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Bitcoin: Eye Candy, Narratives, And 2021 Price Predictions (Cryptocurrency:BTC-USD)

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Here’s how to view this fun little Bitcoin (BTC-USD) article. First, I present two schemes that are descriptive and interesting but don’t offer much in the way of predictive power. I like these charts but they don’t give an idea of ​​future prices. However, they provide a reasonable basis.

Second, I briefly reviewed several Bitcoin price charts, including: Stock-to-Flow, Mayer Multiple, Long-Term Energy Law, BEAM Index, NVT, and Rainbow Price Chart. These price prediction charts are not intended to be completely comprehensive or conclusive. These are the schemes I love, and they seem to have at least a moderate level of rationality.

Third, I quickly discuss the impact of the news cycle and the related narrative flow of Bitcoin. Many examples are provided. The real point is that news definitely affects the price, perhaps a lot more than it does stocks, real estate, bonds, etc.

Finally, I summarize the implications of Bitcoin price charts, including the lower price limits, but also the higher price limits – for all charts.

I have tried to offer something to everyone. However, if you hate Bitcoin, I suggest you take a pass, and I’ll see you in another article.

Interesting, but not predictive

I will try to focus only on the charts that give an idea of ​​the future price of bitcoin. Not all charts are useful for predictions. For example, I am a huge fan of Lindy Law. And as a quick summary:

The Lindy effect is a theoretical phenomenon in which the future life expectancy of some non-perishable object, such as a technology or idea, is proportional to its current life.

This is what this chart shows with reference to specific prices:

Source: Buy Bitcoin Worldwide

However, this chart doesn’t help us predict much at all. While it’s certainly interesting, as it gives us a sense of the Bitcoin “price floors” – it doesn’t tell us much about where Bitcoin might be headed. It’s eye candy.

And here’s the second graph that I really like:

How long HODLSource:

This chart tells us – based on history – that when you buy Bitcoin and hold it for 3 years, 4 months and 4 days, it will break even. It does not matter what price you have paid at any time in the last 10 years or more. Red areas are areas of negative returns while green areas are areas of positive returns. It is clear that green spaces far outnumber red spaces. At the same time, there is not much here to help us understand future prices.

So, from here, I will do my best to focus on the charts which provide some sense of future price, by way of charts. I wouldn’t really spend a lot of time figuring out the technical, philosophical or financial value of bitcoin. This is outside the scope of this article. Instead, we will simply take a look at the charts to better understand where the Bitcoin price is right now and Where are you going.

stock to flow

Stock-to-flow or “S2F” is one of the most popular charts.

Inventory-to-flow is the number we get when we divide total inventory by annual production (flow). It tells us the number of years required, at the current rate of production, in order to produce what is in the current inventory.

Here is the current look:

source: Buy Bitcoin around the world

If you are interested, Plan B Twitter is a big defender of this model. He has also written many good papers on it. Here are two of the best:

Roughly speaking, the pattern indicates a bullish market from $100K to $288K, although nothing is stopping the price from rising any further. Exceeding the limit is quite possible. Also, S2F indicates this $64,000 wasn’t the top.

Meyer’s multiplier

here it is Explanation:

Meyer’s multiplier (millimeter) It is a simple ratio that takes the price of bitcoin and divides it by the 200-day moving average.

Here’s how it looks:

Meyer multiple source: Buy Bitcoin around the world

Not too complicated and here’s how Numbers play outside:

  • <0.55x from 200 DMA: Oversold
  • >0.55x and <1.1x 200 DMA: Bearish channel
  • >1.1x and <1.7x 200 DMA: Bullish channel
  • >1.7x and <2.5x 200 DMA: Excessive bullish extension
  • >2.5x 200 DMA: Overbought

Bitcoin trading appears to be trading low now, in a bearish channel, and very close to oversold. For reference, the oversold price is around $24,000, while the overbought price will be just under $200,000.

Long-Term Bitcoin Authority Law

I don’t see this appearing often but I absolutely love it. The idea is fairly straightforward. Here is an article on the topic, with a great view of the photo:

… Bitcoin price development can be understood as moving within a corridor defined by two time-dependent laws of power.

Basically, it appears that the Bitcoin price floor and the Bitcoin market peak follow the laws of power, as calculated and defined. Here are the forecasts that fall:

  1. The price will reach $100,000 per bitcoin no later than 2021 and no later than 2028. After 2028, the price will never fall below $100,000.
  2. The price will reach $1,000,000 per bitcoin no later than 2028 and no later than 2037. After 2037, the price will never drop below $1,000,000.

Here’s how it looks:

BTC Energy Code source: Buy Bitcoin around the world

I find it interesting that the green line, the linear regression fit, is about $24K now versus $10K to the top and $8k to the bottom. Purely from a price perspective, ignoring adoption, politics, halving and many other factors, this is a somewhat conservative view. This might be realistic.

bitcoin ray indicator

As a quick introduction:

Roughly speaking, BEAM divides the price of Bitcoin at any given moment by the moving average of the previous prices.

In addition to:

A BEAM value close to zero or less indicates that Bitcoin (or another asset) is underpriced or oversold and means that buying might be a good idea. A value close to 1.0 or higher means that the asset is overbought or overbought and it is recommended to sell.

Now, here’s how it looks now:

BTC beam source: Buy Bitcoin around the world

The current BEAM is around 0.37 so it tends towards the lower end i.e. the buy zone or the ‘long zone’ if you are looking to build up. For reference in early May, the BEAM was just over 0.70 so it was starting to get a little hot.

BEAM at the moment does not scream buy or sell. It really only tends to be taken lightly, but it doesn’t tell us that bitcoin is an opportunity to scream. However, it is not a bad time if you are looking for an addition.

Bitcoin NVT Ratio

Here’s how Willie Wu describes it:

The NVT Ratio (Network Value to Transactions Ratio) is similar to the PE ratio used in the stock markets.

When Bitcoin’s NVT is high, this indicates that the valuation of its network exceeds the value transmitted through its payment network, and this can happen when the network is in high growth and investors evaluate it as a high-return investment, or alternatively when the price in an unsustainable bubble.

Here’s how it looks now:

Willy Woo NVT percentageSource: Willy Wu

I put a red square around the NVT and also added two arrows. The red dotted color is sold out while the green dotted color is sold out. As you can see, the actual NVT is about 91 now, with an upper limit of 121 and a lower limit of 58 at the moment. Once again, we see that Bitcoin is roughly in the middle. It’s not for sale but it’s not time to sell either.

Bitcoin Rainbow Price Chart

This one is self-explanatory:

Bitcoin rainbow chartSource: Blockchain Center

The current price is falling in the “still cheap” range but very close to “HODL!” Which I think is really more appropriate. Bitcoin dropped from an all-time high above $63,000 before Coinbase (COIN) debuted. It is also well above the 52-week low of $9,000. So, again, it lands in the middle.

What will raise or lower the price?

I don’t think anyone really knows the answer to what happens next. In fact, anyone who tells you that they know “certainly” is either a liar or a time traveler. After all, the good And Bad news comes constantly but it’s a random flow.

Here’s just one view, showing PayPal (PYPL), Tesla (TSLA), and Elon Musk:

BTC environmentSource: ABC News

Here are Elon’s linked tweets:

Musk tweets BTCSource: Money Watch

Then there’s the recent China news, and the impact that has on the hash rate:

China BTC priceSource: Bitcoin Magazine

In addition, there is a lot of other news, like this:

Bitcoin is getting counterintuitive in the news. It’s not just companies like Square (SQ) and Visa (V). It includes countries, politics and even the environment. There is a lot of fear, uncertainty and doubt, even though FUD continues to decline. One thing is clear: the narratives will continue, and the price will still reflect the cycles of the story, ups and downs.

is contained

Every Bitcoin price chart I’ve checked indicates that it’s not a concrete buy or sell. Instead, it is in a mid-zone, far from its all-time high, but up from a 52-week low. The market appears to be neutral and rational, at least in terms of price.

Roughly speaking, the “floor” appears to be about $25,000, plus or minus. In other words, seeing Bitcoin drop to $25,000 in 2021 wouldn’t surprise me, but I would be totally – so shocked – to see anything under 15 thousand dollars. Almost every graph indicates numbers above $15,000. So, unless something catastrophic happens, I’ll set a low.

Now, on the high end, I have two approximate numbers. The first is about 85 thousand dollars. That would be about $20,000 above the current all-time high. Pricing charts start hitting that number in Q3 or Q4 of 2021, assuming things go well. If you are holding out, this could be the price to start unloading slowly if you are a trader, or if you are more conservative but still bullish.

The second highest number is $125,000, or about twice the highest number ever. This is the price at which Bitcoin will definitely start to look “hot” at $125,000 if you are more optimistic and less conservative. That is, according to the price charts.

While anything is possible, the charts strongly contrast with any price over $250,000, at least in 2021. I don’t mean to say $250,000 is the upper limit. Instead, I’m just pointing out that the charts I reviewed don’t forecast prices above $250,000. This may be a selling price for some, but for others, it will simply increase the conviction that Bitcoin will reach $1 million (or more) in the next 3-5 years.

In short, the Grayscale Bitcoin Trust (OTC: GBTC) still offers an interesting discount on Bitcoin at around 13%. It is just about $3 above the 52-week low. Besides owning Bitcoin directly, it may be a reasonable option for some investors looking for exposure.

Putting it all together, now is not a bad time to accumulate bitcoin. In approximate terms, its price is reasonable now. An average dollar cost at these prices would make sense to those bullish on Bitcoin. Now might not be the best time to sell, and patience will likely be rewarded later in 2021. Recent price trends still suggest an inconsistent risk-return for most investors.

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