Today will be the 3rd weekly update of the Diversification Protocol. This protocol is designed to allocate a weekly income or funds to be invested mostly to BTC when it is undervalued and mostly to gold and optional stable coins when BTC is overvalued. It also tells you to spend gold for living when BTC is undervalued and BTC for living when it is overvalued. This will create higher returns on your investment through a full cycle and reduce stress in a bear market. HERE you can read the protocol in dept.
The valuation is done by using the Mayer Multiple and compare it to historical values. The Mayer Multiple is the current BTC price divided by the 200 day moving average. We use data from mayermultiple.com. When you want to be updated on the multiple several times a day you can follow THIS twitter account.
Because I just started the protocol, I didn't accumulate gold and stable coins yet. In this update I will exactly follow the protocol, but since I only start saving gold and stable coins from a multiple of 1.6, I will only be able to execute it 100% according the rules after that point is broken. Funds invested in BTC today will eventually at least partly be converted to gold, since the BTC accumulates in the same wallet and a percentage of the total BTC in this wallet will be allocated to gold at higher valuations.
The current multiple
Weekly allocations of funds
The protocol will be slightly boring till we get to a multiple of 1.6, till then we allocate 100% in BTC because it is undervalued. With the current 200 day moving average we need a BTC price of over 15.399 USD to start allocating to gold and Stable coins. This can take days or months, but it is good to be prepared already.
Important news of the week
Price went up through a beautiful short squeeze
The Bitcoin price rose from 6980 to 8069 this week. Most of the gains were made at thursday when a short squeeze caused a gain of more than thousand dollars within an hour. The news this week was positive overall, there were many calls for an upcoming bull market and the technical picture improved a lot.
It looks like the market has chosen for the upside!
Last week I wrote in the weekly update that the market almost had to choose a direction. Here a screenshot of that post:
One week later it really looks like the downtrend is broken. This in combination with the failure of the dead cross to push the Bitcoin price down (in the past this resulted in a huge bull run) looks very bullish to me.
It looks like the downtrend is finally broken!
Bittrex re-opens for new users
During the bull run many exchanges closed the door for new sign ups because they could not handle the huge demand. Multiple exchanges re-opened for new users over the last weeks and Bittrex was the last one to re-open this week. This means that people who are waiting to invest in crypto are now able to do so.
Bitcoin permissioned under Sharia law
Muslims can now buy Bitcoin without the need to worry because it is now allowed under the Sharia law. This can potentially bring in 1.6 billion new users to Bitcoin. There is a lot of wealth in some strict Islamic countries like the Saudi Arabia and the Emirates, so this is really bullish news.
Tim Draper predicts 250k Bitcoin for 2022
Tim Draper said that he expect the Bitcoin price to hit 250K in 2022 in THIS article and that crypto will fully replace fiat because it is better money here:
War in Syria will cause a lot of uncertainty
The war in Syria could trigger more geopolitical tension especially between the US and Russia. Governments have proven themselves the biggest violators of human rights and the biggest risk for our world again and more people will wake up and realize how bad the current system is. The decreasing trust in government in combination with the increasing uncertainty will be bullish for Bitcoin and gold.
Fundamentals and valuation
In the history of Bitcoin the multiple was lower than today only 16% of the time. Since the multiple today is 0.84 while the moderate is 1.57, there is 46% discount on BTC according to this valuation method!
Long term the prospects are still extremely bullish. Lightning Network can boost adoption for day to day payments and Wallstreet, governments and central banks could inject huge amounts of money. Now the technical picture has improved a lot, the American tax season is ending in two days and Q2 is historically always good for Bitcoin the short term is turning bullish too!
Disclaimer
This is no financial advice, just my view on the market.
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