The middle curve on the bitcoin log growth curve indicator by Cole Garner represents fair value for bitcoin. Historically here are the times when bitcoin was either overvalued or undervalued:
Oct 2010 to Apr 2011: 7 months below
May-Aug 2011: 4 months above
Aug 2011-Mar 2013: 19 months below
Apr-May 2013: 2 months above
Jun-Oct 2013: 5 months below
Nov 2013-Aug 2014: 10 months above
Sep 2014-Sep 2017: 37 months below
Oct 2017 to May 2018: 8 months above
Jun 2018 to Jan 2021: 32 months below
Feb-Apr 2021: 3 months above
May-Sep 2021: 5 months below
Oct 2021: 1 month above
Nov-Dec 2021: 2 months below
Bitcoin has spent 28 months below fair value and 100 months below fair value since Oct 2010.
71% of the time it's been undervalued. This has presented long periods where buying, DCA'ing, and HODL'ing Bitcoin has allowed for accumulating a significant amount that could have been sold when it became overvalued in price.
I've done some investing scenarios to develop buying and selling strategies by taking advantages of this Bitcoin characteristic.
A person could have put in $1000 bimonthly into Bitcoin starting 9/30/10 to 4/30/11 and invested $15000 when Bitcoin was undervalued. Once the price rose over the 5th curve or became overvalued, then you could have just held the position. At the 7th curve the first day it passed that in price you sell 5%, over the 8th curve 10%, over the 9th curve 15%, and so until Bitcoin dropped below the 7th curve again when you sell the remainder of the position. A person doing that could have made $1.2 M on a $15000 investment.
You take the approximate $800,000 left after taxes and wait until Bitcoin becomes undervalued again. When it goes below the 4th curve you buy 1% of your $800K in bitcoin every 15th or end of month it does that. You buy 2% below the 3rd curve, 3% below the 2nd curve, and 4% below the 1st curve to the bottom curve. You do this from 9/15/11 to 4/15/13.
On 4/30/13 Bitcoin rises above the 5th curve. You buy 30% of the remaining dollars twice a month to the end of Oct 2013. The remainder of the dollars left you buy in bitcoin by then. You have accumulated over 100,000 bitcoin.
On 11/17/13 Bitcoin goes over the 7th curve. You sell 5% of your bitcoin each day over the 7th curve, 10% over the 8th curve, and 15% over the 9th curve to the top curve. You do this every day until 12/18/13 when Bitcoin drops below the 7th curve in price again. You sell the remainder of your Bitcoin.
That strategy would have netted you $84.6 M and $83.6 M in profit from your $800,000 investment, over 100 fold.
This crypto market can be the most lucrative market in the world by just buying Bitcoin when it's undervalued and selling it with appropriate strategies when it becomes overvalued. Rinse and repeat.
Oct 2010 to Apr 2011: 7 months below
May-Aug 2011: 4 months above
Aug 2011-Mar 2013: 19 months below
Apr-May 2013: 2 months above
Jun-Oct 2013: 5 months below
Nov 2013-Aug 2014: 10 months above
Sep 2014-Sep 2017: 37 months below
Oct 2017 to May 2018: 8 months above
Jun 2018 to Jan 2021: 32 months below
Feb-Apr 2021: 3 months above
May-Sep 2021: 5 months below
Oct 2021: 1 month above
Nov-Dec 2021: 2 months below
Bitcoin has spent 28 months below fair value and 100 months below fair value since Oct 2010.
71% of the time it's been undervalued. This has presented long periods where buying, DCA'ing, and HODL'ing Bitcoin has allowed for accumulating a significant amount that could have been sold when it became overvalued in price.
I've done some investing scenarios to develop buying and selling strategies by taking advantages of this Bitcoin characteristic.
A person could have put in $1000 bimonthly into Bitcoin starting 9/30/10 to 4/30/11 and invested $15000 when Bitcoin was undervalued. Once the price rose over the 5th curve or became overvalued, then you could have just held the position. At the 7th curve the first day it passed that in price you sell 5%, over the 8th curve 10%, over the 9th curve 15%, and so until Bitcoin dropped below the 7th curve again when you sell the remainder of the position. A person doing that could have made $1.2 M on a $15000 investment.
You take the approximate $800,000 left after taxes and wait until Bitcoin becomes undervalued again. When it goes below the 4th curve you buy 1% of your $800K in bitcoin every 15th or end of month it does that. You buy 2% below the 3rd curve, 3% below the 2nd curve, and 4% below the 1st curve to the bottom curve. You do this from 9/15/11 to 4/15/13.
On 4/30/13 Bitcoin rises above the 5th curve. You buy 30% of the remaining dollars twice a month to the end of Oct 2013. The remainder of the dollars left you buy in bitcoin by then. You have accumulated over 100,000 bitcoin.
On 11/17/13 Bitcoin goes over the 7th curve. You sell 5% of your bitcoin each day over the 7th curve, 10% over the 8th curve, and 15% over the 9th curve to the top curve. You do this every day until 12/18/13 when Bitcoin drops below the 7th curve in price again. You sell the remainder of your Bitcoin.
That strategy would have netted you $84.6 M and $83.6 M in profit from your $800,000 investment, over 100 fold.
This crypto market can be the most lucrative market in the world by just buying Bitcoin when it's undervalued and selling it with appropriate strategies when it becomes overvalued. Rinse and repeat.
Comment:
meant Bitcoin has spent 28 months above fair value; point being being Bitcoin has spent much more time under fair value which was great for DCA'ing and HODL'ing long term