Today I'm looking at other markets that have behaved like crypto is behaving now. Based on this I will try to predict the coming months for Bitcoin and altcoins.
If you have not already seen yesterday's post https://steemit.com/cryptocurrency/@bitbrain/bitcoin-price-predictions-chart-display then please take a quick look. I promise that there is very little reading to do there.
BITCOIN PRICE PREDICTIONS - Chart Display - Part 2 (Looking at the past)
History repeats itself. This is true for economics. And while it is true that past performance is not necessarily indicative of future performance, long term macro-economic trends are rather predictable and resilient.
I'm now going to discuss some information to support my views in yesterday's post. Once again, I aim to make this post largely visual in nature, so that you can physically see the kind of information that informs my educated guesswork.
A typical hype cycle
I'll start with something that you are hopefully already familiar with. This picture is well-known and is spread widely around the internet:
From https://www.cheatsheet.com/money-career/your-cheat-sheet-to-the-psychology-of-market-cycles-infographic.html/?a=viewall (I tried to find the original source to credit, but it no longer exists. Though this is not the first time it is used, I think that the main site is correct.)
This cycle is true and has been shown to be correct over and over again. It is generally accepted as de facto market behaviour.
Crypto is not immune to such cycles. But I have observed that crypto cycles differ from regular market cycles in two important ways:
- They happen much quicker.
- Their bases axes can be skewed - they tend to climb in price while the cycle is under way.
Bearing in mind the projected Bitcoin charts I showed yesterday, let us now look at the Bitcoin charts.
What Bitcoin is doing
This is Bitcoin from roughly the start of 2017 until today.
See the resemblance?
How about now?
That's the same Bitcoin chart (just in line format instead of candle format) overlaid on the market hype cycle. Almost uncanny, isn't it? I have already squeezed/stretched the charts to compensate for the much quicker crypto time lines, but I have not tilted them. That part you will have to do mentally (it's harder to do that accurately in an image editor). You can see that the Bitcoin chart slopes upwards a bit, otherwise the charts are identical. Now simply follow the standard market cycle to predict what Bitcoin will do next.
To clarify: the upwards tilt of the Bitcoin chart does make things look a little ambiguous, so to really stick my neck out and say what I think, I present you with this chart of exactly where I believe crypto to be in this cycle:
I think we are very close to hitting the bottom of that dip. After that we go sideways for a month or three, and then upwards. At least that's what I think will happen.
Why is this good news for crypto?
I said it earlier, history repeats itself. Look at this chart:
Compare it to the market cycle chart above. This is Amazon during the time of the famous dotcom bubble.[1] While its time duration is far greater, note how similar it is in shape to the current Bitcoin chart. I'm using Amazon because I see that many people have recently been comparing it to Bitcoin. It's a good comparison to make: Amazon is a disruptive tech stock that was viewed similarly then to how Bitcoin is viewed now.
Note [1]. The dotcom "bubble" happened at around the turn of the millennium. It was when a large amount of tech companies that started up rapidly and blossomed under the hype of the growing internet, suddenly collapsed and disappeared. It is seen as a negative thing in that light, BUT the good companies continued. They took a quick drop in price, dusted themselves off, and surged ahead like never before in a growing and now established market. This has close parallels to the many "shitcoins" and poorly run ICOs of late 2017/early 2018. I believe they will largely disappear, and the good cryptos will flourish. I do not believe BTC and other good cryptos to be in a "bubble". They will not pop. They aren't going anywhere. They are just suffering the overall effects of the general dip in the market.
Fast forward five years and see what happened next:
Made by 
Amazon bounced back. Remember: With crypto the time is greatly compressed, you will not have to wait for five years, and crypto charts tilt upwards even more than tech stocks - you really won't have to wait for very long to see a major market resurgence.
Look at Amazon another five years down the line.
The new All Time High (ATH) there is about 2.5 times greater than the previous ATH! Note how the trend line continues growing logarithmically? Visit my very first post to see a similar line: https://steemit.com/bitcoin/@bitbrain/crypto-markets-march-2018-up-or-down While that post is now out of date in several ways (hence this update), the gist of it remains true (I just misinterpreted a support level or two). Or just visit part one of this post again (yesterday's one) it has a crude, hand-drawn version of the same line.
Look at Amazon today (five years after the picture above):
Made by
Words fail me. Just look at those returns! Fair enough, not every company will succeed like Amazon has, but blockchain tech is big news, many will! The good ones should provide very good returns. Does anybody still wish to question the wisdom of a long term "hodl" strategy? (Don't hodl short-term or if you are a day/swing trader, that would just be nonsensical).
Here is the same stock in a different format:
From www.google.com
Do you even notice the dotcom bubble around 2000? It's hardly even visible!
And just in case you thought Amazon was the only one; here are a few more similar cases:
What happens next for Bitcoin?
Well I know what I think. I think it's going to follow the pattern. I think we're very near the bottom. I think that even if I'm wrong and I lose for another 3 months, if I just keep holding it will all turn out just fine. I believe the long-term, upwards-sloping logarithmic trend line. I believe crypto is going up going up, maybe a little sideways first, but then up, high up!
Parting shot: the Bitstamp order book as seen on TradingView (just zoom in once to get rid of all the radical optimists who have orders set at around $1!)
Summing up
I hope this has provided some insight into yesterday's post - why I draw the lines where I do. I hope it gives you hope, and above all, I hope I'm right! I may be wrong, but I honestly don't see how I could be. My times and support levels can still be off a bit, sure, or FUD could throw a spanner in the works tomorrow; but I believe that the general idea is solid.
To put my money where my mouth is: for the first time since September 2017 I have put fiat money into crypto. It's sitting on an exchange right now, just waiting for BTC to dip to around $6 000. I may value-average buy, but I will buy very soon! And then I'm done buying, hopefully forever.
As always: DYOR and take note of my disclaimer. Just in case I'm wrong. But they don't call me Bit Brain for nothing...
Hope you all had a fantastic Easter and may all your crypto dreams come true.
Yours in crypto,
Bit Brain
DISCLAIMER:
I am not a financial advisor nor am I a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.