BITCOIN The Cycles Halving Model times the bottom this SeptemberThis analysis is an update to a model that I've been working on for years and as it shows great accuracy at timing tops and bottoms, I frequently update here on TradingView (something I started on reddit though). Last time I published an analysis on this model was almost 1 year ago (June 11 2021):
As you see, Cycle 3 (orange trend-line) did diverge again from Cycle 2 (green trend-line) and priced its top considerably lower, which is in line with the Theory of Diminishing returns. However an update had to be made on this in order to more accurately display and project the (future) tops. Notice that this is a Halving centered approach. Every Cycle is measured before and after its respective Halving. E.g. Cycle 1 (blue trend-line) starts from the start of the data set and ends on Halving 2, i.e. displaying the price action centered around Halving 1. for comparison purposes, I've centered all on Halving 3 (the most recent one). You can find a more detailed explanation on the methodology on the previous issue of this model (chart above).
** Projecting Cycle Tops and Bottoms **
As you see a more accurate estimate of Cycle Tops is measuring the Fibonacci time extensions progressively starting from the January 2009 Genesis Block (0.0 Fib) and Halving 1 (1.0 Fib). The first one is the 1.3 Fib ext, which is around the Top of Cycle 1. Then Cycle 2 peaked around the 2.3 Fib ext and remarkably, Cycle 3 (the current one), made a top around the 3.3 Fib time ext.
Similarly, on this update I have added bottom projections to the mix. They follow a similar progression from the Genesis Block and Halving 1. The Bottom of Cycle 1 was around the 1.6 Fib ext after Halving 1 and the Bottom of Cycle 1 was around the 2.6 Fib ext after Halving 1. Technically, if the bottom Fib projections work as well as the top ones, the Bottom of Cycle 3 should be around the 3.6 Fib ext, which is around the end of September 2022.
** Portraying the Bear Cycles and Rally Phases **
A combination of the above, portrays a rough estimate of how the current Bear Cycle will unfold and that is from the 3.3 Fib to the 3.6 Fib (red area). This is respective to all previous Bear Cycles as well. As for the Rally Phases (green area), those start after each Halving and end on the +.3 Fib extension. The Rally Phase of Cycle 3 for example started on Halving 3. The next Halving is on March 2024, so there is still plenty of time before this aggressive, parabolic part of the Bull Cycle starts.
On the other hand, buying at the bottom (as mentioned the next one is projected according to this model to be around September 2022), always gives the lowest risk and highest return. Based on this model there isn't but another 4 months left for this opportunity, but as this Cycle turned out to be the smoothest in history (as I've mentioned in numerous analyses already), it is possible to see something of a sideways price action for the remainder of the Bear Cycle instead of a 'traditional' capitulation candle.
** Conclusion **
One thing is for sure with this model, that the current Cycle as it diverged a year ago from the previous one, it will converge again after the Bear phase ends. This will still be diminishing returns compared to the previous ones, but will translate to a new All Time High.
Do you agree with this model and the projections made? Do you have your own estimate for the Cycle bottom? Feel free to share your work and let me know in the comments section below!
BONUS MATERIAL Two examples of previous applications of the Halving centered approach and the Convergence - Divergence modelling:
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