BTC - Everything you need to know for the next Bitcoin Bubble
Bitcoin is going to have another bubble, and it's likely coming after the next Halving
Bitcoin will have another euphoric bubbly period, it's just a matter of when.
Everything you need to know about the previous ones can be seen here:
(Source: https://twitter.com/ChartsBtc/status/1204788348641898496)
As you can see, every time we had a euphoric bubbly phase, it was followed by an 80-90% retrace.
We already saw the most recent retrace that bottomed at $3,100.
What should we expect to happen next?
As it relates to our next bubble, pay special attention to the lows during those pullbacks compared with the highs seen during the most euphoric phases of the bubble.
They are circled here for you:
(Source: https://twitter.com/narcopoly/status/1204791317353684995)
We only have 2 data points to go off of, so not a ton of data to base our trend on, but we do the best we can with what we have.
In this case, the second peak was about 1/4th the total return of the previous one.
Using that same logic and math, we could apply the 1/4th model to our next phase.
If the last phase saw a 130x return, we would expect the next phase to return something around 32x from the lows ($3,100).
That would equate to a projected price of $100,750.
Do you understand now why so many people keep pointing to that $100k price target?
Why does the halving cause these massive rallies?
It's pretty simple really, it's math.
For bitcoin to stay at a price for any length of time the supply and demand must be fairly balanced.
That means that the current demand that is coming in to bitcoin is chewing up the new daily supply each day to keep the price around $7k.
Well, if that daily new supply gets cut in half, but the demand stays roughly the same, what do you think happens to prices?
They go up!
And, once they start going up, animal spirits take over and prices well overshoot where they probably should and you get things like 30x returns in a very short period of time.
Once this next halving takes place, and the reduction in supply starts being offset by a sustained demand level, we should start seeing prices take off.
And when that happens, animal spirits take over.
Stay informed my friends.
-Doc
It's not only the reduction of the new supply.
it is also:
This is a self-fulfilling prophecy.
Yes, the backdrop of steady demand (or increasing) vs decreasing new emissions, likely equals higher prices. If demand just stays constant, prices have to go up.
You nailed it.
I think the only constant is change. So I think in one of the next bubbles we'll see a surpasing of bitcoin by an altcoin and even a massive downfall of bitcoin. If you think it Bitcoin is the most basic blockchain technology right now out there. Money always follows value. If one day cryptocurrency gets used by the masses it won't be bitcoin, I can assure you that. Until that happens bitcoin will live from bubble to bubble.
I agree. Though I think bitcoin's best use case is as a store of value. Bitcoin can be digital gold while other fabric chains can be web 3.0. That's how I look at it anyways. Gold is an $8 trillion dollar market while bitcoin is $150 billion. Bitcoin can still go up a ton even if some other fabric coin eventually has a larger market cap as web 3.0.
I sincerily don't know about the use case of store of value. Don't believe it. The use case will be what people want to believe it is, and I don't see many people say to consider it a store of value, only speculate about it's price and nothing more.
Anyone worried about the value of their local currency is likely to view it as a store of value.
It's quite hard to guess these because crypto is at the edge of technology breakthroughs. Hence the normal trading analysis might not explain the trends sometimes.
But nevertheless it's interesting to see this perspective. Sure makes bitcoin holders happy to play the long game.
Yea I mean it's just based on past patterns with bitcoin itself, surrounding its halving events. Most likely things won't go exactly like this, but they may end up doing something similar.
the technology behind the price does not fit past patterns unlike the stock market, the momentum will be deferred by the adoption you have at that time
What do you mean by this?
Thanks for sharing this data, mate. Very informative and easy to dissect.
There's constant, and steadily growing demand, that's for sure. We're seeing more institutional instruments for BTC, and we're also seeing more adoption; e.g. growing BTC transactions on Square's app, IRA retirement funds for BTC, more BTC support on mainstream digital banking apps, among other things. So, I do believe there is a chance for this scenario to play out, albeit probably we won't see such high prices so quickly.
That said, recent trading volumes have been meek, as BTC's been trading sideways with a hint of bearish sentiment for the time being. Do you think people are just hodling their BTCs until halving-2020?
It's very possible. I know a lot of people are actually. It will be interesting to see what happens if/when things stop performing as expecting compared wit past trends. Do they HODL or bail?
That's true. Depending on how the prices move, they could still hodl. Yet, if prices prove to be less than savoury, we could see a dump post-halving. Let's hope the latter doesn't happen.
we're reaching a global inflection point where asset prices are extremely bubbled, central banks have opened the flood gates on new money supply, US stocks are in euphoric mania land, cost of living comfortably is out of reach for a majority of the world (if you don't factor in credit card debt), and personal debt is beyond sustainable for the long run.
Coming in 2020: bankruptcies as far as the eye can see and debt negotiator businesses booming, Gold hits $3000 and Silver hits $50-100 at least, Bitcoin hits $40,000, global Housing prices drop by 50%, US stocks panic sell in February and dead cat bounce in early summer, homeless rates triple, poor crop yields and mass pig deaths from 2019 cause temporary food shortage and spikes in food prices, social unrest reaches crescendo, Record number of big box stores close, Amazon struggles along with courier businesses, Facebook continues to decline and is caught red-handed fabricating views and clicks (this one is highly speculative and totally out of context, but I have a strong gut feeling about it).
If non of that occurs in 2020, consider it a miracle. I could post a massive list of things that have a chance of happening, but the above list has a high probability in my mind.
I don't think we can extrapolate where Bitcoin is headed, because Bitcoin's entire lifespan has existed inside of a Central Bank bubble, and that bubble is about to grow exponentially in some ways that will benefit the price of Bitcoin, but will be deflationary for people's net worth. looking even further down the road, Without a wealth tax the US government is going to go bankrupt (technically it already is) either under Trump or a Democratic President, take your pick. With a wealth tax will come asset devaluation, bankruptcies, mergers, more wealth disparity, and eventually just like with income tax the wealth tax will hit anyone with a positive net worth.
this leaves Bitcoin with no other choice but to shoot for the moon, far beyond what historical logarithmic trends would suggest. A global reset will be pure chaos for 3-6 months, and it would be better if it happens in 2020 with all the proverbial stars aligned, than for it to occur later, because if it occurs later then the bottom 99% suffer for longer. Either way, Bitcoin and precious metals are currently undervalued by a factor of 10 in my opinion, but they can still be squeezed lower in the short term before 2020.
You may be right on some of this, though I am curious, why do you see bitcoin gold and silver (as well as other assets) going up, yet you see housing prices going down?
technically the numeric prices of houses may not actually go down, but your share will decrease starting in 2020 as shared equity mortgages become mainstream. When the price of a house goes up, normally you gain numerically, but with shared equity the banks get to sell that numerical gain to investors. You will probably hear arguments that shared equity is meant to lower the price of a home for a first time buyer, but it will impact all home owners as the value of fiat plummets but the stake you have in your home remains at the same numeric amount.
This could actually trigger a home price meltdown I think later when investors want a larger cut of the equity and start buying out the remaining share of the home from the people living in it.
But short term the equity people think they have in their homes is going to shrink in real value as investors steal the rest, which I think will lead to homeowners selling off their equity for liquidity, and causing a buyers market.
edit as for bitcoin, gold and silver going up, the extreme excess liquidity that's ramping up will need to go somewhere, and while it has initially gone into stocks, its not going to stay there, and banks don't offer any meaningful gains on any investments they offer (and average annual rate of return is an obvious scam), so the only thing left is metals and any other safe haven, and the liquidity that gets funneled into real estate isn't going to help home owners, aside from short term liquidity if they choose to sell off their equity.
2nd edit I guess I should clarify. If you are someone that ones your own house outright with no mortgage or line of credit, and you are financially well off, then none of the above applies to you. If you do have a mortgage or a line of credit that you can't pay off in full without needing time, then you may find your bank contacting you soon to "offer" you a shared equity mortgage, with the alternative being that you pay off your line of credit immediately (as these are often business related), or if you simply have a mortgage you are paying then they may offer reduced payments if you switch to a shared equity mortgage.
I agree with your theory about the excess money, though I just also think it will prop up housing prices and just about all assets across the board. Anyone who already owns a house (or land) will be happy.
Dear @jrcornel
That statement would suggest (at least to me) that the reason why we will experience next bubble is related to decreased supply of new BTC.
At that would mean that correct is following assumption currently miners are dumping large amount of BTC and they are main cause of selling pressure.
In my opinion halving will not increase demand and simply by reducing selling pressure coming only from miners, we won't really be able to reach new state of bubble. Especially since hostile environment, lack of regulations and lack of certainty across the globe didn't change a bit. Until this will change - serious investors will stay away from anything related to crypto, ICOs, STOs etc.
Great read.
Cheers, Piotr
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Hello jrcornel…nice post indeed...Where do you see BTC heading towards in 2020?
I think you will see bitcoin north of $20k a few most post halving, which is in May of next year.
That's great...look forward to upward trend :-)