The Bitcoin Bottom

4 ott 2022

The chart above provides two bottom projections for the price of Bitcoin. These projections are based on what is called the cycle low multiple.


This is a screenshot of the Bitcoin Cycle Low Multiple chart

The cycle low multiple for Bitcoin is currently 2. This means that if prior cycle price action is predictive of future cycle price action, Bitcoin's current price (~20k) is twice as high as it will be at the bottom of the current cycle (~10k). Although historical price action does not guarantee future price action, history generally tends to repeat itself.

With that said, both projections suggest that Bitcoin's price will fall to around $10,000 at some point between late October and late November. Both projections also suggest that this will be the bottom and that price will undergo recovery at the end of 2022 and into the beginning of 2023.

In the future, I plan to write a longer post about my thoughts about Bitcoin, blockchain technology, non-fungible tokens (NFTs), decentralized finance (De-Fi), and decentralized autonomous organizations (DAOs), but I will share a few preliminary thoughts below.

After much research, it is my strong belief that Bitcoin is posing a systemic risk to the fiat monetary system. Although Bitcoin presents new obstacles as a currency and as a store of wealth, its ability to facilitate transactions and store wealth independent of central banks' monetary systems will eventually draw the ire of these institutions.

However, due to Bitcoin's decentralized nature, it will be virtually impossible for governments to stop. This will present a major challenge to the fiat monetary system. Be wary of Central Bank Digital Currency (CBDC) as this could become central banks' means to more effectively stop their citizens from converting fiat currency into Bitcoin.

What central banks fear most is when their citizens realize that, due to its perpetually increasing scarcity, Bitcoin preserves wealth over time, unlike any fiat currency. This attribute of Bitcoin combined with its completely decentralized nature makes it a monumental challenge to the fiat monetary system.

Finally, one important note: If you choose to accumulate Bitcoin, be sure to use a secure hardware wallet. Do not trust any exchange or company to maintain custody of your Bitcoin on your behalf.


Note: This is my first post done on a light background. I have learned that some people have eye strain when viewing charts with darker backgrounds. I would appreciate receiving comments below on whether people prefer a light or dark background on my charts, or if it does not matter.

This is not financial advice. As always, anything can happen. Cryptocurrency involves significant risk and investors can lose a significant amount or all of their money.

4 ott 2022

Nota

Correction: When I stated: "The cycle low multiple for Bitcoin is currently 2", what I meant to say is that both other cycle multiples were at 2 at this point in their halving cycles. Meaning Bitcoin is currently priced twice as high as it will be at this cycle's low if those other cycles' price actions are predictive.

9 ott 2022

Nota

I rarely use non-log adjusted charts on Bitcoin, but if price is reacting to a certain non-log trendline, I will consider it. Look how Bitcoin's price continues to be resisted by this downtrend line:



Here's a close-up:



By October 19th, this trend line will be below the price of Bitcoin's lowest close in 2022.



Therefore, it seems quite possible that by October 19th we could see Bitcoin closing at new lows.

Whereas if Bitcoin breaks this downtrend to the upside, I will not trust any apparent bull run until after November 2022. The cycle low multiplier chart says more downside to come until at least then.

16 ott 2022

Nota

Bitcoin is likely to begin its final leg down soon.

buybitcoinworldwide.com/stats/cycle-repeat/

19 ott 2022

Nota

So far it looks like Projection #2 is winning. Let's see how things unfold. I believe that one of the biggest risks to Bitcoin right now is the reserves that back stablecoins. Under the surface, these secret reserves are likely already in trouble.

3 nov 2022

Nota

Bitcoin is not moving exactly according to my projection which was based on past halving cycles. Right now it looks like BTC is in a dilemma zone where it could try to shoot up to around 22k to 23k.



Nonetheless, being currently inverted, the yield curve is a warning that a recession is coming. Since the coming recession will likely be one of major liquidity issues, in my opinion, there's little chance that stablecoins won't falter in 2023 as these liquidity issues become entrenched. If you're long-term bullish on Bitcoin as I am, patience will pay off. Consider how much more Bitcoin you can buy with your capital if you begin accumulation during the coming recession, rather than right now.

Perhaps I am wrong, as anything can happen. But what I can say is that the current yield curve inversion has never failed in the past to predict a recession. In some ways, the inversion creates a mathematical certainty of a recession since it reflects the destruction of credit which results in the demand destruction that characterizes recessions. Why load up on Bitcoin BEFORE the recession?

8 nov 2022

Nota

Major stablecoin volatility is occurring on FTX. This volatility dwarfs the volatility seen during the COVID crash and the Luna crash.



By reducing the money supply at a record pace, the Federal Reserve makes major moves like this in stablecoins far more likely. The Fed's unprecedented tightening both leads to a dollar scarcity as well as a deflation in the value of assets that back these stablecoins. Together these factors make the chance of stablecoin volatility extremely high. Any unanticipated event, such as what's occurring with FTT right now, can easily and rapidly lead to major issues.

FTT is just the latest casualty of the Fed's extreme tightening. Unlike other asset classes, central banks will not come to cryptocurrency's rescue.

Other risk assets should watch these events closely. In some regards, they're the canary in the coal mine of the extreme liquidity issues that are to come...

9 nov 2022

Nota

We're entering the final shakeout phase, however, it could take a long time to end. I would be cautious about jumping in during instability unless you're absolutely able to withstand extreme volatility.

I would not be surprised to see two or more quarters of extreme crypto weakness because the Federal Reserve is exacerbating liquidity issues with unprecedented tightening. It is a fact that money (US dollars) is disappearing at the fastest rate in history. The current yield curve inversion is the most extreme on record (as measured by the ratio of US10Y/US02Y), which warns of economic contraction in future quarters.

Therefore, all of these liquidity issues in crypto are likely going to get worse. The effects of monetary tightening are only now just beginning to take hold, and crypto will likely fare the worst of any asset class because it will not be rescued by central banks. Furthermore, there are still no strong signs that monetary tightening has broken commodity inflation. Can you imagine if even after all this tightening, commodity inflation nonetheless continues to explode higher? You don't need to have a wild imagination to envision this because it's already happening in some countries. Despite the central bank hiking to 75% in Argentina, commodity prices continue to explode higher. Turkey and Sri Lanka remain highly susceptible to further high inflation. Even advanced economies (Eurozone, UK and Japan) have not been able to reign in commodity inflation.





The best time to buy crypto will be when most market participants are certain it is worthless. This will reflect the despair phase of the market cycle. Just be careful about which crypto you're buying. Aside from Bitcoin and Ethereum, only a small handful of other cryptocurrencies are worth your investment.

No one can predict the exact bottom for Bitcoin. However, here are two things that I believe to be true: (1) the cycle low is likely not in yet, but even if it is, 2023 will likely be a better time to enter Bitcoin as more volatility lay ahead; and (2) Bitcoin will survive whatever volatility may lay ahead.

14 gen 2023

Nota

It looks like a bit of an impulse has occurred for Bitcoin.



I know this is causing a lot of FOMO, but I am going to remain patient. The VIX is currently at major support, and my seasoned charting and investing experience is telling me: do not add large long positions when the VIX is compressing its spring.



“The stock market is a device for transferring money from the impatient to the patient”.
-Warren Buffet