BTC: Quantitative Analysis and Targets
Updated
BTC is looking fairly bearish. However, there is a huge bull case for BTC. In mapping this out (BTC-USD), BTC has traded extremely linearly and has experienced quite normal growth contrary to those who claim that BTC is over-valued. As an investment, BTC has actually grown much more healthily than some equities. I will show you BTCs linear/quadratic growth curve vs SPY and QQQ
Those bounces off that trendline (highlighted in green) for me are telling. They serve to normalize BTC's growth and return BTC to a health trading average for continued growth. You will notice how BTC tends to respect the line and not fall below whereas SPY falls below. Generally, when it falls below, it means that the growth has been too fast to be sustainable and the stock needs to regress backwards to regain normalcy and strength.
As a result, BTC is actually technically trading within the low range of its expected value at this point in BTCs life. Taking those charts and creating a time series model, BTC's, I suppose you could say, expected market value currently is around 47,000 USD, with an actual range of 39, 9826.92 to 47,201.92 USD.
What this means is that, while BTC currently seems to be selling off, this is kind of expected and I wouldn't necessarily advance a bearish case for BTC because it still operating within its expected growth parameters. Now the thing I don't like about BTC is that its not exactly a stock, its fairly novel and so it can be argued that crypto will at some point turn out to be a fad and completely useless. This would be, IMO, the only case against BTC at this point, because looking at it from a math perspective, BTC appears extremely healthy and actually has proved more of a stable investment that indices like SPY.
Which leads me to say, in terms of a bearish price target, you can expect for BTC to want to test around the 39000 range based on time series modelling.
A drop below 39,000 would be taking BTC away from its normal expected growth and placing it into the negative growth which is not really abnormal for growth stocks and thus not something I would panic about. I wouldn't start panicking unless BTC dropped below 25,000 to 28,000 which would be well beyond the parameters that a stock would drop outside of its normal trading range. Again BTC is novel. I have never done this type of analysis on crypto before, so all I have to compare this to is stocks, but I just find this all extremely interesting.
In terms of chart patterns, again, BTC is looking kind of bearish. See the chart below:
I think realistic short targets would be:
39,000
35,000
30,000
Break of 30,000 I would be inclined to ride this down to 25,000.
Realistic bullish targets would be:
45,000
47,000
50,000
These targets all fall within a normal trading pattern for BTC based on its trading history as of Sept 2014 (with the exception of a 25,000, that would be a concerning target if you are bullish on BTC).
That's it! My first crypto analysis! yay me :p.
Let me know if you have any questions, comments or criticisms below!
Thanks for reading!
Disclaimer: I am an equities trader. Aside from investing in some crypto and doing some crypto mining, I don't trade BTC. This analysis was just done for fun!
Those bounces off that trendline (highlighted in green) for me are telling. They serve to normalize BTC's growth and return BTC to a health trading average for continued growth. You will notice how BTC tends to respect the line and not fall below whereas SPY falls below. Generally, when it falls below, it means that the growth has been too fast to be sustainable and the stock needs to regress backwards to regain normalcy and strength.
As a result, BTC is actually technically trading within the low range of its expected value at this point in BTCs life. Taking those charts and creating a time series model, BTC's, I suppose you could say, expected market value currently is around 47,000 USD, with an actual range of 39, 9826.92 to 47,201.92 USD.
What this means is that, while BTC currently seems to be selling off, this is kind of expected and I wouldn't necessarily advance a bearish case for BTC because it still operating within its expected growth parameters. Now the thing I don't like about BTC is that its not exactly a stock, its fairly novel and so it can be argued that crypto will at some point turn out to be a fad and completely useless. This would be, IMO, the only case against BTC at this point, because looking at it from a math perspective, BTC appears extremely healthy and actually has proved more of a stable investment that indices like SPY.
Which leads me to say, in terms of a bearish price target, you can expect for BTC to want to test around the 39000 range based on time series modelling.
A drop below 39,000 would be taking BTC away from its normal expected growth and placing it into the negative growth which is not really abnormal for growth stocks and thus not something I would panic about. I wouldn't start panicking unless BTC dropped below 25,000 to 28,000 which would be well beyond the parameters that a stock would drop outside of its normal trading range. Again BTC is novel. I have never done this type of analysis on crypto before, so all I have to compare this to is stocks, but I just find this all extremely interesting.
In terms of chart patterns, again, BTC is looking kind of bearish. See the chart below:
I think realistic short targets would be:
39,000
35,000
30,000
Break of 30,000 I would be inclined to ride this down to 25,000.
Realistic bullish targets would be:
45,000
47,000
50,000
These targets all fall within a normal trading pattern for BTC based on its trading history as of Sept 2014 (with the exception of a 25,000, that would be a concerning target if you are bullish on BTC).
That's it! My first crypto analysis! yay me :p.
Let me know if you have any questions, comments or criticisms below!
Thanks for reading!
Disclaimer: I am an equities trader. Aside from investing in some crypto and doing some crypto mining, I don't trade BTC. This analysis was just done for fun!
Note
YESS!! I am loving that this has not fallen below 39000 ... yet. This is a great sign! As of right now, this is 100% respecting the math.
I am not saying that its not possible for this to fall below 39000 in the future, but I love this so far!
Trade safe everyone!!
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