Bitcoin Price Analysis

When Bitcoin (BTC) prices are rapidly rising or falling, the argument 'how much is the real value of Bitcoin?' heats up. The BTC price, which was $ 11,000 in October last year, rose to $ 63,000 in the middle of April. Then it declined to the level of 32,000 and is currently trading at the level of 38,000 dollars.

Since the Bitcoin price is determined in the market, we have to accept the current price level. But was the $ 11,000 price in October 2020 correct, or was it $ 63,000 that we saw in the middle of last month?

Since Bitcoin has been bought and sold in the market for nearly a decade, it can guide us on how the price has evolved over the years. The chart below shows the daily price of Bitcoin from 28.04.2013 to yesterday. The exponential slope line built on these data gives the information about what Bitcoin's value would be if its price had risen properly. (Result for yesterday: 27,500 USD - 2021 year-end estimate 40,700 USD)

Why did I use the trendline as exponential rather than linear? Because an exponential trend line explains the data better than a linear trend line. We understand this because the R squared value, which is also seen in the graph, is 0.85. In addition, it is a known fact that technology advances cumulatively. It seems logical for prices to rise exponentially in parallel.

The price shown above can be considered as an average of many years. When evaluating the results of such an analysis, it is useful to be cautious. Due to psychological factors, prices may remain below or above they 'should be' for a long time. Using this information together with classical technical analysis methods will give much better results.

Thanks for reading.

Image Source: https://unsplash.com/photos/vBCVcWUyvyM
Data Source: https://www.coindesk.com/price/bitcoin