Crypto News: August 24, 2018
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Bitcoin price predictions are hard.
A proper prediction requires accurate identification of the future price of Bitcoin, while also stating the timeframe which that price will be reached. If you make a prediction without price or timeline, you are merely guessing.
In January 2018, I predicted that Bitcoin could reach $50,000 by the end of this year — I was wrong. As I’ve looked at more data, it is apparent that I was correct to predict a Bitcoin price of $50,000. Unfortunately, my timeline may have been off by as much as 4 years.
What data is driving me to revise my outlook for Bitcoin?
Parabolic increases in price continue to take longer — each parabolic run is measured from the last all-time high to the new all-time high. The first rapid price appreciation took just over 300 days (2010-2011) and the second took over 900 days (2011-2013). The last parabolic price increase peaked at ~$20,000 (2013-2017) and took almost 1,500 days to complete.
If this trend continues, we are unlikely to reach the next all-time high until July or August 2023. This would be more than 2,000 days since the current all-time high, which was reached in December 2017.
Bear markets continue to last longer — each bear market is measured from peak to trough during a prolonged drawdown period. The first bear market lasted ~160 days (2011) and the second bear market lasted ~400 days (2013-2014). The current bear market, if it follows the historical trend, is likely to continue for 650 days.
If this comes to fruition, the crypto markets won’t begin recovering from the recent negative price movements until Q3 of 2019. This is a much longer market cycle than most people are currently expecting, which leads me to believe that people will experience a level of pain and discomfort that we haven’t seen in quite awhile.
Each Bitcoin halving has led to a bull market — scarcity is a powerful feature. As the Bitcoin mining reward gets cut by 50%, the price ultimately increases to account for the deflationary schedule. We saw this in both 2012 and 2016. There is no guarantee the next halving (May or June 2020) will drive a bull market, but history often rhymes.
It is never fun to admit that you were wrong about something you said publicly. However, it is important to constantly test your own assumptions and beliefs. As I’ve tested myself over the last few weeks, it became obvious that I needed to gather better data and rebuild the prediction model.
The final data outputs left me with a few uncomfortable conclusions. The most notable one is that we are likely to see Bitcoin near $3,000 before we see Bitcoin at $10,000 again. If this is true, that means we still have ~50% price decrease to go. Things may get really, really ugly if this happens.
Obviously I can’t promise the model I’m using is accurate, nor can I promise that my conclusions will stand the test of time. In fact, I was wrong just 9 months ago so everything I say about price targets should be taken with a grain of salt. Nothing I do professionally requires me to read charts, understand price movements, or predict future potential — this is probably a good thing.
Do your own research. Buckle up for the bumpy ride. And lets see if $50,000 by December 2022 or January 2023 is a more accurate outlook.
UPDATED: Obviously, some people agree with this post, while others disagree. I want to call out a few people that helped me think through this revision or have put together models that are worth checking out.
The first is @KunalDaSen who has an epic visual. We vary on 2023 peak (He is at $160k and I’m at $190k, I have $50k before Jan 2023 and he has it during Jan 2023, and then we’re off by a few days on lengths of bull/bear markets). This is a must see for the amount of detail in one chart: Click here
Lastly, I had an in-person conversation last week with @CryptoEthan where he really pushed me to think more deeply about where Bitcoin was going. He told me he thought $3,000 would be the bottom and this is one of his charts: Click here
These guys are all pros at technical analysis and have far more understanding than me. I defer to their expertise on any mistakes I may have made as I worked through this.
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