@sminston_withI wanted to understand Bitcoin's price multiple relative to each historical cycle top, for the 12 months leading up to those tops. Can this give us some insight as to WHEN and WHAT the top is likely to be (and not to be) this time around? Example: "Within the next 2 months, how likely is the price to double, giving us that $200k top?"
In 2011, the year prior to the cycle top saw the price multiply hundreds of times (~500x from just 8 months before the price peak).
For each subsequent cycle, as you might have imagined, the price went through fewer multiples to reach the price peak. Although, the average difference (on a log scale) is less each new cycle.
For the 2011, 2013 and 2016 peak lead-ups, there was a gradual descending of multiples (from the ~100xs to 10xs and lower), with a very sharp downward shift in the final 1-2 months to finally hit 1x (this defines the price peak). BUT - for 2021, this behavior was not observed, and it was more of a trajectory shift around 5-6 months out, followed by a gentler, more gradual approach to the ultimate peak for the final 3 month lead-up.
So what am I doing here? I am (rather qualitatively) examining the CURRENT CYCLE PRICE ACTION (black line), and plotting it as a simulated approach to a hypothetical price peak with assumed timeframes (dates) and prices (in USD). We can then compare these scenarios to the past 12-month lead-ups to historical price peaks.
I did this, and (again, rather qualitatively) binned these into RED, YELLOW or GREEN boxes, based on how likely the scenario seems.
RED: 'Probably Ain't Gonna Happen'The three scenarios I've deemed 'highly improbable' are boxed in red here; they are:
Nov 8th, $150,000: For starters, the much earlier months (8-12 out) are at an average level that is too low from what I would expect based on the 2011-2013-2017 trend, so seems very conservative in this regard. Second, the black line is touching the historical multiple value NOW where the price should be doing about a 1.5x to reach the cycle top; historically there needs to be some room in the last 3-6 months for the current line to squeeze *under* the previous cycle line; no room here!
Nov 8th, $200,000: Here the black line is already past the 2021 cycle line; there simply isn't enough time for BTC's price to rise fast enough to drive that black line under the previous line. While may be remotely possible, diminishing returns are real and there seems to have been a structural change between the older cycles and the 2021 cycles. This ain't gonna happen in 2 months like it did in 2017 and prior, sorry.
Nov 8th, $250,000: Same reasoning as the scenario above, basically: while I don't discount the 200-250k range for this cycle, 2 months isn't enough time based on the historical trend.
YELLOW: 'Eh... well... maybe!?'The three scenarios I've deemed 'moderately likely' are boxed in yellow here; they are:
Jan 8th, $150,000: Here I lend a fair nod to a $150k peak, although I think it is conservative (key word here) - first reason being that, again, the multiples levels for 5-12 months out are shifted quite a bit lower than the previous 3 peaks, where the trend should make the drop smaller (I'd expect at LEAST the 2x level). Second, we still have lots of runway until hitting month 0, leaving room for a more gradual landing or funky changes in structure.
Mar 8th, $150,000: Same reasoning, but this is ULTRA conservative; especially looking at the power law trend of BTC's price. To me this is possible but would indicated almost no bubble at all.
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