BTC Log model - A full Technical Outlook
Contents Breakdown:
I. Risk Warning before reading
II. Key criteria for chart reading & acronyms.
III. Weekly Imbalance & Continuation Pattern
IV. Example backtest to live.
V. Volatility & Volume Metrics
V.I Volatility since inception
V.II Short term volatility (30 days)
V.III Price vs Volume
V.IV Price vs volume (30 days)
VI. Where BTC is now/ Bear Case 1
V.I. Bear case 2
V.II Bear Market Relief Rally
V.III. Bitcoin Dominance vs BTC
V.IV. Heikin Ashi candles
VII. Bullish Cases
VI.I Bullish Case 2
VI.II. Bitcoin Vs Ethereum
VI.III. BTC Halvings
VIII. XAU vs BTC, chart research
IX. Reference Data in plain text
X. Misc Data
XI. Chart updates
Important notes.
- It is recommended to click into the pictures to review the model figures and or view the technical setups in clearer details, depending on what format of choice is being used (mobile, laptop, pc screen).
Risk Warning
Trading leveraged products such as Forex, commodities and CFDs, carries with it a high level of risk and so may not be suitable for every investor. Prior to trading the foreign exchange, commodity or CFD market, consider your investment objectives, level of experience and risk appetite. You should never risk more than you can afford to lose. If you fail to understand or are uncertain of the risks involved, please seek independent advice and remember to conduct due diligence as criteria varies to suit the individual.
II.
Master Key for zones
Technical Setup backtest:
Key:
CP - Continuation pattern
DBD - Drop Base Drop
OP - Original price
DCA - Dollar Cost Average
FL - Fresh Levels
III
Weekly Chart using Imbalances and Continuation Pattern levels
(Now CP from here on).
Where Buying upon a CP level is clear is based upon two factors;
1. Time
2. Understanding the levels from a departure level be it buying/selling imbalance.
The departure level is hardest part to predict, so ideally it's best not to - which why zones are drawn especially where all time highs or new tops exist.
However, with reference to the chart below - Drop Base Drop or DBD from now on. to a CP level is clear on the timeframe below.
*To those who refer to Supply and demand, this is the same thing.
So why is the CP level this zone? where The overall scale shows a further drop scenario on the horizon?
Well, this is down to the removal of multiple factors within a traders, investors control.
1. Scarcity of the coin in circulation
2. CP level has not removed the demand imbalance, there the price cycle has high probability of continuing back to the Original price (OP from now on).
3. Departure scenarios occur like fractals where patterns repeat upon smaller timeframes, and do not always necessarily meet the expectation of price flow until a later date. [Where the price chart moves up and right, price is bullish and offers less likelihood of slowing down as a base imbalance is present for a price reversion]. Down and left, shows the trend is your friend and sellers have captured the price imbalance between buyers, sellers and the flow will look the the next departure zone at the CP or a fresh level.
IV.
Example of Departure level and why the CP level still stands.
Back testing the new all time high, shows a Rally Base Rally - in the formation of 119days or 17 weeks to create.
From here, confirmations need to be understood before entering aggressively or with a confirmed mindset where price has offered a pathway of creating lower lows and a fresh level.
Marking of the zone using the weekly low and all time high - in conjunction with looking left at the previous top.
Can we now establish an imbalance?
Where price closes below the imbalance zone but does not offer a lower consecutive daily low.
await price - before adding a sell position.
If Price creates a rest of the candle wick high, await closure of consecutive two day candles before assessing the entry point.
Does price break the low and create an engulfing which breaks the parallel channel and imbalance patterns?
Add sell, triple confirms are assessed and probability is >95% confidence price is with the departure imbalance.
Here is a clear setup scenario which confirms a clear proximal sell from the departure level.
Using the daily infinity line which indicates the sentiment hypothesis: 'should price break said infinite ray, price becomes invalidated'
Subject to departure creating lower lows, this has been confirmed.
The weekly Departure line (purple) clearly shows the areas of profit taking or if a sideline investor, using Dollar Cost Average, (here on DCA) buying positional points for long term investing upon close out of sellers positions.
Here is the Daily chart setup
Itemized labels are clear. Follow the steps breakdown to plot points with on trade setups.
As noted, price can retest the imbalance >50% probability upon establishing a smaller time frame base using price action.
So aggressive sellers, subject to Infinite ray breakout, sell upon rejection at around $59,000 marked in the Green line.
Figure 1.
Figure 2.
Confirmation of the aggressive sell and confirmed sell from departure.
The profit targets are clearly set to minimize price reversion and a possible CP to the up and right.
However, from this point, clever traders will close out and await confirmation upon a 'Bull trap' at the consolidate Base within the DBD to the arrival zone at the buying imbalance, essentially adding a smaller position to confirm extra downward right CP.
Here is the Bull trap marked upon the inside candle which suggests the liquidity wicked the end of the sellers, instead it has formed the 'Base' part of the overall picture within the DBD.
Figure 3.1 - Bull Trap Base
This is now perfect for smaller term price action traders to consolidate and form the Base positional, DCA investors want.
However, the overall pattern still is in a positional move for probability of sellers as the arrival target has not completed yet.
Do not over look the 119 days previous cycle. History fractals repeat, all be it not like for like, but this is where patience is clear from a technical stand point.
The Base demand daily imbalance needs to be removed for a CP move to occur.
Figure 3.2
Base - awaiting Drop.
Price is 42 days into the next Departure selling imbalance, and has encountered price target zone one. Which using the weekly channel and Imbalances price has still not finished the selling cycle yet as the arrival zone still is fresh and needs retesting. This paradox position of which "Fresh imbalance" is in reference to is favourable to the selling imbalance as "what goes up, must come down", not only this - from a technical departure level and how imbalances work as a concept, is clear distinct levels encounter higher probability of retesting in terms of a buying imbalance.
In this case $30,000 psychological level is the level of price movement within a DBD.
Figure 3.3
The End result
After 77 days [11 weeks] and -52.6% from all time high to present price, Bitcoin has halved... in price.
V
Volatility
There are exceptions to any price volatility ofcourse, noted on the chart which 'breach the regression curve. (these are not drawn to best fit as outliers are needed and will exceed the parameters).
To note, as with volatility upon price movements both positive and negative will present high volatility upon a low price with sharp movements as an example from inception below shows the volatile state of 'aggressive moves' which jump from an example a close of $0.80, with the following close of $0.5, this is a -37.5% decrease and will present a highly volatile swing. Subsequent to this an open of $0.5 to a growth of $0.6 the next days close presents a swing of +20%. While these percentage moves are large, the representation of the figures which are lower will trick the psychology of investor/traders upon short term periods. Let's look at the data closer.
Review the chart below to see the high volatility within the First 30 days of Trading and what the swings look like in terms of investing percentages gain/losses per day.
Daily Volatility (Inception)
Now refer to the overall picture as BTC has become more established since 2010 (July,17th) -2022 (May at present)
The volatility has still produced whipsaw events which have impacted investors and traders a like. An example of this high volatility can show one of the outlier events which took place back on 12th March 2020 at the closing price of $7,987.15 and the closing capture on 13th March 2020 showed a price of $5,767.05 a -27.8% decrease within a trading day.
While the regression band does capture the reversion points for a highly reactive zone, one more than one occasion exceptional losses and growth spikes have occurred to benefit each holders. The same is clear with FX and Indices and stocks. These occasions the volume of participants is clear and the move has been winding up for a time period (interchangeable per trader).
(Current 30 day Volatility)
Using the data captured from the 20th April 2022 - 20th May 2022, shows the last month of volatility where price has continued the PCP bearish move after a consolidative phase on the daily chart.
The largest swings occurring upon the drop from the 4th May 2022 onwards which are represented on the chart above the volatility graph.
Whilst the swings are concerning in the short term price movement, this does create large opportunities from both sellers and buyers equally generating the price action necessary to keep the market moving.
Volume Vs Price (Last 30 days)
What are the takeaways from this chart?
The Volume spikes are visualized below where the the heavy volumes reacted around the points which have been drawn around the previous 30k psychology level and also indicate the structural lows in the past.** (View chart below)
Date High Low Mid Volume
12/05/2022 30,270.00 26,591.00 28,746.00 34,209.37752
11/05/2022 32,227.00 27,900.00 28,639.50 28,543.23109
10/05/2022 32,687.00 29,833.00 30,568.50 14,880.86320
09/05/2022 34,316.00 30,439.00 31,360.50 20,202.58385
Notice the large volume interest upon the buyers/sellers reacting to the zone where a fair price has now been created at $26,591 low. This still has not created the true reflective fair value zone, however the lower low put into the market can now engage a buying opportunity for those who are inclined to take advantage of the volatile scenarios.
**To see this zone clearer, view below
[Signifies the 30k zone]
Volume Vs Price (200 days)
Overall using a 200 day picture volume has picked up at psychological levels ending 000 or 500 as expected.
The volume spikes at critical levels where imbalances are placed on the chart below where price aligns with a heavier interest and combines with imbalances upon the daily and weekly levels.
On top of this - the additions of price creating consolidative phases allows a volume to build up as orders pile up both for buyers and sellers.
High volume plot points all point to clear candles of interest on the chart.
Below captures the 10 highest positions which can be plotted and see the high volatile volume pushes/pulls before the next departure occurs from trading ranges and daily imbalances alike.
VI.
Where is the price of BTC now?
Bear Market Cases
Looking to the Monthly in a Bear Case scenario;
Note; the way Fresh levels work within the principles of Imbalances can create the next part of the cycle, while in a bear case - short term losses will hurt the psychology of the market participant, the overall concept here is to fully understand how price looks to previous arrival and departure levels of CP and Fresh Levels (here on FL).
Price can Imbalance net close, whereby price will look to the structure of the overall BTC price chart from inception and offer a closing out, from sellers to buyer - this is a net imbalance on the chart, where buyers will assume control of the discounted price and begin to change the selling environment to a buying opportunity for both short term and long term investors.
The reason for a bear case;
With the back test proof example as above, price reversion whilst not entirely predictable - assessing risk measured moves are however subject to confirmation;
so;
1. Using the $35,000 to $26,000 zone as an imbalance - subject to price using this as a tested and validated previous demand Imbalance, say this scenario of held base breaks, this has become a DBD scenario.
With allow price to remove the current demand imbalance,
The next imbalance is around $17,800 - $15,000 which is a critical position within the chart structure and can establish a change within market participants, this is called a shake out.
The psychological factor here, will posses a lot of holders with losses, where new participants and existing will be able to add to existing positions at the discounted part of the cycle.
Now looking at the main position of the Bitcoin from initiation to present, the future log chart formats a price option [as the bear case suggests to reach a low] can price here reach the pivotal level and re-activate the next bullish run? [refer to chart below labelled Bear case the next phase].
Please read: Important notice
Dominance percentage will not coincide with price reflection nor the supply percentage mined also provide a clear aligned price figure to the exact Dominance/price/crypto market cap outcome. These variables are subject to interpretation of change, but can provide indicative scenarios. Note II, where increase of Bitcoin Dominance will always mean price correlates positively, the market factors further to this will need to be quantified in a deeper model with a multi variable scenario analysis. Review the implied price relating to more of the crypto market size as a whole before drawing a conclusion. The simplistic formula is here to indicate a potential price using imbalances upon supply and demand and what price can reflect where new fresh extended levels will take BTC.
Top of the markets to the bottom of the bearish moves
Let's look at some scenarios where if price settles within the arrival zone at the imbalance completion marked between
$16,300 - $20,400 - price will be within the range of the previous bear market alignments with a drop between (76.03%) drop reaching the distal zone at $16,300. With highs of (70.79%) drop incurred.
So far the average bear market from high to low averages at (75.37833%) using the marked zones.
High Low Loss % from high to low.
23/05/2011 24/10/2011 -93.56
25/11/2013 05/01/2015 -85.94
04/12/2017 19/11/2018 -84.76
24/06/2019 02/03/2020 -71.09
12/04/2021 21/06/2021 -56.36
08/11/2021 09/05/2022 -60.56*
* = current low in the bear market.
Bear Model case (1)
This implied model shows what happens in a scenario within the bear market where the Market Cap suffers a loss to 0.55x multiple where the market cap is applied at 2.245T.
* With the dominance being an important factor - review the chart below to address the cycle of Dominance vs BTC value in previous bear markets, notice the negative correlation (and probable causation upon the removal of liquidity from the market with a strong change of hands occurring).
* The alignment of dominance retreats to a Gold standard with alt coins having higher swings of volatility as opposed to the violent swings of BTC. (note, BTC will incur large -5% moves, as does Gold).
VI.I
Bear Model Case 2
What to know about the Strong bear market (bleeding market)
As the variables change, let's look at a Bleeding market where the following occurs;
* Crypto market falls to 816.6B which equates to 7% of the Gold market as of data inception date.
* Dominance tends to increase when the bear markets occur, where other Crypto assets default, the overall winner is the dominant force (or value store) is Gold and demand increases, however price can still continue to decrease as money is removed from the market.
* Taking an implied value at face value, price alignments are the key target here which support the strategy of imbalance/supply and demand zones. The overall market value is not important as this value driver is built up on numerous variables.
VI.II
Bear Market Relief Rally
Here is a probable scenario in which after a losing streak in the market, the market will show a sign of life, with new inflows taken upon an opportunity buy in upon a discount (either in a DCA investment or large volume of Puts to boost sentiment).
Why 40k? This is the current scenario where previous back testing, structure seem to point to (not 40k) but for pattern & market structure purposes whereby, price creates a DBR scenario for short term trading opportunities to fuel the final wave of the bearish structure. (Review below label 'Backtest relief rally')
Backtest relief rally
This was looking back to 2018 where June 11th - July 30th saw a summer relief rally occur after arriving back to the original level.
The white circles indicate the reactive points creating the first reactive test of the zone, which is an important aspect as the fresh level will generate the demand to continue (allbeit shorter term moves). From the targets from said demand, price can either oscilate back upto the original supply (departure) or look at the structure in place and revert to two probable levels (creating a lower high).
The second test is a deeper consolidative phase, still providing a demand reaction however less likely to produce a return which is equal/higher than the previous lower high. The steep curve (looking at the bullish structure previous indicates the highly probable OL is sat underneath the current level).
The Final reactive white circle becomes the 'Break and retest' of the trendline. Now in this scenario price broke through to deeply test the demand structure. Creating a final move which "sprung" out of the arrival zone, but created a bull trap scenario. The final move (or wave) is now in action from the reactive retest.
The lower demand aligns to the monthly wick (left, September 2017).
While the above backtest shows the scenario, market cycles do repeat (although not in exact patterns as every piece of market data is unique), however looking at the probability and how the market is currently aligned (using the above (Bear market relief rally), the chart is point to signs of a similar outcome.
VI.III
Bitcoin Dominance vs BTC
*Inversion pattern where Alt coins are hardest hit, and order flows move to BTC and cash surplus is removed from the market.
*Where the all time high (arrival destination for BTC) the Dominance is at a low, why? This is due to the entire market share increasing and prices of alternate assets which will grow at different rates where the ROA is higher than BTC as diminishing returns exist.
Dominance Solely; (weekly)
The curve steepness from the supply imbalance shows an original level and fresh level respectfully.
the 60% fresh level will indicate a strong opportunity for a targeted destination in a bear market scenario where the market value of BTC will hit a respected price, equating to a 60% Dominance on the market cap.
Using the weekly structure, the Demand (arrival) is weak and needs to create a new destination towards the supply.
Price has broke out of the weekly zone with an impulse, from here, now expecting price to oscillate within the trading range at current (39.18-47.6%).
Once the confirmation of the trading range is broken, the clear movement towards the Fresh level is now available. This will subsequently mean the price of BTC will suffer.
VI.IV
Heikin Ashi (Monthly)
What is the chart showing?
* Previous structure has shown a bear market of 14 red candles each within the two major previous corrections.
* At present 6/14 (using the anchor as a probable scenario), shows that the market still has more room to fall before the imbalance is touched within the fresh zone.
* The bear market may have a consolidatory phase where price begins to drift slowly but over a 14 candle period.
Review the Heikin Ashi weekly with the regression bands in place to indicate a probable zone of price reaction
Why is the white zone an area of importance?
*The fair market value (white line) and upper band zone (green upper) both create a curve of prediction as to where price can react upon an original level.
*Looking left on the structure, where the white zone is situated, this aligns with the previous structure highs, where price can have a reactive measure to. With this being a 'Fresh arrival' the structure can use this price zone as a imbalance position use as a base and build upon a long imbalance from here. (This in theory does not always correlate in Crypto, but has a higher probability within FX pairs).
VII
Bullish Case
Bull Market Cases
Looking into the bullish case, the weekly levels, will need to hold at key pivot levels, however, looking at previous tests - from all time highs, to the lows, the bear market moves from the tops have been captured below.
From the regression zones - this can offer a large bullish case from the change of hands from bearish moves to a bullish move.
Using the Bullish case - the current state of play price looks to the key demand imbalance at $19,690 to $15,000 as the market cycle completes its pathway from Departure level (supply) and arrives at the (demand) zone.
There are interesting gaps along the way where 'Psychological' consolidative zones will react, creating a lower high formation. This can be a fresh level for a trading range or potential zone which can fall to a monthly zone (which can break upon multiple retests), shows a strong probability for a DBD scenario.
Price can in the short term of course remain in a trading range and essentially move sideways, to the DCA investor and position holder - looking forward to bigger picture, the main area of interest is within the range of $33,800 - 28,800, as price once rebounding from this zone, shows the Fresh level which has no tests as yet, meaning price will look to the Supply trading range of said zone.
Bull Case 1
First the Conservative case applied below;
The Key takeaway is that the chart below can plot the next bullish cycle which can over extend to a new fresh level and in turn become the next fresh supply.
What this chart shows, is a clear DBD scenario, where now an original level will be clear for a 'change of hands', creating the opportunity for the next bullish cycle to initiate.
Trading/investing upon confirmations will be key here to the overall success to the individual participant.
Looking at how BTC has worked in the past with impulse, correction impulse moves or (RBR), this can form the next scenario outcome.
Using the distal line based at $15,000 as an example will allow room for positions to be added where a reactive bottom occurs.
Upon a reactive bottom, buyers will need to confirm daily closes and also zones to the left where price has yet to test (as a deep corrective).
An engulfing candle from a bottom or a long wick (weekly confirm) will signify a short term move for buyers, but note - wicks can be retested within the arrival zone to clear out early buyers for the full profit takers of sellers.
The model assumes an implied mined % of BTC against the market capitalization of the Crypto market where(these are interchangeable variables). For the purpose of the model screenshot supplied, shows interval levels with differing dominance percentages expressed, furthermore the implied price will look towards the implied market cap of the Crypto market as a whole.
With reference to BTC to XAU market cap shows the highlighted variable outcomes which over extend subject to alignment of the growth of the Crypto market and onboarding of further inflows of clients.
A bullish target using the past data implies that a $50,000 mark is qualifiable as a target for a lower boundary. This is based off the fact that Dominance of BTC will need to decrease and inflows in the market from all participants to be entering again within the market space.
VII.II
Bullish Case 2
What does this model show and how can the chart interpret some of the outputs?
The end goal is ofcourse the price which is the clear result, however notice the bottom section which can relate closer to how BTC price can react whereby;
1. Inflows are attracted and volume increases steadily into BTC as opposed to other cryptocurrencies as the desired asset of choice.
Dominance does not always have to be >40% of the market, instead can use the scarcity value of remaining circulation to be mined and the circulating supply which is not controlled by Saitoshi & considered 'lost, irretrievable'. This will provide a closer proximity to the real availability of BTC.
Preface to the chart and not the implied values. The next cycle can demonstrate where with further additions to consumers and the return of inflows as a growing demand increase. These fuel the change and create the price action required. (revert back to the previous peaks of the market and review the volume).
Backtest of Dominance Vs Price inversion
Looking at another example with the model applied, notice below with a potential priced in method whereby BTC holds a 43-44% Dominance of the entire market at 3.062T price of BTC will reach the desired all time high value. (subject to conditions set, where investment is heavily invested in BTC over other assets.
To understand the implied price return. The implied price based on the (implied market cap/supply)*1000 which gives the future price based off the Dominance percentage.
The implied price CAGR over the five and ten year period are calculated to indicate the return value upon the implied new price set in line with the new Crypto market cap.
When calculated back the returns, most investors look purely at the return calculation fundamentally removing all aspects of transaction fees upon purchase sells, exchange fees based on percentage of Fiat conversion to BTC and fee's upon moving from wallet to wallet transfers. This formula below purely looks at the investment price as dated to the future price value. =Implied/price close^(1/5years)-1 gives the Annual return for 5 Years.
*change the 5 years to any shortened/longer period to work out the return over a given period.
VII.III
Bitcoin Vs Ethereum
This chart represents the value of ETH against BTC, showing the valuation chart of where the pinpoint lows and highs correspond to the individual assets price in comparison.
The weekly chart is showing two probable scenarios here based off the arrival and departure and arrival zones.
*Price can look to come back to 0.4 zone as the curve using the market structure (looking left ) a clear impulse and correctional play has been created. Now using the previous cycles, a fair value is needed as a correction (bear phase) where BTC & ETH will correct back to the trendline (review curve to see where price will look to). This is a potential pathway.
*Always adjust and never forget the 0.2 zone for ETH BTC trend can fall back to the original level, this impact would be
Now review the reversion zones where BTC, ETH stagnates in a bear market before the next bull run.
VII.IV
BTC Halvings
1) Bitcoin Halvings
The best way to interpret Bitcoin's price action is via the logarithmic chart which shows the overall square root function of each cycle.
Simply put, realistically, the log chart is slowing down on the longer timescale, meaning that Bitcoin is now currently in its fourth phase as shown in the chart - price maturity and store of value. [Halving uses a step chart within the rewards]
Halvings; are where new bitcoins are issued by the Bitcoin network every 10 minutes. The amount of Bitcoins issued were 50 every 10minutes, however every four years, this number is halved, hence "halving".
A definition is explained here;
"The Bitcoin mining algorithm is programmed to look for new blocks every ten minutes. The time it takes to find blocks will decrease as more miners join the network and add more hashing power. To restore a 10-minute objective, the mining difficulty is reset once every two weeks or so. The average time to locate a block has constantly remained below 10 minutes (roughly 9.5 minutes) as the Bitcoin network has grown dramatically over the last decade."
Source: https://cointelegraph.com/bitcoin-for-beginners/bitcoin-halving-how-does-the-halving-cycle-work-and-why-does-it-matter
The significance of halving decreases the amount of new bitcoins generated per block, meaning the supply of new bitcoins is lower, making buying more expensive.
In normal markets, lower supply with steady demand usually leads to higher prices, this comes with a utility which we will look at a store of value and a consider the ongoing use case of BTC as a best practice of who can create for the general public offerings to provide best customer experiences with offerings using the network effect with parties added where merchants are added on a platform, this scalability of being able to move BTC around as a payment system with the ever decreasing availability of BTC able to be mined and % in circulation remaining, using supply/demand, price along with maintaining price stability and a store of value, will continue to drive the price up.
At present national currencies exist like the USD, EUR, GBP & AUD, taking the US in to focus for example; U.S. Federal Reserve, has at its disposal multiple tools that enable it to add or remove dollars from circulation. If the economy is floundering, for instance, the Fed can increase circulation and encourage lending by purchasing securities from banks (look back to COVID 19, 2008 market crash and Millennium crash). Alternately, if the Fed wants to remove dollars from the economy, it can sell securities as part of removing dollars from the system. These currencies are infinite, especially with printing of new Fiat. However, BTC and other Cryptos and XAU in this case present a fixed or limited resource (XAU). Having a predetermined number it’s this scarcity alongside their utility that largely influences their market value as a store of value.
Bitcoin has at current had Three halving's so far; review below the growth one year on from the day BTC halves
November 28th 2012
July 9th 2016
November 5th 2020
For the instance of the First halving, BTC per block Before = 50BTC per block
After = 25 BTC Per block
Using (Final value - Starting Value)/Starting value * 100 = % increase
Price on halving day 1 = $12.35 as at November 28th 2012
365 Days after period = $1037.75 November 28th 2013
Growth = 8303% R.D up 8302.83%
Second halving
Price on halving day 2 = $650.63 July 9th 2016
365 Days after period = $2541.85 July 9th 2017
Growth = 291%
Third Halving
Price on halving day 3 = $8765.8 May 11th 2020
365 Days after period = $55,952.5 May 11th 2021
Growth = 538%
Fourth [Pending]
Price on halving day = $ Feb-June 2024
V.III
XAU vs BTC, chart research
As stated above, the cause of these growth cycles are the Bitcoin Halvings, which leads to a supply shock and a subsequent rally. As history has shown that with a lower supply (scarcity) the demand for the coins go higher, meaning that the fundamental value of Bitcoin may go down, and now becomes more of a 'Store of Value' asset, just like gold. Refer to the below chart of XAU/BTC price chart.
Weekly Chart XAU/BTC
Notes taken from the chart:
The argument here can be presented as price for BTC is showing clear chart pattern almost mirroring XAU.
Note: XAU is finite but the supply is unknown, however BTC is 21MLN coins and known.
This uptick in Gold taking off in the 68 and retesting the lows in 1970. This departure imbalance shows clearly on the BTC chart between 2017-2019 showing a similar case. Whilst not causative, there is an element hear of the adoption phase before looking at Gold, price began to depart and create a RBR formation to generate a new all time high.
To note further, price once created the new ALT-high position, it is now time to sit on the side and await the next move, the reason being - daily charts offer shakeouts between these fresh levels and it's a risk-calculated measure to remove positions from the market or at least dwindle down to a minimum subject to trailing stop losses. The move will now form an imbalance in favour of a supply imbalance and a distal zone for viewing a sell opted trade.
Although this chart is just an observation and educated guess using technical approaches with supply and demand imbalances, still assume that this chart is realistic and a probable scenario as it is calculated with a balance of market psychology, technical, and overall market cycle theories explained.
Even the monthly chart can be seen as a minuscule timeframe and we have to take this day by day, timeframe by timeframe. We can most definitely see lower prices and from a longer perspective, anything below 100,000 USD is still considered a great buy for Bitcoin , as many will start to understand that Bitcoin is becoming an investment. If we also apply Murphy's law, we will also have to assume that all good things will come to an eventual end for a cycle.
XAU vs BTC further, looking back
Gold 70's analysis using departure and arrival supply and demand imbalances.
Here is the weekly chart in the 70's between Nov 1973 - September 1976 which shows the steep trend of RBR (on the Red line)
The reason why the "Xs" are marked on the chart is purely to show where areas on the RBR structure to the formed supply imbalance created a good reference pathway (not always 100% mirrored) but for a DBD to the original level, these are positions to take profit or look to await further positions for adding to keep exposed in the sell.
From here price created an imbalance where price had exhausted, price is now presenting a departure for sellers using a proximal sell and a distal (top) stop loss.
Price reverts to the original departure zone as the strong impulse correction, impulse now needs to retest the original level
Retest of the Original level (monthly)
Total Crypto Market cap vs GOLD Market CAP.
Unfortunately Tradingview doesn't offer a GOLD CAP vs Crypto. Refer to an al source.
IX
Reference data in plain text
so here is a BTC vs XAU Chart and relative values thanks to Woobull.com
https://charts.woobull.com/bitcoin-vs-gold/
Simplified BTC price to market cap ratio of XAU
Prices = April 1, 2022
However a simple price target using the value of Gold price value as at 12.249T [April 1, 2022]
BTC price as at close $46,630 April
BTC market value 8.87307E+11 or (887BN)
=12.249/88.7 = 13.81x multiple
Apply this to the price of BTC where close $46,630 x 13.81x = $643,960.30 subject a 1:1 ratio of BTC Market cap = XAU
BTC Modelling can be manipulated to reach whatever price you like. See the example below;
The interchangeable criteria relates back to the Dominance of the Crypto market dominance of Bitcoin using cases of where BTC had previously held highs of 70% Dominance.
For the purpose of the model implied below; using 70% as the Optimal where the large majority of investment activity by passes the other ALT coins and stable coins or better yet the top 10 coins.
70% of all investment into the market as a whole will increase the dominance of BTC in conjunction with the Implied price subject to the current scarcity of BTC in circulation with an additional 900mined per day.
Implying the 70% market cap of the new Crypto market space at a current price of 3.062T using the 19.003M coins in circulation an implied price subject to investment into BTC > all over projects, the price will produce a $112,799.40 per BTC held.
Upcoming analysis for BTC to consider.
Adding complexity layers; where
removal of "Lost BTC" from the current BTC in live circulation as at the date provided 02/04/2022 using the case of 3million coins are lost or (15.79%) of the circulating supply currently available or 14.29% of the total 21M coins.
Satoshi also holds 900,000* from sources which is 4.736% of the current circulating supply, or a 4.29% of the total 21M supply. This will be looked into in a future analysis.
X
Misc data
Sources of pricing, API added to excel with macro to refresh data (daily).
cryptosheets for second verification of price open, mid, volume, close confirms as cross reference.
Under/over valued price prediction model tool built in excel with function builder to map implied price returns using simplified modelled scenarios.
XI
Chart updates - to show confirms of DCA or buy sell orders with CP confirms
I. Risk Warning before reading
II. Key criteria for chart reading & acronyms.
III. Weekly Imbalance & Continuation Pattern
IV. Example backtest to live.
V. Volatility & Volume Metrics
V.I Volatility since inception
V.II Short term volatility (30 days)
V.III Price vs Volume
V.IV Price vs volume (30 days)
VI. Where BTC is now/ Bear Case 1
V.I. Bear case 2
V.II Bear Market Relief Rally
V.III. Bitcoin Dominance vs BTC
V.IV. Heikin Ashi candles
VII. Bullish Cases
VI.I Bullish Case 2
VI.II. Bitcoin Vs Ethereum
VI.III. BTC Halvings
VIII. XAU vs BTC, chart research
IX. Reference Data in plain text
X. Misc Data
XI. Chart updates
Important notes.
- It is recommended to click into the pictures to review the model figures and or view the technical setups in clearer details, depending on what format of choice is being used (mobile, laptop, pc screen).
Risk Warning
Trading leveraged products such as Forex, commodities and CFDs, carries with it a high level of risk and so may not be suitable for every investor. Prior to trading the foreign exchange, commodity or CFD market, consider your investment objectives, level of experience and risk appetite. You should never risk more than you can afford to lose. If you fail to understand or are uncertain of the risks involved, please seek independent advice and remember to conduct due diligence as criteria varies to suit the individual.
II.
Master Key for zones
- Red = Three Month
- Blue = Monthly
- Purple = weekly
- Orange = Daily
Technical Setup backtest:
Key:
CP - Continuation pattern
DBD - Drop Base Drop
OP - Original price
DCA - Dollar Cost Average
FL - Fresh Levels
III
Weekly Chart using Imbalances and Continuation Pattern levels
(Now CP from here on).
Where Buying upon a CP level is clear is based upon two factors;
1. Time
2. Understanding the levels from a departure level be it buying/selling imbalance.
The departure level is hardest part to predict, so ideally it's best not to - which why zones are drawn especially where all time highs or new tops exist.
However, with reference to the chart below - Drop Base Drop or DBD from now on. to a CP level is clear on the timeframe below.
*To those who refer to Supply and demand, this is the same thing.
So why is the CP level this zone? where The overall scale shows a further drop scenario on the horizon?
Well, this is down to the removal of multiple factors within a traders, investors control.
1. Scarcity of the coin in circulation
2. CP level has not removed the demand imbalance, there the price cycle has high probability of continuing back to the Original price (OP from now on).
3. Departure scenarios occur like fractals where patterns repeat upon smaller timeframes, and do not always necessarily meet the expectation of price flow until a later date. [Where the price chart moves up and right, price is bullish and offers less likelihood of slowing down as a base imbalance is present for a price reversion]. Down and left, shows the trend is your friend and sellers have captured the price imbalance between buyers, sellers and the flow will look the the next departure zone at the CP or a fresh level.
IV.
Example of Departure level and why the CP level still stands.
Back testing the new all time high, shows a Rally Base Rally - in the formation of 119days or 17 weeks to create.
From here, confirmations need to be understood before entering aggressively or with a confirmed mindset where price has offered a pathway of creating lower lows and a fresh level.
Marking of the zone using the weekly low and all time high - in conjunction with looking left at the previous top.
Can we now establish an imbalance?
Where price closes below the imbalance zone but does not offer a lower consecutive daily low.
await price - before adding a sell position.
If Price creates a rest of the candle wick high, await closure of consecutive two day candles before assessing the entry point.
Does price break the low and create an engulfing which breaks the parallel channel and imbalance patterns?
Add sell, triple confirms are assessed and probability is >95% confidence price is with the departure imbalance.
Here is a clear setup scenario which confirms a clear proximal sell from the departure level.
Using the daily infinity line which indicates the sentiment hypothesis: 'should price break said infinite ray, price becomes invalidated'
Subject to departure creating lower lows, this has been confirmed.
The weekly Departure line (purple) clearly shows the areas of profit taking or if a sideline investor, using Dollar Cost Average, (here on DCA) buying positional points for long term investing upon close out of sellers positions.
Here is the Daily chart setup
Itemized labels are clear. Follow the steps breakdown to plot points with on trade setups.
As noted, price can retest the imbalance >50% probability upon establishing a smaller time frame base using price action.
So aggressive sellers, subject to Infinite ray breakout, sell upon rejection at around $59,000 marked in the Green line.
Figure 1.
Figure 2.
Confirmation of the aggressive sell and confirmed sell from departure.
The profit targets are clearly set to minimize price reversion and a possible CP to the up and right.
However, from this point, clever traders will close out and await confirmation upon a 'Bull trap' at the consolidate Base within the DBD to the arrival zone at the buying imbalance, essentially adding a smaller position to confirm extra downward right CP.
Here is the Bull trap marked upon the inside candle which suggests the liquidity wicked the end of the sellers, instead it has formed the 'Base' part of the overall picture within the DBD.
Figure 3.1 - Bull Trap Base
This is now perfect for smaller term price action traders to consolidate and form the Base positional, DCA investors want.
However, the overall pattern still is in a positional move for probability of sellers as the arrival target has not completed yet.
Do not over look the 119 days previous cycle. History fractals repeat, all be it not like for like, but this is where patience is clear from a technical stand point.
The Base demand daily imbalance needs to be removed for a CP move to occur.
Figure 3.2
Base - awaiting Drop.
Price is 42 days into the next Departure selling imbalance, and has encountered price target zone one. Which using the weekly channel and Imbalances price has still not finished the selling cycle yet as the arrival zone still is fresh and needs retesting. This paradox position of which "Fresh imbalance" is in reference to is favourable to the selling imbalance as "what goes up, must come down", not only this - from a technical departure level and how imbalances work as a concept, is clear distinct levels encounter higher probability of retesting in terms of a buying imbalance.
In this case $30,000 psychological level is the level of price movement within a DBD.
Figure 3.3
The End result
After 77 days [11 weeks] and -52.6% from all time high to present price, Bitcoin has halved... in price.
V
Volatility
There are exceptions to any price volatility ofcourse, noted on the chart which 'breach the regression curve. (these are not drawn to best fit as outliers are needed and will exceed the parameters).
To note, as with volatility upon price movements both positive and negative will present high volatility upon a low price with sharp movements as an example from inception below shows the volatile state of 'aggressive moves' which jump from an example a close of $0.80, with the following close of $0.5, this is a -37.5% decrease and will present a highly volatile swing. Subsequent to this an open of $0.5 to a growth of $0.6 the next days close presents a swing of +20%. While these percentage moves are large, the representation of the figures which are lower will trick the psychology of investor/traders upon short term periods. Let's look at the data closer.
Review the chart below to see the high volatility within the First 30 days of Trading and what the swings look like in terms of investing percentages gain/losses per day.
Daily Volatility (Inception)
Now refer to the overall picture as BTC has become more established since 2010 (July,17th) -2022 (May at present)
The volatility has still produced whipsaw events which have impacted investors and traders a like. An example of this high volatility can show one of the outlier events which took place back on 12th March 2020 at the closing price of $7,987.15 and the closing capture on 13th March 2020 showed a price of $5,767.05 a -27.8% decrease within a trading day.
While the regression band does capture the reversion points for a highly reactive zone, one more than one occasion exceptional losses and growth spikes have occurred to benefit each holders. The same is clear with FX and Indices and stocks. These occasions the volume of participants is clear and the move has been winding up for a time period (interchangeable per trader).
(Current 30 day Volatility)
Using the data captured from the 20th April 2022 - 20th May 2022, shows the last month of volatility where price has continued the PCP bearish move after a consolidative phase on the daily chart.
The largest swings occurring upon the drop from the 4th May 2022 onwards which are represented on the chart above the volatility graph.
Whilst the swings are concerning in the short term price movement, this does create large opportunities from both sellers and buyers equally generating the price action necessary to keep the market moving.
Volume Vs Price (Last 30 days)
What are the takeaways from this chart?
The Volume spikes are visualized below where the the heavy volumes reacted around the points which have been drawn around the previous 30k psychology level and also indicate the structural lows in the past.** (View chart below)
Date High Low Mid Volume
12/05/2022 30,270.00 26,591.00 28,746.00 34,209.37752
11/05/2022 32,227.00 27,900.00 28,639.50 28,543.23109
10/05/2022 32,687.00 29,833.00 30,568.50 14,880.86320
09/05/2022 34,316.00 30,439.00 31,360.50 20,202.58385
Notice the large volume interest upon the buyers/sellers reacting to the zone where a fair price has now been created at $26,591 low. This still has not created the true reflective fair value zone, however the lower low put into the market can now engage a buying opportunity for those who are inclined to take advantage of the volatile scenarios.
**To see this zone clearer, view below
[Signifies the 30k zone]
Volume Vs Price (200 days)
Overall using a 200 day picture volume has picked up at psychological levels ending 000 or 500 as expected.
The volume spikes at critical levels where imbalances are placed on the chart below where price aligns with a heavier interest and combines with imbalances upon the daily and weekly levels.
On top of this - the additions of price creating consolidative phases allows a volume to build up as orders pile up both for buyers and sellers.
High volume plot points all point to clear candles of interest on the chart.
Below captures the 10 highest positions which can be plotted and see the high volatile volume pushes/pulls before the next departure occurs from trading ranges and daily imbalances alike.
VI.
Where is the price of BTC now?
Bear Market Cases
- Bear Case 1
- Bear Case 2
- Bear Market Relief Rally
- BTC Dominance
- Heikin Ashi candles
Looking to the Monthly in a Bear Case scenario;
Note; the way Fresh levels work within the principles of Imbalances can create the next part of the cycle, while in a bear case - short term losses will hurt the psychology of the market participant, the overall concept here is to fully understand how price looks to previous arrival and departure levels of CP and Fresh Levels (here on FL).
Price can Imbalance net close, whereby price will look to the structure of the overall BTC price chart from inception and offer a closing out, from sellers to buyer - this is a net imbalance on the chart, where buyers will assume control of the discounted price and begin to change the selling environment to a buying opportunity for both short term and long term investors.
The reason for a bear case;
With the back test proof example as above, price reversion whilst not entirely predictable - assessing risk measured moves are however subject to confirmation;
so;
1. Using the $35,000 to $26,000 zone as an imbalance - subject to price using this as a tested and validated previous demand Imbalance, say this scenario of held base breaks, this has become a DBD scenario.
With allow price to remove the current demand imbalance,
The next imbalance is around $17,800 - $15,000 which is a critical position within the chart structure and can establish a change within market participants, this is called a shake out.
The psychological factor here, will posses a lot of holders with losses, where new participants and existing will be able to add to existing positions at the discounted part of the cycle.
Now looking at the main position of the Bitcoin from initiation to present, the future log chart formats a price option [as the bear case suggests to reach a low] can price here reach the pivotal level and re-activate the next bullish run? [refer to chart below labelled Bear case the next phase].
Please read: Important notice
Dominance percentage will not coincide with price reflection nor the supply percentage mined also provide a clear aligned price figure to the exact Dominance/price/crypto market cap outcome. These variables are subject to interpretation of change, but can provide indicative scenarios. Note II, where increase of Bitcoin Dominance will always mean price correlates positively, the market factors further to this will need to be quantified in a deeper model with a multi variable scenario analysis. Review the implied price relating to more of the crypto market size as a whole before drawing a conclusion. The simplistic formula is here to indicate a potential price using imbalances upon supply and demand and what price can reflect where new fresh extended levels will take BTC.
Top of the markets to the bottom of the bearish moves
- Here are the marked zones which correlate to the tops and bottoms using the 2week chart, allowing the supply and demand departure and arrival destinations in play.
- At current, 20/05/2022 - the market has encountered a low of $25,790* est. from $68,990 highs (-62.72%) drop thus far.
Let's look at some scenarios where if price settles within the arrival zone at the imbalance completion marked between
$16,300 - $20,400 - price will be within the range of the previous bear market alignments with a drop between (76.03%) drop reaching the distal zone at $16,300. With highs of (70.79%) drop incurred.
So far the average bear market from high to low averages at (75.37833%) using the marked zones.
High Low Loss % from high to low.
23/05/2011 24/10/2011 -93.56
25/11/2013 05/01/2015 -85.94
04/12/2017 19/11/2018 -84.76
24/06/2019 02/03/2020 -71.09
12/04/2021 21/06/2021 -56.36
08/11/2021 09/05/2022 -60.56*
* = current low in the bear market.
Bear Model case (1)
This implied model shows what happens in a scenario within the bear market where the Market Cap suffers a loss to 0.55x multiple where the market cap is applied at 2.245T.
* With the dominance being an important factor - review the chart below to address the cycle of Dominance vs BTC value in previous bear markets, notice the negative correlation (and probable causation upon the removal of liquidity from the market with a strong change of hands occurring).
* The alignment of dominance retreats to a Gold standard with alt coins having higher swings of volatility as opposed to the violent swings of BTC. (note, BTC will incur large -5% moves, as does Gold).
VI.I
Bear Model Case 2
What to know about the Strong bear market (bleeding market)
As the variables change, let's look at a Bleeding market where the following occurs;
* Crypto market falls to 816.6B which equates to 7% of the Gold market as of data inception date.
* Dominance tends to increase when the bear markets occur, where other Crypto assets default, the overall winner is the dominant force (or value store) is Gold and demand increases, however price can still continue to decrease as money is removed from the market.
* Taking an implied value at face value, price alignments are the key target here which support the strategy of imbalance/supply and demand zones. The overall market value is not important as this value driver is built up on numerous variables.
VI.II
Bear Market Relief Rally
Here is a probable scenario in which after a losing streak in the market, the market will show a sign of life, with new inflows taken upon an opportunity buy in upon a discount (either in a DCA investment or large volume of Puts to boost sentiment).
Why 40k? This is the current scenario where previous back testing, structure seem to point to (not 40k) but for pattern & market structure purposes whereby, price creates a DBR scenario for short term trading opportunities to fuel the final wave of the bearish structure. (Review below label 'Backtest relief rally')
Backtest relief rally
This was looking back to 2018 where June 11th - July 30th saw a summer relief rally occur after arriving back to the original level.
The white circles indicate the reactive points creating the first reactive test of the zone, which is an important aspect as the fresh level will generate the demand to continue (allbeit shorter term moves). From the targets from said demand, price can either oscilate back upto the original supply (departure) or look at the structure in place and revert to two probable levels (creating a lower high).
The second test is a deeper consolidative phase, still providing a demand reaction however less likely to produce a return which is equal/higher than the previous lower high. The steep curve (looking at the bullish structure previous indicates the highly probable OL is sat underneath the current level).
The Final reactive white circle becomes the 'Break and retest' of the trendline. Now in this scenario price broke through to deeply test the demand structure. Creating a final move which "sprung" out of the arrival zone, but created a bull trap scenario. The final move (or wave) is now in action from the reactive retest.
The lower demand aligns to the monthly wick (left, September 2017).
While the above backtest shows the scenario, market cycles do repeat (although not in exact patterns as every piece of market data is unique), however looking at the probability and how the market is currently aligned (using the above (Bear market relief rally), the chart is point to signs of a similar outcome.
VI.III
Bitcoin Dominance vs BTC
*Inversion pattern where Alt coins are hardest hit, and order flows move to BTC and cash surplus is removed from the market.
*Where the all time high (arrival destination for BTC) the Dominance is at a low, why? This is due to the entire market share increasing and prices of alternate assets which will grow at different rates where the ROA is higher than BTC as diminishing returns exist.
Dominance Solely; (weekly)
The curve steepness from the supply imbalance shows an original level and fresh level respectfully.
the 60% fresh level will indicate a strong opportunity for a targeted destination in a bear market scenario where the market value of BTC will hit a respected price, equating to a 60% Dominance on the market cap.
Using the weekly structure, the Demand (arrival) is weak and needs to create a new destination towards the supply.
Price has broke out of the weekly zone with an impulse, from here, now expecting price to oscillate within the trading range at current (39.18-47.6%).
Once the confirmation of the trading range is broken, the clear movement towards the Fresh level is now available. This will subsequently mean the price of BTC will suffer.
VI.IV
Heikin Ashi (Monthly)
What is the chart showing?
* Previous structure has shown a bear market of 14 red candles each within the two major previous corrections.
* At present 6/14 (using the anchor as a probable scenario), shows that the market still has more room to fall before the imbalance is touched within the fresh zone.
* The bear market may have a consolidatory phase where price begins to drift slowly but over a 14 candle period.
Review the Heikin Ashi weekly with the regression bands in place to indicate a probable zone of price reaction
Why is the white zone an area of importance?
*The fair market value (white line) and upper band zone (green upper) both create a curve of prediction as to where price can react upon an original level.
*Looking left on the structure, where the white zone is situated, this aligns with the previous structure highs, where price can have a reactive measure to. With this being a 'Fresh arrival' the structure can use this price zone as a imbalance position use as a base and build upon a long imbalance from here. (This in theory does not always correlate in Crypto, but has a higher probability within FX pairs).
VII
Bullish Case
Bull Market Cases
- Bull Case 1
- Bull Case 2
- Bitcoin Vs Ethereum
- BTC Halvings
Looking into the bullish case, the weekly levels, will need to hold at key pivot levels, however, looking at previous tests - from all time highs, to the lows, the bear market moves from the tops have been captured below.
From the regression zones - this can offer a large bullish case from the change of hands from bearish moves to a bullish move.
Using the Bullish case - the current state of play price looks to the key demand imbalance at $19,690 to $15,000 as the market cycle completes its pathway from Departure level (supply) and arrives at the (demand) zone.
There are interesting gaps along the way where 'Psychological' consolidative zones will react, creating a lower high formation. This can be a fresh level for a trading range or potential zone which can fall to a monthly zone (which can break upon multiple retests), shows a strong probability for a DBD scenario.
Price can in the short term of course remain in a trading range and essentially move sideways, to the DCA investor and position holder - looking forward to bigger picture, the main area of interest is within the range of $33,800 - 28,800, as price once rebounding from this zone, shows the Fresh level which has no tests as yet, meaning price will look to the Supply trading range of said zone.
Bull Case 1
- Dominance retreats back to level of 40-45%
- Crypto market inflows accelerate
- Demand zone is freshly tested, now the bullish RBR cycle can commence.
First the Conservative case applied below;
The Key takeaway is that the chart below can plot the next bullish cycle which can over extend to a new fresh level and in turn become the next fresh supply.
What this chart shows, is a clear DBD scenario, where now an original level will be clear for a 'change of hands', creating the opportunity for the next bullish cycle to initiate.
Trading/investing upon confirmations will be key here to the overall success to the individual participant.
Looking at how BTC has worked in the past with impulse, correction impulse moves or (RBR), this can form the next scenario outcome.
Using the distal line based at $15,000 as an example will allow room for positions to be added where a reactive bottom occurs.
Upon a reactive bottom, buyers will need to confirm daily closes and also zones to the left where price has yet to test (as a deep corrective).
An engulfing candle from a bottom or a long wick (weekly confirm) will signify a short term move for buyers, but note - wicks can be retested within the arrival zone to clear out early buyers for the full profit takers of sellers.
The model assumes an implied mined % of BTC against the market capitalization of the Crypto market where(these are interchangeable variables). For the purpose of the model screenshot supplied, shows interval levels with differing dominance percentages expressed, furthermore the implied price will look towards the implied market cap of the Crypto market as a whole.
With reference to BTC to XAU market cap shows the highlighted variable outcomes which over extend subject to alignment of the growth of the Crypto market and onboarding of further inflows of clients.
A bullish target using the past data implies that a $50,000 mark is qualifiable as a target for a lower boundary. This is based off the fact that Dominance of BTC will need to decrease and inflows in the market from all participants to be entering again within the market space.
VII.II
Bullish Case 2
- Dominance retreats back to level of 40-45%
- Crypto market inflows accelerate to half of the Gold market total value est. 6.124T
- Demand zone is freshly tested, now the bullish RBR cycle can commence.
What does this model show and how can the chart interpret some of the outputs?
The end goal is ofcourse the price which is the clear result, however notice the bottom section which can relate closer to how BTC price can react whereby;
1. Inflows are attracted and volume increases steadily into BTC as opposed to other cryptocurrencies as the desired asset of choice.
Dominance does not always have to be >40% of the market, instead can use the scarcity value of remaining circulation to be mined and the circulating supply which is not controlled by Saitoshi & considered 'lost, irretrievable'. This will provide a closer proximity to the real availability of BTC.
Preface to the chart and not the implied values. The next cycle can demonstrate where with further additions to consumers and the return of inflows as a growing demand increase. These fuel the change and create the price action required. (revert back to the previous peaks of the market and review the volume).
Backtest of Dominance Vs Price inversion
Looking at another example with the model applied, notice below with a potential priced in method whereby BTC holds a 43-44% Dominance of the entire market at 3.062T price of BTC will reach the desired all time high value. (subject to conditions set, where investment is heavily invested in BTC over other assets.
To understand the implied price return. The implied price based on the (implied market cap/supply)*1000 which gives the future price based off the Dominance percentage.
The implied price CAGR over the five and ten year period are calculated to indicate the return value upon the implied new price set in line with the new Crypto market cap.
When calculated back the returns, most investors look purely at the return calculation fundamentally removing all aspects of transaction fees upon purchase sells, exchange fees based on percentage of Fiat conversion to BTC and fee's upon moving from wallet to wallet transfers. This formula below purely looks at the investment price as dated to the future price value. =Implied/price close^(1/5years)-1 gives the Annual return for 5 Years.
*change the 5 years to any shortened/longer period to work out the return over a given period.
VII.III
Bitcoin Vs Ethereum
This chart represents the value of ETH against BTC, showing the valuation chart of where the pinpoint lows and highs correspond to the individual assets price in comparison.
The weekly chart is showing two probable scenarios here based off the arrival and departure and arrival zones.
*Price can look to come back to 0.4 zone as the curve using the market structure (looking left ) a clear impulse and correctional play has been created. Now using the previous cycles, a fair value is needed as a correction (bear phase) where BTC & ETH will correct back to the trendline (review curve to see where price will look to). This is a potential pathway.
*Always adjust and never forget the 0.2 zone for ETH BTC trend can fall back to the original level, this impact would be
Now review the reversion zones where BTC, ETH stagnates in a bear market before the next bull run.
VII.IV
BTC Halvings
1) Bitcoin Halvings
The best way to interpret Bitcoin's price action is via the logarithmic chart which shows the overall square root function of each cycle.
Simply put, realistically, the log chart is slowing down on the longer timescale, meaning that Bitcoin is now currently in its fourth phase as shown in the chart - price maturity and store of value. [Halving uses a step chart within the rewards]
Halvings; are where new bitcoins are issued by the Bitcoin network every 10 minutes. The amount of Bitcoins issued were 50 every 10minutes, however every four years, this number is halved, hence "halving".
A definition is explained here;
"The Bitcoin mining algorithm is programmed to look for new blocks every ten minutes. The time it takes to find blocks will decrease as more miners join the network and add more hashing power. To restore a 10-minute objective, the mining difficulty is reset once every two weeks or so. The average time to locate a block has constantly remained below 10 minutes (roughly 9.5 minutes) as the Bitcoin network has grown dramatically over the last decade."
Source: https://cointelegraph.com/bitcoin-for-beginners/bitcoin-halving-how-does-the-halving-cycle-work-and-why-does-it-matter
The significance of halving decreases the amount of new bitcoins generated per block, meaning the supply of new bitcoins is lower, making buying more expensive.
In normal markets, lower supply with steady demand usually leads to higher prices, this comes with a utility which we will look at a store of value and a consider the ongoing use case of BTC as a best practice of who can create for the general public offerings to provide best customer experiences with offerings using the network effect with parties added where merchants are added on a platform, this scalability of being able to move BTC around as a payment system with the ever decreasing availability of BTC able to be mined and % in circulation remaining, using supply/demand, price along with maintaining price stability and a store of value, will continue to drive the price up.
At present national currencies exist like the USD, EUR, GBP & AUD, taking the US in to focus for example; U.S. Federal Reserve, has at its disposal multiple tools that enable it to add or remove dollars from circulation. If the economy is floundering, for instance, the Fed can increase circulation and encourage lending by purchasing securities from banks (look back to COVID 19, 2008 market crash and Millennium crash). Alternately, if the Fed wants to remove dollars from the economy, it can sell securities as part of removing dollars from the system. These currencies are infinite, especially with printing of new Fiat. However, BTC and other Cryptos and XAU in this case present a fixed or limited resource (XAU). Having a predetermined number it’s this scarcity alongside their utility that largely influences their market value as a store of value.
Bitcoin has at current had Three halving's so far; review below the growth one year on from the day BTC halves
November 28th 2012
July 9th 2016
November 5th 2020
For the instance of the First halving, BTC per block Before = 50BTC per block
After = 25 BTC Per block
Using (Final value - Starting Value)/Starting value * 100 = % increase
Price on halving day 1 = $12.35 as at November 28th 2012
365 Days after period = $1037.75 November 28th 2013
Growth = 8303% R.D up 8302.83%
Second halving
Price on halving day 2 = $650.63 July 9th 2016
365 Days after period = $2541.85 July 9th 2017
Growth = 291%
Third Halving
Price on halving day 3 = $8765.8 May 11th 2020
365 Days after period = $55,952.5 May 11th 2021
Growth = 538%
Fourth [Pending]
Price on halving day = $ Feb-June 2024
V.III
XAU vs BTC, chart research
As stated above, the cause of these growth cycles are the Bitcoin Halvings, which leads to a supply shock and a subsequent rally. As history has shown that with a lower supply (scarcity) the demand for the coins go higher, meaning that the fundamental value of Bitcoin may go down, and now becomes more of a 'Store of Value' asset, just like gold. Refer to the below chart of XAU/BTC price chart.
Weekly Chart XAU/BTC
Notes taken from the chart:
The argument here can be presented as price for BTC is showing clear chart pattern almost mirroring XAU.
Note: XAU is finite but the supply is unknown, however BTC is 21MLN coins and known.
This uptick in Gold taking off in the 68 and retesting the lows in 1970. This departure imbalance shows clearly on the BTC chart between 2017-2019 showing a similar case. Whilst not causative, there is an element hear of the adoption phase before looking at Gold, price began to depart and create a RBR formation to generate a new all time high.
To note further, price once created the new ALT-high position, it is now time to sit on the side and await the next move, the reason being - daily charts offer shakeouts between these fresh levels and it's a risk-calculated measure to remove positions from the market or at least dwindle down to a minimum subject to trailing stop losses. The move will now form an imbalance in favour of a supply imbalance and a distal zone for viewing a sell opted trade.
Although this chart is just an observation and educated guess using technical approaches with supply and demand imbalances, still assume that this chart is realistic and a probable scenario as it is calculated with a balance of market psychology, technical, and overall market cycle theories explained.
Even the monthly chart can be seen as a minuscule timeframe and we have to take this day by day, timeframe by timeframe. We can most definitely see lower prices and from a longer perspective, anything below 100,000 USD is still considered a great buy for Bitcoin , as many will start to understand that Bitcoin is becoming an investment. If we also apply Murphy's law, we will also have to assume that all good things will come to an eventual end for a cycle.
XAU vs BTC further, looking back
Gold 70's analysis using departure and arrival supply and demand imbalances.
Here is the weekly chart in the 70's between Nov 1973 - September 1976 which shows the steep trend of RBR (on the Red line)
The reason why the "Xs" are marked on the chart is purely to show where areas on the RBR structure to the formed supply imbalance created a good reference pathway (not always 100% mirrored) but for a DBD to the original level, these are positions to take profit or look to await further positions for adding to keep exposed in the sell.
From here price created an imbalance where price had exhausted, price is now presenting a departure for sellers using a proximal sell and a distal (top) stop loss.
Price reverts to the original departure zone as the strong impulse correction, impulse now needs to retest the original level
Retest of the Original level (monthly)
Total Crypto Market cap vs GOLD Market CAP.
Unfortunately Tradingview doesn't offer a GOLD CAP vs Crypto. Refer to an al source.
IX
Reference data in plain text
so here is a BTC vs XAU Chart and relative values thanks to Woobull.com
https://charts.woobull.com/bitcoin-vs-gold/
Simplified BTC price to market cap ratio of XAU
Prices = April 1, 2022
However a simple price target using the value of Gold price value as at 12.249T [April 1, 2022]
BTC price as at close $46,630 April
BTC market value 8.87307E+11 or (887BN)
=12.249/88.7 = 13.81x multiple
Apply this to the price of BTC where close $46,630 x 13.81x = $643,960.30 subject a 1:1 ratio of BTC Market cap = XAU
BTC Modelling can be manipulated to reach whatever price you like. See the example below;
The interchangeable criteria relates back to the Dominance of the Crypto market dominance of Bitcoin using cases of where BTC had previously held highs of 70% Dominance.
For the purpose of the model implied below; using 70% as the Optimal where the large majority of investment activity by passes the other ALT coins and stable coins or better yet the top 10 coins.
70% of all investment into the market as a whole will increase the dominance of BTC in conjunction with the Implied price subject to the current scarcity of BTC in circulation with an additional 900mined per day.
Implying the 70% market cap of the new Crypto market space at a current price of 3.062T using the 19.003M coins in circulation an implied price subject to investment into BTC > all over projects, the price will produce a $112,799.40 per BTC held.
Upcoming analysis for BTC to consider.
Adding complexity layers; where
removal of "Lost BTC" from the current BTC in live circulation as at the date provided 02/04/2022 using the case of 3million coins are lost or (15.79%) of the circulating supply currently available or 14.29% of the total 21M coins.
Satoshi also holds 900,000* from sources which is 4.736% of the current circulating supply, or a 4.29% of the total 21M supply. This will be looked into in a future analysis.
X
Misc data
Sources of pricing, API added to excel with macro to refresh data (daily).
cryptosheets for second verification of price open, mid, volume, close confirms as cross reference.
Under/over valued price prediction model tool built in excel with function builder to map implied price returns using simplified modelled scenarios.
XI
Chart updates - to show confirms of DCA or buy sell orders with CP confirms
منشورات ذات صلة
إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.