Speculations, Data analysis, well-known Patterns, Fundamentals, Daily News and more are several tools we use to predict what could be the next move of our favourite instrument : Bitcoin.
Genesis
Bitcoin (BTC) was invented by a pseudonymous individual or group named Satoshi Nakamoto in 2008 and is the world’s first enduring cryptocurrency that succeeded where decades of digital cash experiments failed.
Bitcoin’s monetary policy is enforced through a unique blend of software, cryptography and financial incentives rather than the whim of trusted third parties. The Bitcoin network is powered by a cryptographically secure, verifiable database called the blockchain — itself a technological phenomenon.
The Bitcoin ecosystem consists of a global network of stakeholders, including the miners that secure the network and drive the issuance of the Bitcoin currency, the traders who speculate on this radically market-driven asset, and the builders working to onboard people to the cryptocurrency paradigm.
How Bitcoin was built influences its patterns
Bitcoin's 19th million coin was mined recently, increasing the circulating coins proportion to 90% of the total supply. Besides, there is a common pattern known as the rainbow chart which displays the logarithmic regression path bitcoin follows. The cyclical behaviour of the security can be explained by the following facts :
Bitcoin tends to be overall bullish because the supply is limited and the amount of coins being released in circulation is halved every four years. Each block mined now provides a reward of 6.25 BTC .
A total of 210,000 blocks are mined between each halving dates, with a more visible aspect of the cycles : From the 1st block to the 70,000th block, Bitcoin appears to be in a bullish phase, from the 70,001st block to the 140,000th block a bearish phase and from the 140,001st block to the 210,000th block a sideways phase.
Bitcoin is the most dominant cryptocurrency. Indeed, it influences the whole cryptocurrency market due to its market capitalization. It's dominancy is also cyclical and since 2016, it falls below 40% exactly when we are entering the bearish phase (>140,000 blocks being mined) while the bullish phase is catarterized by a dominance around 70% of the total market.
The average drawdown during an era (Between two halving dates) is 80%.
The only indicator to consider: The MVRV Ratio and Z-score
The MVRV ratio was created by Murad Mahmudov & David Puell hot on the heals of the invention of the Realized Cap concept by the Coinmetrics team of Nic Carter and Antoine Le Calvez. Realized Cap is an alternative approach to Market Cap as a measure of network valuation. Rather than using the last traded price and multiplying by the coins in circulation as seen in Market Cap, Realized Cap approximates the value paid for all coins in existence by summing the market value of coins at the time they last moved on the blockchain. MVRV is simply the ratio comparing the two, i.e. MVRV = Market Cap / Realized Cap. It’s useful for getting a sense of when the exchange traded price is below “fair value” and is also quite useful for spotting market tops and bottoms (Source: Coinmetrics.com).
The MVRV ratio is calculated by dividing the total bitcoin market value (MV) by its realized value (RV). Therefore, the metric represents the extent in which the current bitcoin market valuation is overextended beyond (values >1) or actually at a discount (values <1) compared to the holders’ aggregated cost base.
From the MVRV ratio we obtain the MVRV z-score, which first calculates the difference between the total bitcoin market value and its realized value, and then divides that by the standard deviation of the market valuation — a common statistical procedure called “standardization.” The MVRV z-scores, therefore, represent the number of standard deviations that each bitcoin market valuation is increased or decreased against its realized value (Remember z-score >1 means overextended and z-score <1 discount)
What do indicators say?
(These Explanations are just for educational purposes and are not financial advices)
Genesis
Bitcoin (BTC) was invented by a pseudonymous individual or group named Satoshi Nakamoto in 2008 and is the world’s first enduring cryptocurrency that succeeded where decades of digital cash experiments failed.
Bitcoin’s monetary policy is enforced through a unique blend of software, cryptography and financial incentives rather than the whim of trusted third parties. The Bitcoin network is powered by a cryptographically secure, verifiable database called the blockchain — itself a technological phenomenon.
The Bitcoin ecosystem consists of a global network of stakeholders, including the miners that secure the network and drive the issuance of the Bitcoin currency, the traders who speculate on this radically market-driven asset, and the builders working to onboard people to the cryptocurrency paradigm.
How Bitcoin was built influences its patterns
Bitcoin's 19th million coin was mined recently, increasing the circulating coins proportion to 90% of the total supply. Besides, there is a common pattern known as the rainbow chart which displays the logarithmic regression path bitcoin follows. The cyclical behaviour of the security can be explained by the following facts :
Bitcoin tends to be overall bullish because the supply is limited and the amount of coins being released in circulation is halved every four years. Each block mined now provides a reward of 6.25 BTC .
A total of 210,000 blocks are mined between each halving dates, with a more visible aspect of the cycles : From the 1st block to the 70,000th block, Bitcoin appears to be in a bullish phase, from the 70,001st block to the 140,000th block a bearish phase and from the 140,001st block to the 210,000th block a sideways phase.
Bitcoin is the most dominant cryptocurrency. Indeed, it influences the whole cryptocurrency market due to its market capitalization. It's dominancy is also cyclical and since 2016, it falls below 40% exactly when we are entering the bearish phase (>140,000 blocks being mined) while the bullish phase is catarterized by a dominance around 70% of the total market.
The average drawdown during an era (Between two halving dates) is 80%.
The only indicator to consider: The MVRV Ratio and Z-score
The MVRV ratio was created by Murad Mahmudov & David Puell hot on the heals of the invention of the Realized Cap concept by the Coinmetrics team of Nic Carter and Antoine Le Calvez. Realized Cap is an alternative approach to Market Cap as a measure of network valuation. Rather than using the last traded price and multiplying by the coins in circulation as seen in Market Cap, Realized Cap approximates the value paid for all coins in existence by summing the market value of coins at the time they last moved on the blockchain. MVRV is simply the ratio comparing the two, i.e. MVRV = Market Cap / Realized Cap. It’s useful for getting a sense of when the exchange traded price is below “fair value” and is also quite useful for spotting market tops and bottoms (Source: Coinmetrics.com).
The MVRV ratio is calculated by dividing the total bitcoin market value (MV) by its realized value (RV). Therefore, the metric represents the extent in which the current bitcoin market valuation is overextended beyond (values >1) or actually at a discount (values <1) compared to the holders’ aggregated cost base.
From the MVRV ratio we obtain the MVRV z-score, which first calculates the difference between the total bitcoin market value and its realized value, and then divides that by the standard deviation of the market valuation — a common statistical procedure called “standardization.” The MVRV z-scores, therefore, represent the number of standard deviations that each bitcoin market valuation is increased or decreased against its realized value (Remember z-score >1 means overextended and z-score <1 discount)
What do indicators say?
- We are currently at the 3rd halving era which occurred on May 11th 2020, more precisely the END of the bearish phase. The crossover between the 140,000th block mining date and the lows logarithmic regression indicated 18,000 USD per bitcoin, pretty close to the actual realized Low 17592.78.
The MVRV ratio is at 1 giving sights of a FAIR VALUE (Source: CryptoQuant).
The actual Drawdown of the bearish period was around 75% (80% average since inception).
(These Explanations are just for educational purposes and are not financial advices)
Trade closed: target reached:
BTC actually bottomed on Nov 05 2022 by reaching 15,632, with an MVRV score of 0.75.
The current price is 35,000, up about 133% with an MVRV score of 2.1, which means it is actually trading at fair value.
The current price is 35,000, up about 133% with an MVRV score of 2.1, which means it is actually trading at fair value.
