bearish . If it is approved, I have no doubt that we would see new all-time highs by the end of the year.
Failing that, however far the speculation runs, I would expect us to return to eactly where we are now at c. 6.7k.
This time, ironically the thing which is currently hurting us (the Futures ) could be what has legitimised the ETF decision to some extent.
The unwinding of short positions coupled with genuine speculation frenzy would be the sort of thing which helps with insane bull runs.
Either way, I still expect the bull run, its just a matter of when.
FILBFILB
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