Analyst: Model predicting Bitcoin will hit $288k is no better than “moon cycles”
To most, Bitcoin’s rally from literal irrelevance to becoming one of the most valuable assets in the world is hard to explain. The critics say that the value of the cryptocurrency is entirely based on speculation by foolish retail investors willing to buy into what they think is a Ponzi scheme.
Thus, when a quantitative analyst known as “PlanB” revealed a valuation model for Bitcoin in early 2019, crypto investors felt validated and were rightfully enthused. The model, called the Stock to Flow (S2F) model, suggested that the value of BTC was mostly derived from its scarcity, enforced by the cyclical block reward halvings that take place every four years.
But, as the next halving has neared, the model has come under fire from critics, saying that there is scant evidence to suggest that it is actually applicable to Bitcoin.
Bitcoin’s stock-to-flow ratio and price are “NOT” cointegrated, according to Alex Krüger, an economist closely tracking the cryptocurrency space.
In an extensive Twitter thread published Apr. 29, the analyst stated that the S2F model is flawed because Bitcoin’s scarcity is algorithmic and known in advance, not random, making cointegration between BTC’s scarcity and its price impossible.
Krüger summed up his thoughts with the following conclusion:
“People using S2F to predict BTC may as well be using the moon cycles to predict BTC. […] The S2F analysis is interesting. But the S2F model is useless for predicting price, as the underlying assumptions of the model are not met. Now and always.”
Krüger isn’t the first to have tried to debunk the sentiment that Bitcoin’s halving will be decisively bullish for the cryptocurrency. Per previous reports from CryptoSlate, Seattle-based crypto hedge fund Strix Leviathan debunked a portion of the halving narrative in a report, writing:
“Reality – Not all miner rewards are sold. A meaningful amount of mined BTC is sitting on balance sheets as miners both speculate and utilize BTC-collateralized loans to run and expand operations. The impact of a supply-side cut on price is uncertain at best and minimal at worst.”
Alex Krüger’s critical take on the S2F model comes shortly after PlanB released an updated version of the model, as CryptoSlate reported previously.
The analyst found that by taking into account the latest rally in the price of gold and by analyzing Bitcoin slightly differently, a new formula can be created that has a “perfect fit,” an R squared of 99.7 percent. According to PlanB:
“[The new] model estimates a market value of the next BTC phase/cluster of $5.5T. This translates into a BTC price of $288K [between 2020-2024].”
That’s not to say that the halving won’t have an effect on the Bitcoin market. It just might have a bearish effect.
CryptoSlate’s Joseph Young recently interviewed Mao Shixing, the co-founder of F2Pool, for an article written for LongHash. Mao said that with the Bitcoin price still relatively low compared to its all-time highs and the halving rapidly approaching, miners could soon feel a profitability crunch that may “doom” them:
“With the halving approaching, Bitcoin miners are doomed to be confronted with the problems of mining profits getting lower and the proportion of electricity bills higher. Meanwhile, miners will need more time to reach the break-even point.”
Low miner profitability threatens the price of Bitcoin because the business of mining is predicated on positive cash flows, as the cost of electricity and cost to maintain ASIC miners is very high.
An analyst explained in a Twitter thread last year that when smaller, non-industrial mining operations “get backed into a corner,” they’re forced to liquidate the coins they earn via mining, often all at once, to keep the lights on, cash out, or to upgrade their systems for the future:
“Undercapitalized miners panic sell, price dumps, longs get squeezed, stop losses cascade — then more miners lose their lunch.”
It’s a trend that has the potential to cause Bitcoin to drop should buying pressure be too slow in the wake of the upcoming halving.
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A decentralist at heart, Nick has shown interest in Bitcoin and cryptocurrencies since 2013. He has since joined this industry as a full-time content creator, focusing on written content and visuals. Aside from working with other leading trade publications, Nick is a part-time creative at HTC’s Bitcoin division, EXODUS. He is based in Canada, where there is an apparent lack of industry events.
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Author: AuthorNick Chong Twitter LinkedIn Analyst @ CryptoSlate
Arthur Hayes Teases $420,000 Bitcoin As Elon Musk Asks Crypto Traders for Anime BTC
The CEO of the crypto derivatives exchange BitMEX is highlighting Bitcoin’s decentralization, teasing a massive Bitcoin (BTC) price and taking a shot at Elon Musk – all in a single tweet.
On Friday, Arthur Hayes “announced” that he has secured enough funding to take Bitcoin off the public market once it hits the $420,000 mark.
Funding secured, I’m taking #bitcoin private at $420,000. Many thanks to the Vision Fund for their support. https://t.co/NAntTqE6hB
— Arthur Hayes (@CryptoHayes) May 2, 2020
The statement is a twist on Elon Musk’s infamous tweet about his plans to take Tesla private when it hits $420 a share. That tweet landed Musk in hot water with the US Securities and Exchange Commission, which accused him of misleading investors. Musk eventually settled with the SEC and paid a $40-million fine without admitting any wrongdoing.
The new viral tweet from Hayes, on the other hand, is placing a spotlight on the lack of control any one person has on the Bitcoin network, and the inability for an agency like the SEC to point the finger at a person or group behind the leading cryptocurrency.
In a recent newsletter, Hayes said he believes that in the mid to long-term, BTC’s status as hard money with a capped and limited supply will stand out against a stimulus binge from the US. He’s predicting Bitcoin will hit $20,000 by the end of the year.
As for Musk, he’s once again toying with Bitcoin and crypto traders.
After creating a new firestorm on Friday by declaring Tesla’s stock is overpriced, he then replied to @Bitcoin, asking how he can attain some BTC, in cartoon form.
How much for some anime Bitcoin? pic.twitter.com/itqRslFNcb
— Elon Musk (@elonmusk) May 1, 2020
Bitcoin (BTC) Price Prediction: Halving as Reason to Expect the Price Above $10,000
Can the bulls maintain the growth for Bitcoin (BTC) till the halving?
The cryptocurrency market is clearing each obstacle along the way to new heights. Almost all of the coins from the Top 10 list are in the green except for Ethereum (ETH), Binance Coin (BNB), and Tezos (XTZ).
Meanwhile, the dominance rate for Bitcoin (BTC) has remained unchanged since yesterday and is currently sitting at 65.5%. In terms of the monthly change, BTC also remains in the same position.
Market Cap: $165,367,683,581
Volume (24H): $46,826,931,120
Change (24H): 0.79%
Our last Bitcoin (BTC) price prediction came true as the main crypto reached its resistance level of $9,165 and is currently trading below it.
Looking at the 4H chart, Bitcoin (BTC) is facing a correction after failing to fix above the $9,200 mark. The current decline is also accompanied by a decrease in trading volume.
Looking at the daily time frame, Bitcoin (BTC) is heading towards a vital level of $9,500. There is enough liquidity for crypto as the trading volume remains at a relatively high level. What is more, the Moving Average Convergence/Divergence (MACD) indicator is located in the green, confirming the dominance of buyers.
At press time, Bitcoin was trading at $8,873.
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Author: Sun, 05/03/2020 – 14:16
Bitcoin Hasn’t Done This Since 2015 Before Its 10,000% Bull Run
The price of Bitcoin (BTC), the top-ranked cryptocurrency, currently sits around $9,000, after last week’s impressive 20% rally in a single day. With the halving now less than 2 weeks away, it might seem like a no brainer to go long on Bitcoin to catch the next explosive move.
However, there is one chart view that suggests we may have topped out, and that is what I’ll start with today.
Daily crypto market performance. Source: Coin360.com
BTC USD daily chart. Source: TradingView
In last week’s analysis, I shared two possible ascending channels, one of which was invalidated leaving one in play. This week, I want to look at the possibility that we were not inside either channel and the fact we could still be in a downtrend since the June 2019 pump that almost hit $14,000.
The upper trend line is validated by three touches. However, the lower trendline of this channel puts the immediate downside as low as $3,000 with the moving average around $6,300. These are not numbers that I expect Bitcoin to see again, but it would be foolish to not be prepared for it.
BTC USD daily chart. Source: TradingView
The Fibonacci retracement levels from the ATH of $20K per Bitcoin are showing us that a breakout today could see us return to much higher levels than previously expected.
$9,550 is the critical level to focus on. It’s both the 0.382 Fib and the top of the channel. Claiming this level could see Bitcoin soar towards the 0.5 Fib of $11,50,0 which then realistically puts the 0.618 Fib of $13,500 on the table.
Now that’s all well and good, but “number go up” doesn’t always happen, and one such indicator that can be relied on to confirm the direction we’re headed based on the current momentum is the monthly Moving Average Convergence Divergence indicator or MACD.
BTC USD monthly MACD chart Source: TradingView
Last week, I highlighted the significance that the moving average divergence convergence (MACD) Indicator has on the price of Bitcoin when it crosses bullishly on the weekly timeframe.
However, with the bullish monthly candle close comes a new picture for the monthly MACD. Mapped out above is the monthly MACD bullish and bearish crosses with the weekly MACD bullish crosses highlighted with the dotted lines — green for bullish crosses that saw a big run after, and red dotted lines for the false bullish crosses.
The reason for this map is to see if there are patterns that match with the 2017 weekly bullish cross that saw a 2,000% rise. But it’s also useful to see if the higher time frame view is showing us any contradictory momentum that could suggest a dump is due soon.
Moving from the left to the right of the chart, what this shows is that back in March 2017 when the weekly MACD crossed bullish, the monthly MACD was already in a bullish crossover from 2015.
Thus, at the point of the weekly bullish crossover, both the MACD and signal lines were on an upward trajectory. This resulted in a 2,000% increase in price for Bitcoin from the point of the weekly cross.
Later on, the false bullish crossover on the weekly in September 2018 shows us that the monthly MACD and signal line were both in a downward trajectory and that the monthly MACD was already crossing bearishly. Thus, the higher timeframe momentum was signaling that the move from weekly MACD crossover may not be valid.
The February weekly bullish crossover seemingly has exactly the same conditions as the September crossover with one difference. The histogram on the monthly MACD was losing downward momentum as can be seen by the paler pink color compared to the darker pink in the previous crossover. In this case, it resulted in a 400% increase in the price of Bitcoin.
Now looking at the 2020 momentum, we can see that the monthly MACD was chopping and changing direction between December and February, which led to the signal line and MACD having a sidewards trajectory — quite literally a first for Bitcoin.
But if you’ve read this far, and you’re still following where I am going with this, the monthly signal line is on an upward path for the first time since October 2015, back when Bitcoin was just $200 per coin, and if you take this to the $20K all-time high, that’s a monstrous 10,000% or 100x move.
So with this in mind, will the next bullish cross on the monthly MACD happen in June? Are we in store for a 10,000% increase from the current price? Only time will tell.
BTC USD 1 hour chart. Source: TradingView
Drilling down to the hourly now, and we can see that Bitcoin was starting to form a pattern of lower highs and higher lows after its big leg up last night.
Typically this signals a potential continuation of the previous trend, and the upside potential is around $9,600. And if we had held this level for a candle close on the daily, then next week would have looked to be incredibly bullish.
As this has just broken down, a pullback to $8,400 throughout the week is to be expected.
The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Author: Keith Wareing