The Bottom Is As Important As The Top
A lot of people try to call and predict the top of this cycle and it is very Important to know where to climb out if you are a trader or someone speculating on the BTC price. However, it is equally important for someone like me to try and determine where we will bottom on this current cycle. Looking at the last bear market that many consider to be quite extreme, we only saw the price head south for about a year. A year of falling prices is not as bad as it sounds, especially as prices begin to stabilize and consolidate, providing great opportunities to stack more BTC.
I do have a portion of my portfolio that I intend to sell for profit at the peak of this cycle, or as close as I can get. I also have a long-term hodl portfolio that I have no intention of selling. I have more security by holding an asset that is unseizable, even if the price devalues over a year or two. In the times that we are currently living, I believe that it is imperative to hold assets that are solely in one's own possession. I have recently made an adjustment to my strategy that I will perhaps detail in another article. This is a plan that I will start initiating once we hit $100K. I don't change my fundamental strategy but do fine tune and adjust it to optimize my performance.
The stock to flow model, put together by PlanB has been key in predicting the price of BTC over long and extended time frames. Many criticized this model when BTC was trading between 3K and 10K, saying that it was inaccurate and a failed model. It has since been vindicated by the recent price action of BTC over the past few months. As we speak, the current price of BTC has outperformed the S2F model.
This tends to happen in both the bullish and bearish scenario but over time averages out and stays in tandem with the model. Many have said that they expect the BTC price to crash down to approximately $20K after reaching the euphoric highs expected in this bull market. Personally I find that over bearish and considering the last crash, not very relative at all.
Where Could We End Up?
It is often said that while the market may not repeat exactly, it does rhyme. The argument that this bull run may be less in percentage terms when compared to the previous bull market does make sense. As we progress to each new cycle, the returns become substantially less but that is also pertinent to the crashes. Current corrections in this bull cycle have ranged between 24% and 30%, while the previous cycle saw corrections in excess 40%. Yes, the dynamics are different! Yes, things really are different this time but that is how markets mature. They receive recognition, adoption and large amounts of capital inflow.
Looking to PlanB's dot printing model within the S2F model one can start to see a pattern formulating that seems to be very accurate for the time that has been measured thus far. In the diagram below, it is clear that we have only begun to print orange dots.
Historically, orange dots indicate an acceleration in price, while the first few yellow dots are where the major upside occurs prior to a blow off top. Looking back on the last cycles in relation to market bottoms post market tops, one can see a clear similarity. In both cycles, the bottom is reached at the mid point of the green dot sequences. These mid points are exactly in line with the previous mid points of the orange dot sequence. This has played out like clockwork previously and if one takes into account that we have only commenced the printing of orange dots, it is reasonable to say that we have not even reached the price at which this cycle will bottom out at yet.
I consider a retracement to 20K not only unlikely but also not supported by any significant data. If the orange dots continue to print at a moderate pace, I would say that the next cycle bottom could possibly range between 80K to 100K. Some may think that is way too bullish but it is merely an extrapolation of past performances. It is also important to note that a blow off top moves in crazy multiples and for a brief time creates prices that are unnaturally high. Please note that these are my views to encourage readers to conduct their own research.
This should not be considered investment advice in any way, shape or form.
