Why Steve's 5.3 theory is not likely to play out
Many have already heard about the Steve's (Crypto Crew University) 5.3 theory. This theory determines that the percentage gains throughout the bitcoin cycles are decreasing by a factor of 5.3, placing a top for bitcoin for this present cycle at roughly 80k.
While I tend to agree with Steve's analysis, and actually find him one of the most accurate bitcoin analyst for this kind of technical analysis, sometimes I do disagree. This is one of this cases. Even though I still find this 5.3 factor a remarkable finding for the big swings he suggests, I don't think this data can't be extrapolated the way he is doing it.
Very often in different kind of analysis people forget about the time factor. Most importantly, when talking about cycle analysis, one has to pay more attention to the significance of the term cycle, where cycle and time are directly related. To be more specific a cycle is the periodic repetition of price action during a specific time period. Bitcoin’s 4 years periodicity is very well known, with the bottoms marking the beginning of new cycles precisely every 4 years. And this is where I find Steve’s analysis might be wrong. While he considers the cycles from 2014 as being 4 year cycles, from 2010 to 2013 top his analysis include 2 cycles within a period of 3 years. Within this period, while many consider two cycles, it might be far from correct, and against the true meaning of the word cycle.
If cycles periodicity is maintained since BTC’s inception, we can see that time for both tops and bottoms are perfectly aligned. If the 5.3 theory is applied now, we see three important things: 1) first cycle percentage factor is way higher than 5.3, roughly 10 times more; 2) in the second cycle we do have the 5.3 factor correctly assigned, and 3) we can only calculate two past percentage factors with the data we have, so no reliable trend can be determined at this point. What we do see is that the sizes of these green boxes are indeed decreasing (diminishing returns), but if we set the next top around 100k, it would still fit the trend perfectly.
As conclusion, while there is no doubt we have a 5.3 percentage factor for some of the most important tops printed so far in BTC’ history, this shouldn’t be used to extrapolate the next cycle target since the periodicity of the first cycle was not correctly calculated.
Time will tell.
Let me know your thoughts.
While I tend to agree with Steve's analysis, and actually find him one of the most accurate bitcoin analyst for this kind of technical analysis, sometimes I do disagree. This is one of this cases. Even though I still find this 5.3 factor a remarkable finding for the big swings he suggests, I don't think this data can't be extrapolated the way he is doing it.
Very often in different kind of analysis people forget about the time factor. Most importantly, when talking about cycle analysis, one has to pay more attention to the significance of the term cycle, where cycle and time are directly related. To be more specific a cycle is the periodic repetition of price action during a specific time period. Bitcoin’s 4 years periodicity is very well known, with the bottoms marking the beginning of new cycles precisely every 4 years. And this is where I find Steve’s analysis might be wrong. While he considers the cycles from 2014 as being 4 year cycles, from 2010 to 2013 top his analysis include 2 cycles within a period of 3 years. Within this period, while many consider two cycles, it might be far from correct, and against the true meaning of the word cycle.
If cycles periodicity is maintained since BTC’s inception, we can see that time for both tops and bottoms are perfectly aligned. If the 5.3 theory is applied now, we see three important things: 1) first cycle percentage factor is way higher than 5.3, roughly 10 times more; 2) in the second cycle we do have the 5.3 factor correctly assigned, and 3) we can only calculate two past percentage factors with the data we have, so no reliable trend can be determined at this point. What we do see is that the sizes of these green boxes are indeed decreasing (diminishing returns), but if we set the next top around 100k, it would still fit the trend perfectly.
As conclusion, while there is no doubt we have a 5.3 percentage factor for some of the most important tops printed so far in BTC’ history, this shouldn’t be used to extrapolate the next cycle target since the periodicity of the first cycle was not correctly calculated.
Time will tell.
Let me know your thoughts.
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.