Where Is the Bitcoin Price Heading? A Long-Term Summary – CryptoGlobe


By many accounts, 2017 is the year that crypto entered popular consciousness. This awareness fueled a market mania, producing one of the most impressive asset bubbles (in terms of percentage, not raw value) the world has seen.

We all know what happened next. But while cryptoasset valuations crashed like a house of cards during most of 2018, the industry and communities of crypto have never been more busy or dynamic. Innovation and building have not stopped. Institutional access is here and growing. Every government in the world is being forced to create policy dealing with the legality of the new asset class.

Bitcoin, the crypto that started it all, seems to be thriving. The acrimonious Bitcoin Cash hardfork from 2017 is just a memory. Transaction costs are near all-time-lows, even as transaction volume approaches its highs. Bitcoin’s mining network, after a tumultuous and arduous year – for many miners no doubt an extinction event – is beginning to stabilize, and the network’s hashrate and mining difficulty have both cautiously resumed their habitual uptrends.

Whither Bitcoin?

And yet, the market price of Bitcoin remains stuck at a level not seen since the latter half of 2017.

And the worst – the “bottom” – may not yet be in. Many technical analyst, traders, and market forecasters predict that the monthlong tumble starting on November 14th – which saw bitcoin’s price cleaved in half from $6,300 to under $3,200 after months of coiling near $6,000 – is not the end; that those lows, or even deeper lows, must be revisited, before bitcoin’s unflappable uptrend can be resumed.

In this article, I will look at a selection of the most rigorous and well researched price predictions, distill them, and present them in brief for the reader to get a feel for what the industry’s best say. This is the long term bitcoin price prediction compilation.

Stop, Murad

We can start with the “bad news,” with an analyst who forecasts more pain until a return to growth. Murad Mahmudov (@MustStopMurad) is one of the foremost analysts who holds this view, with his analysis of simple moving averages (SMAs).

Murad’s analysis is delivered in full here, and examines weekly moving averages compared to bitcoin’s price action. The crux of his argument is that Bitcoin’s booms-and-busts move in cycles (which seems pretty much irrefutable); and that during each cycle, bitcoin’s price dips into ever lower weekly moving averages.

It is sometimes held that bitcoin’s price will not break the 200-week moving average now, because it has never done so before. This argument can be seen here, for example.

But working against this assumption is the fact that it is based on a sample size of exactly one: moving averages are lagging indicators, meaning they take their forms from previous price history; and bitcoin has only been around long enough to form price data circa the second cycle (we’re now in the third). The 200 weekly SMA can be seen below, purple.

bitcoinLong_1.png(source: TradingView.com)

The significance of this fact is that, we don’t know if bitcoin hit the 200 weekly SMA during the bottom of the first cycle, but it doesn’t really look like it would have. What’s more, even though the 100 weekly SMA was itself barely around during the bottom of cycle #1, it seems to be where bitcoin ceased its price fall – not the 200 weekly SMA. The 100 weekly SMA can be seen below in orange.

bitcoinLong_2.png(source: TradingView.com)

It’s clear to see that, in this the third cycle, bitcoin has been stopped cold by the 200 weekly SMA – exactly as it did in 2015. So it is easy to believe that the 200 is reliable. But here is where Murad’s argument unfolds.

He submits that the first cycle ground to its bottom at the 100; the second at the 200; and that the third will do at the 300 weekly SMA. All three averages can be seen below, as well as Murad’s own (very) visual breakdown.

bitcoinLong_3.png(source: TradingView.com)

murad.png(source: @MustStopMurad, Twitter)

Slow Down

If Murad’s analysis points to cyclically lower lows versus the moving average, analyst Awe & Wonder claims that the cycles are also getting longer and more drawn-out. But not only that, he observes that “[bitcoin] is increasing in price at a decreasing rate” – probably not what you wanted to hear.

His analysis is based on measuring the rates of change in bitcoin’s long term logarithmic chart. The logarithmic part is important, which tracks the rate of change in price rather than absolute change – indeed, looking at bitcoin’s full history without it is tough on the eyes.

bitcoinLong_4.png

Awe & Wonder tracks the average of week-on-week price growth throughout bitcoin’s three cycles (just as Murad), to get a trending rate of change of weekly growth. He observes that this weekly rate is falling predictably. This analysis is now fairly old (October 2018), and the author at the time predicted a drop to $4,500-$5,000.

‘Something’s Amiss’

Another analyst, David Puell, was satisfied with neither of these latter explanations, writing that he still sought “a metric that both adapted to bitcoin’s rapid, high-velocity parabolic moves and accounted for its overall trend decay over time.”

Puell’s solution was to create a new sort of moving average – or at least, it looks like one – which he called Delta Capitalization. This indicator is the product of two others: Realized capitalization, and Average capitalization.

This indicator, only unveiled last month, at first paints a pretty rosy picture of the situation. This is because in a decade bitcoin has hardly dipped below the RealizedCap line, pretty much being stopped hard by it on the previous two cycles – and so is it on this cycle.

bitcoinLong_5.png

But Puell warns against a hasty prognosis, reminding us that “[the] delta cap is currently sloping down  –  and it will continue to do so for several months.” He also recognizes that “the bitcoin cycle seems to be elongating,” and cites a “major dissonance” in the market per Willy Woo’s analysis of velocity in the bitcoin market.

Willy Who

No price prediction piece would be complete with Willy Woo’s predictions, who has an enormous following in the crypto industry and community.

He is responsible for the NVT ratio, or Network Value to Transactions ratio indicator. The ratio represents the relationship between the current value – market capitalization – of the Bitcoin network, divided by the current amount of value – in USD terms – being sent over the network.

bitcoinLong_6.png

Essentially, the indicator should not deviate drastically from its lower range. If it does, it indicates, in Willy’s words, that “network valuation is outstripping the value being transmitted on its payment network […] or alternatively when the price is in an unsustainable bubble.”

The NVT is an attempt to assay some quantifiable value in the Bitcoin network, in lieu of earnings which could be used to produce a PE ratio – used in traditional investing and trading.

Willy has stated that sidechains, like the Liquid Network, will warp the ratio and necessitate recalibration in response – naturally, sidechains (on any blockchain) will take ever growing portions of value transfer away from on-chain activity.

A further, more recent elaboration of the NVT indicator – and another work in progress – is Willy’s “NVT Caps,” or capitalizations, in which he “[maps] NVT back into a valuation domain.” The effect can be seen below. Willy says that the NVT Cap bands converge toward the bottom of a cycle, signalling the event ahead of time.

nvtcaps.png

UTXO Oracles

Perhaps hewing closest to the NVT indicator is Delphi Digital’s analysis of unspent transaction outputs (UTXOs). Like the NVT, it measures historical activity on the Bitcoin blockchain and constructs predictions, and MA-like illustrations.

Delphi surmise that the longer a coin has been dormant and unmoved the less likely it is that the coin’s owner will sell it – the owner has become a holder. The group have applied this principle to the entire UTXO pool across bitcoin’s entire history, and derived a patterned relationship between the age of the UTXO pool and the asset’s price.

utxo2.png

They observe that the UTXO pool reaches its maximum overall age – it is least volatile – during the starts of uptrends; conversely, they observe that the pool reaches its minimum age – it is most volatile – after the price peaks and during bubble-pops.

Delphi are also keen to emphasize the effect of Bitcoin’s halving event, and its role in fostering a “clear reduction of natural selling pressure” – although they add that “it’s difficult to isolate [the halving’s] direct impact because market participants likely price it in.”

The halving – the amount of bitoin awarded to a successful miner – has in the previous cycles occured squarely during market uptrends, long after the previous market cycle’s bases have been put in.

Using these methods, Delphi called a bottom in bitcoin price action by the end Q1 2019 – which has almost arrived – or H1 at the most, making their analysis one of the most auspicious and comforting.

Dime-a-Dozen

This has certainly not been an exhaustive list of bitcoin price predictions. Much of the industry think that a bottom has been found, but just as many believe the opposite. Anticipations of a final capitulation below $3,000, or even $2,000, are not uncommon.

The concept of recurring market cycles, however, is pretty much universal across the space; and generally, most analysts tend to predict elongating market cycles. Indeed, this is already bitcoin’s longest bear market. Ultimately, it is hard to walk away from all these analyses believing that there is much more pain to come – especially for those who have weathered the storm this long. 

The only thing that just about everybody in crypto agrees on, however, is that bitcoin and crypto are not dead.



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