It’s October, so the entire crypto space is waiting to see whether a prediction that has played out to the dot so far, will still continue to hold.
A 4channer said back in January that the bottom had been reached in December, and that bitcoin will rise to $5,300 in April. It did precisely that.
The 4channer said bitcoin’s price would reach $9,200 in July. Bitcoin’s price rose to some $14,000 in June, then came back down to meet anon’s prediction in July.
The 4channer said that bitcoin’s price would now reach $16,000. That would be a doubling from the current price and quite an incredible prediction if it still plays out ten months on, but will it?
We don’t know. October has plenty to run and there’s a lot that can happen.
Brexit, for example, might send the pound below dollar parity. Tensions in Hong Kong might mean the peg falls. CNY might devalue more. Institutional investors might actually start using Bakkt.
A lot can happen, so let’s consult the tea leafs of technical analysis bitcoin bar charts.
Well, there’s no easy reading of that, it’s just a bart head. The last candle also suggests no one has a clue, so, if we had to guess we’d say some straight sideways movement.
Now if we wanted to be a bit silly, we’d say if we go back to that August 2017 bit, it looks like kind of the same bart.
What happened after is a doubling, so maybe, and it sidewaying at the current price is what it did in May.
So this might be a semi-natural fall to support to see if it holds, and then perhaps another testing of, well $14,000 you’d think, but the 4channer says $16,000.
The 4channer is obviously not a real time-traveler, so it don’t mean what he said will happen.
He is merely estimating based on a pattern of sorts in bitcoin’s price whereby it tends to double, slowly to begin with and then pretty fast in a 1-2 months period.
That pattern might be something to do with the mining algorithm. They’re obviously the producers of new supply, so dynamics there may well affect the price.
In particular, if miners think price would rise, then presumably they would hold off selling unless they absolutely have to.
That withdrawal of supply by itself would presumably lead to a price increase presuming demand remains constant, with at least the biggest miner showing an interesting behavior:
One reading here is that at the beginning of 2015, Bitmain was kind of almost going bankrupt.
Up to summer of that year, it must have been a very difficult time for them following what was then becoming nearly two years of a bear market that began in November-December 2013.
Plenty of miners did go under during that period, but let’s actually look at the chart because this is interesting:
So this all looks familiar, even the bart there as 2016 was to begin. So if we try and look at both charts at the same time, we have bottom in Jan 2015 when price reaches a brief $150. Likewise we have Bitmain’s holdings slightly increase.
Price starts to rise a bit. A relieved Bitmain sells sort of relentlessly, barely surviving presumably.
Things get a bit better for them in July, they have a little cushion, but still they selling all new coins until January 2016.
January 2016 is that little bart there, if you can see it, that big red candle. Bitmain sells no more now, and we can see what price is doing.
That’s until July-August 2016, when they start relentless selling again, but price doesn’t care anymore now because of course there was the halvening.
Now looking at all this is quite interesting because the focus has generally been on that November-December 2017 window, but we can see here price going parabolic way before that, a 10x increase in just a year.
Interestingly from January to July 2017, Bitmain either sells just new coins or nothing at all, then dumps them in one go (sort of thing) in or around July/August when they sell some 40,000 bitcoins, reducing price from near $3,000 to $2,000.
Then they hold, and price so rises, with this suggesting miners clearly have huge influence on the price of bitcoin.
Obviously we have to consider this could be just a coincidence, it’s just one address, we’d need quite a bit more resources – just time really – to undertake a full analysis of the relationship between price and miner holdings because this is just one data point.
Yet it appears quite clear, even from common sense, that what miners do with their new supply can be a considerable factor in regards to what the price does.
In that case the halvening can have considerable influence because it does not give miners any choice in regards to new supply, which it reduces by 50% for the entire mining network.
That of course happens to be the 4channer’s prediction for November 2020, with it not priced in because… well we think that whole concept is flawed.
You can’t price it in because you don’t quite have the certainty and even if you did, you might not have the resources, or you might not have the knowledge, and so on.
Pricing-in is a rational theory of what one should do, but not a descriptive theory of what is and it’s not descriptive because there’s the demand equation too. If supply falls, but demand also falls, then they might cancel each other out.
So it’s not the case that because halvening then price must 10x. It’s more the case that if halvening, then price will fall less than it would have otherwise or rise more than it would have otherwise, but if it rises or falls depends more on whether people want it or not, or more objectively, on utility and its growth.
As it stands, bitcoin’s sole utility is value transfers. Of that it handles currently $7 billion a day, but that’s a very noisy number because of change addresses and all the rest.
So a more useful number is how it changes and there we don’t have a nice chart, but bitcoin is continuing to grow, it’s continuing to enter new markets, and it’s continuing to find new use cases for its unique features of decentralized value transfers or value storage.
Meaning the 4channer can easily be right, but it can also be the case that maybe he has gone a bit too fast in his prediction, that three months gaps between doublings are maybe not quite realistic.
Yet, who knows. $30,000 in February could well be our headline, but it may well be the case it will go slower if it goes in that direction.