Bitcoin Price Prediction and State From October 2018

jason  ·  2018 Oct 9

I'm going to share some insights based on the last couple trades. From there we can make some predictions about price.

BTC vs Wallstreet

There's one chart "the psychology of wallstreet market cycles". If we compare the December bull run with this chart, historical bull runs, and the Gold rush in 1980, they all look very similar.

These bull runs are not because of technological advancements or news, but purely based on speculation and emotion. All bubbles are created because of greed as more people than before enter the market, and will have a cooldown period thereafter. The higher the runup to ATH the longer the cooldown will be. Each run-up and cooldown period look very similar. I guess greed and fear in everyone is same lol.

Wallstreet

No let's compare this wallstreet chart with Bitcoins bull run in 2014, 2017 and the 1980s gold rush. Those are comparable because of the huge increases in a short amount of time, it's not to be compared with any peak in a chart.

Let's start with Bitcoin 2014. BTC 2014 bull run

Now let compare this with 2017. BTC 2017 bull run

It's very similar. Let's compare gold. Gold bull run 1980

And now all next to eachother. Compare all bull runs

If we put the historical runs over the latest bull run, stretch it out to make the rise and cooldown period similar, I expect to reach the previous ATH in 2020. More on this later in this post. At least it's nowhere near yet and not going to happen in December 2018, unless major collapses of countries fiat systems will happen,driving the adoption of BTC on country level.

So how is this related to the current state?

Glad you asked 😜 Our strategies nightmare is when the price hovers around the SMA200 line, it's indecisive and we don't make profit. So if we take the consolidation period from the bull run in 2014 at around period numbered 6. We see the following: Consolidation 2015

The grey line is our SMA200 line, it's a major indicator for our strategy but not the only one. The small loses because of the ranging market is very similar as we are seeing now: Consolidation 2018

This strengthens my hypothesis that we are currently in period 6 as the backtest and current situations behaves the same. If we check the performance of this ranging market from last month we see a loss of -4.86%, -1.58% and -0.9%. Checking the performance of the ranging market in 2015 we have -2.18%, -2.55%, -0.91%. The performance is about the same. Check our performance of May 2015 about -5.64%. Backtest from 2015

This backtest is BTC/USD.

What if we overlay the bull runs, can we see when the market will recover?

Let's compare the December 2017 bull run with the 2014 and 1980s gold rush.

First the gold rush: Prediction bitcoin vs gold

The red dots are the anchor points I used. From the first crash at ATH, recovery and trying to match the 2nd and 3rd recovery. The black line represent gold and the candles represent the December 2017 bull run. We can see gold went down further after consolidation. The previous lows were quite similar showing a well protected bottom. However after consolidation it went down far below previous bottoms. The lowest point would be similar to a price of 5K USD. The gold rush took about 20 years to recover. The period of recovery, if we were to believe the gold chart, would be 1st/2nd quarter of 2019, in which it seems we haven't bottomed out yet. Reaching the ATH would be well into 2020.

Now let's take a look at the Bitcoin run from December 2014. I will compare different versions with different anchor points. Prediction bitcoin vs btc 2014 v2

The version is using the ATH, the first drop and first recovery, and the bottoms as anchor. The white line represent the 2014 bull run. The reason why I choose to anchor the bottom is that in both charts, a period of low volume and ranging markets does not happen until the market consolidates. I'm not sure that made sense lol. Compared to gold it recovers more quickly and because we anchored the bottoms, we are right around the corner of recovery. However ATH would be well at the end of 2019 or beginning 2020. Since bull runs usually happen around the end of the year, this would be a good guess.

What if we move the anchor points to reflect the recovery periods 2 and 3 and anchor the bottom. Prediction bitcoin vs btc 2014 v1

It looks quite similar. A false breakout in December which goes back to the bottom in January. This makes sense as I see a lot (uneducated) predictions from people that expect a December bull run just because of last year.

What can we do about the losing trades now?

We are in the worst moment for our strategy to trade. I expect it to make a couple more losing trades before the market pulls itself out. I don't believe the market will repeat itself 1-to-1 but generally the higher timeframe trends will be the same. I will test some strategies on the 2015 ranging market to see if we can improve it without affecting our historical results too much. If not, then it's just part of the strategy to make profit, no worry.

Where to take it from here?

Of course we may never see a next bull run, it's therefore even more important to have it managed. Bull runs are emotion/greed based and are likely to repeat itself, if not for another generation like the gold rush. Unless a complete collapse of fiat systems I don't expect anything worthwhile will happen to Bitcoin coming year.

If you believe we are in the consolidation period too, you can take a look at our backtest performance from the same period that our strategy made small loses like now.

Prediction bitcoin vs btc 2014 v1

Of course past performance does not predict future returns.

What's more upcoming?

At the moment I'm preparing a test to trade alts on Binance based on the buy and sell indicators from our current BTC strategy. Alts are all mostly linked to BTCs performance. The plan is to buy 3-5 alts at the same time based on price and volume changes after our BTC buy signal, so that we can pick the ones with the highest upwards volatility. Not sure if it's ever going to be publicly available but if it's worthwhile I'll be sharing it with you.

Another last note is that we switched to a fund management service, as this better describes our services. The cost is tied to our performance, so no profit no pay. You can read more on the website. Give it a try and never worry about when to enter or when to exit to secure your profits.

Don't go alone, it's dangerous, take our strategy with you ;)

Cheers, Jason