In recent Bitcoin articles I have promised to re-publish my theory on how BTC's Parabolic Channel may expand into the future and how our favorite (and very accurate most of the time on any time-frame) LMACD indicator is in line with the diminishing returns in the future.
** Before we start, please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
** The LMACD Triangle and Diminishing Returns **
Bitcoin has its historic Parabolic Channel that has been trading in and it is what is offering those great returns in every Cycle to patient investors. What this Parabola is to Bitcoin, the Triangle is to the LMACD indicator as you see on the chart.
The LMACD is trading on Lower Highs and Higher Lows since the very beginning. Every Lower High represents of course a new All Time High (ATH) for Bitcoin. As you see though the original Triangle 1 (in blue) broke marginally with the December 2017 High (which is to this date Bitcoin's ATH) and created a new Triangle 2 (in red). If on the current Cycle another divergence takes place then a new Triangle may be created 3 (in yellow), but as long as every Cycle's ATH is on Lower Highs, then theory of diminishing returns will hold. As you see what a Lower High is for the LMACD, the Higher High is on BTC's Parabolic Channel but with lower returns than the previous one.
** What will the return on this Cycle be? **
As you see the first Cycle (Low to High) offered roughly +300000% return, the second offered +60900%, the third +12700%. This shows that the returns are roughly 5 times less as each Cycle passes. Assuming the sequence holds (which at the moment have no signs showing that it won't) the fourth cycle will offer 5 times lower returns that the previous and those are roughly calculated to be +2500% (still a great investment though).
** BITCOIN's Ultimate Fate. Turning asymptotic as mass adoption kicks in **
As this Diminishing Returns Theory holds, the LMACD will continue to give Lower Highs inside Triangles (like I said could be expanding Triangles but as long as the Lower Highs hold, the theory will stay valid) and the Parabolic Channel will continue making new ATH but on diminishing returns (lower returns than the previous Cycle). But how long can this last?
Well there is no real answer to that but as long as Bitcoin holds this pattern then at some point the Parabolic Channel will turn ASYMPTOTIC (I have made an extensive study on this feature in the past), which means that deeper and deeper into the future its volatility will start decreasing (so will the returns naturally) as the Parabola transcends more and more into a straight line. This will fundamental come with greater and greater adoption of Bitcoin as societies will start speculating less on its price as means of profit seeking (turning it into fiat currencies) and start using it more and more as means of transaction and of course STORE OF VALUE (which is its fundamental use, remember how scarcity plays a role in this).
Right now we are just about to begin the new hyper aggressive parabolic rise of the current Cycle. The LMACD on the 1W chart is below 0.00, has just bounced off the Blue Triangle 1 and made a bullish cross. This makes it an optimal buy level on the long term towards $100000. Would you want to miss on this ride?
Do you agree with my Diminishing Returns Theory? Do you think we will hit $100000 on the next peak? Disagree and have an alternative to propose? Feel free to share your work and let me know in the comments section!
Please like, subscribe and share your ideas and charts with the community!
** BONUS MATERIAL: Why the LMACD indicator should be trusted on medium and long term time-frames **
** Before we start, please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
** The LMACD Triangle and Diminishing Returns **
Bitcoin has its historic Parabolic Channel that has been trading in and it is what is offering those great returns in every Cycle to patient investors. What this Parabola is to Bitcoin, the Triangle is to the LMACD indicator as you see on the chart.
The LMACD is trading on Lower Highs and Higher Lows since the very beginning. Every Lower High represents of course a new All Time High (ATH) for Bitcoin. As you see though the original Triangle 1 (in blue) broke marginally with the December 2017 High (which is to this date Bitcoin's ATH) and created a new Triangle 2 (in red). If on the current Cycle another divergence takes place then a new Triangle may be created 3 (in yellow), but as long as every Cycle's ATH is on Lower Highs, then theory of diminishing returns will hold. As you see what a Lower High is for the LMACD, the Higher High is on BTC's Parabolic Channel but with lower returns than the previous one.
** What will the return on this Cycle be? **
As you see the first Cycle (Low to High) offered roughly +300000% return, the second offered +60900%, the third +12700%. This shows that the returns are roughly 5 times less as each Cycle passes. Assuming the sequence holds (which at the moment have no signs showing that it won't) the fourth cycle will offer 5 times lower returns that the previous and those are roughly calculated to be +2500% (still a great investment though).
** BITCOIN's Ultimate Fate. Turning asymptotic as mass adoption kicks in **
As this Diminishing Returns Theory holds, the LMACD will continue to give Lower Highs inside Triangles (like I said could be expanding Triangles but as long as the Lower Highs hold, the theory will stay valid) and the Parabolic Channel will continue making new ATH but on diminishing returns (lower returns than the previous Cycle). But how long can this last?
Well there is no real answer to that but as long as Bitcoin holds this pattern then at some point the Parabolic Channel will turn ASYMPTOTIC (I have made an extensive study on this feature in the past), which means that deeper and deeper into the future its volatility will start decreasing (so will the returns naturally) as the Parabola transcends more and more into a straight line. This will fundamental come with greater and greater adoption of Bitcoin as societies will start speculating less on its price as means of profit seeking (turning it into fiat currencies) and start using it more and more as means of transaction and of course STORE OF VALUE (which is its fundamental use, remember how scarcity plays a role in this).
Right now we are just about to begin the new hyper aggressive parabolic rise of the current Cycle. The LMACD on the 1W chart is below 0.00, has just bounced off the Blue Triangle 1 and made a bullish cross. This makes it an optimal buy level on the long term towards $100000. Would you want to miss on this ride?
Do you agree with my Diminishing Returns Theory? Do you think we will hit $100000 on the next peak? Disagree and have an alternative to propose? Feel free to share your work and let me know in the comments section!
Please like, subscribe and share your ideas and charts with the community!
** BONUS MATERIAL: Why the LMACD indicator should be trusted on medium and long term time-frames **
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💰Free Channel t.me/tradingshotglobal
🤵Contact info@tradingshot.com t.me/tradingshot
🔥New service: next X100 crypto GEMS!