After one of the worst Bitcoin slumps in its history, many people wonder if the crypto market has peaked. The market has been hit by FUD after FUD, which has had a negative impact on some owners. Many retail investors panic about selling their coins. January 2018 flashbacks set in and suddenly there was talk of the beginning of a new bear market.
For months, the crypto space around Bitcoin has been dominated by bullish tales of institutional adoption, BTC as a store of value that steals the sheen of gold. “Up only” became something more than a meme, it was a belief until the moment when prices fell below critical support.
Despite its apparently sudden execution, BTC’s price crash was predicted by many experts who are able to read the signs and indicators that go beyond the narratives. The anonymous analyst “John Nash” has been studying this phenomenon for some time and has come up with an interesting theory.
“Nash” reviewed the previous cycle of BTC to counteract “moonboism,” an invented condition that investors with an everlasting “up only” mood suffer from. As the graphic below shows, every BTC since 2021 has one trait in common: They tend to be longer than their predecessor and offer a lower return on investment (ROI).
Source: Josh Nash (@ johnNas67967558)
Bitcoin’s first cycle began in 2011 with a term of 8 months. During that time, the price of BTC rose from under $ 1 to around $ 10. The second cycle started somewhere in 2013 and lasted about 7 months with 2 different peaks at the end of that year and in 2014.
Bitcoin’s third cycle was the longest with a term of 35 months. The current cycle has lengthened by 28 months, the analyst said:
Cycles lengthen significantly, ROI significantly reduced (the law of reduced yields). Anyone who still believes in a 4-year cycle and constant ROI is clearly in denial / delusion.
Beware of Bitcoin’s price narratives Bitcoin
He presents 3 possible scenarios from the chart presented by the analyst. A high point of the current cycle until summer 2022, an extension of the cycle until October 2022 if it is the same length as the previous cycle.
Finally, the least likely and most optimistic scenario is a peak of the cycle in December 2021. Based on the previous argument, it can be assumed that the shorter the cycle, the more explosive the ROI. So if this scenario prevails, BTC could make massive profits.
In a separate post, the analyst warns investors about narratives, these can be powerful in attracting new users, but just as dangerous if followed blindly. Based on Metcalfe’s Law used to describe the new technology adoption curve, Nash drew the following conclusion:
Over the past decade, Bitcoin has followed the adoption curve / Metcalfe’s law more or less steadily, but with one special characteristic. Since Bitcoin’s network growth is expressed directly in monetary value, it is prone to speculative episodes such as B. Bubbles.
Using a logarithmic growth curve (LGC) is possible to determine the true bottom and top of BTC, the moment the curve flattens out and fewer users enter the network. This is accompanied by more maturity (time) and less volatility for the BTC price.
The analyst rejects models that predict an infinitely appreciative BTC price, he believes that no Bitcoin cycle will surpass its previous overstretch.
In other words, BTC is less likely to hit an all-time high if the percentage growth is higher than it was in 2017, when BTC rose from $ 1,000 to $ 20,000 and rose 1,900%. An increase in cryptocurrency from $ 10,000 to $ 100,000 in this cycle would then mean an increase of 900%. A plausible price according to this theory.
BTC is trading at $ 36,112, with losses in all time frames. The monthly chart was the hardest hit at the time of writing, losing 37.3%.
BTC with small losses in the daily chart. Source: BTCUSD Tradingview
Bitcoin was rejected in the high area around its current levels and downward trends on the daily chart. At...