Bitcoin Price and the Altcoin Rally: Part I
1) The green vertical line represents Bitcoin rising above its previous high (i.e., $1,163) from the 2012 Bitcoin Halving Cycle run (see ref 1 for discussion of the Bitcoin Halving Cycle). But it also reflects the beginning of the 2017 Altcoin Rally as well.
2) The yellow vertical line represents the price high (i.e., $19,666) of the 2016 Bitcoin Halving Cycle run and the beginning of the last stages of the Altcoin Rally of 2017.
3) The red vertical line represents the end of the Altcoin Rally for the 2016 Bitcoin Halving Cycle.
4) The X-axis represents time.
5) The Y-axis represents the percent of bitcoin dominance for all crypto coins. Therefore, as the percent of bitcoin dominance drops, the prices of Altcoins are rising relative to the price of Bitcoin .
1) The Altcoin Rally began when Bitcoin reached and surpassed the old high (i.e., $1,163) from the previous 2012 Bitcoin Halving Cycle. Induction suggests that we can expect a similar beginning of a new Altcoin Rally once Bitcoin surpasses the old high (i.e., $19,666) of the last 2016 Bitcoin Halving Cycle.
2) The timing of the last Altcoin Rally suggests that a new Altcoin Rally may last a little longer after Bitcoin has reached its peak for the current 2020 Bitcoin Halving Cycle. However, induction also suggests that this rally will end soon after and smart speculators should begin exiting alt coin positions.
3) Previous cycles and rallies suggest that Bitcoin will outperform Altcoins when the next crypto winter begins. Smart speculators should attempt to sell Altcoins early and remain in Bitcoin or cash until the next Bitcoin Halving Cycle begins in 2024, and in particular, a new high in Bitcoin is reached for the 20224 Bitcoin Halving Cycle.
4) Similar to my prediction of the timing of the 2020 Bitcoin Halving Cycle bull run (i.e., see ref 1), I expect market participants to front run the Altcoin Rally. Specifically, I think we may see a start to the Altcoin Rally as early as a price of $15,000.00 per Bitcoin , with an increasing probability as we approach a price of $17,500 per Bitcoin . I personally will have my Altcoin portfolio ready for the Altcoin Rally at a price of $17,500 per Bitcoin .
Further Altcoin Rally Analysis:
1) The important questions are “Why did the Altcoin Rally begin when it did?”, and “Why was this rally so pronounced, intense, and abrupt?”.
I attempt to answer these questions using a rhetorical analysis of the potential cognitive states of market participants. A rhetorical analysis is an empirical examination of the plausible and probable arguments available to actors in a given context to justify and or criticize actions and or judgments about reality. For example, prior to a new all time high in Bitcoin , it is relatively easier for bears to argue that the current rally is a “dead cat bounce” or just a lull in the current bear market. However, as prices approach the all time high this argument becomes harder and harder to make both internally (i.e., justifications and/or rationalizations we provide ourselves) and externally (i.e., linguistic statements we share with others). Similarly, arguments become easier to develop and deploy as prices rise and approach the all time high. In short, as price rises, we see a decrease in the production and persuasiveness (i.e., perceived rationality) of arguments and an increase in the production and perceived rationality of arguments. These changes become more pronounced and intense as we approach new all time highs.
Moreover, I theorize that something very different happens once we break or get very close to the all time high. Specifically, I think a symbolic “big bang” or rhetorical critical mass moment is reached where the rhetorical dynamics governing rationality reach a criticality. The cognitive or persuasive potential of rhetorical arguments expand violently and exponentially, while the rationality and plausibility of arguments collapse suddenly and dramatically. Once the old high is breached, it becomes untenable to make the argument that we are still in a bear market. Market participants making such arguments appear both irrational to others as well as themselves. The rhetorical resources available to and marshalled for the bear case diminishes irrevocably and quickly. In contrast, bulls no longer need to expend rhetorical resources making the counter argument that the bear market is over. These freed rhetorical resources do not flow slowly and incrementally into the cognitive consciousness of market participants, but flood into the rhetorical imagination creating an argumentative echo chamber that extends and expands the cognitive horizon of what is possible and plausible. The threshold of what is reasonable falls precipitously, and in this new attention landscape, altcoins and their myriad business models and diverse future worlds appear rational and persuasive. The symbolic “big bang” shifts the cognitive arena from a presumption of “crypto currencies will not survive to” to the presumption of “crypto currencies will thrive and disrupt/transform the world”.
I will discuss these ideas further as I think more about the concept of a rhetorical “big bangs” and the creation of argumentative contexts that allow for bubbles and bull runs in general. If you are interested in this type or similar types of rhetorical analyses, please see my previous work on the Bitcoin Halving Analysis.