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Market Analysis: Bitcoin Could See $58,000 Before Major Correction
’s parabolic rise since its inception has seeminglydefied and ignored all external fundamental influences; projecting pricestherefore requires looking at the cryptocurrency in a different way, and inthis case, ’s parabolic rise since its inception has seeminglydefied and ignored all external fundamental influences; projecting pricestherefore requires looking at the cryptocurrency in a different way Bitcoin Rate In Inr In 2010
’s price history, we can seethat it follows a nearly perfect parabolic curve. In particular, its priceprofile has thus far been nearly identical to the Fibonacci Sequence (Chart 1).
In layman terms, the Fibonacci Sequence is a series of numbersin which a number is derived by adding the previous two numbers before it inthe sequence. For example, starting with 0, the sequence goes 0, 1, 1, 2, 3, 5,8, and so on. The sequence can be found in all corners of nature, from leafarrangements in plants to the spiral shape of hurricanes.
The chart above shows that current Bitcoin prices ($16,851)correspond most closely with the 22nd number of the Fibonacci Sequence(17,711). Subsequently, dividing Bitcoin prices from 2010 to present into 22equal parts, or every four months Bitcoin Rate In Inr In 2010 , produces a good price profile alignment withthe sequence (0-22).
If we were to consider that Bitcoin’s price pattern has sofar correlated with a purely mathematical formula, then we can assume that itis an unique asset class Bitcoin Rate In Inr In 2010 , devoid of any fundamental influences, and any priceforecasts in the near to mid-term future should be purely technical.
Forecasting BitcoinPrices Using The Fibonacci Sequence
Chart 2, below, shows Bitcoin and the Fibonacci Sequenceplotted together, in log scale. In this view we notice two significantpatterns:
The Fibonacci Sequence (blue line) acts as atrend line for Bitcoin prices.
Bitcoin prices have historically oscillatedaround the trend line in a similar profile to business cycles.
Because the oscillation around the blue trend line has beenrelatively consistent since 2010, we will, for the purpose of this exercise,consider the Fibonacci Sequence as Bitcoin’s “fair value.” Any subsequent pricemovement around the trend line could then be considered deviations from fairvalue.
Bitcoin has undergone two complete price cycles in itslifespan, with a complete cycle defined as a price trough moving to a pricepeak, and back to a trough again. Cycle peaks and troughs are shown in circlesin Chart 2.
We are currently still in the bull phase, or the first halfof the third cycle, with prices projected to move much higher than the currentfair value of $17,711. By averaging the percentage gains of the last twocycles, from the fair value of the beginning of the cycle to Bitcoin’s price atthe peak of the bull period, we are able to estimate the amount Bitcoin stillhas to grow in its current cycle. The Table below summarizes these findings.
The model predicts that prices in Bitcoin’s current cyclewill peak at around
beforethe cycle turns bearish and prices revert back to below fair value. This of course,ignores all fundamental and macroeconomic influences. The model is only validuntil the end of the current cycle, since with more regulation underway, andthe nature of cryptocurrency investing evolving rapidly, it would seemillogical to assume that Bitcoin’s price pattern will continue moving upwards parabolicallyand indefinitely follow the Fibonacci Sequence.
This analysis comes as Bitcoin futures began trading on itsfirst regulated futures exchange, through the Cboe Options Exchange on Sundaynight. This marks the first time investors could get exposure to the largestcryptocurrency via a mainstream regulated exchange. Early trading of Bitcoinsaw the clearing house issue several restrictions, such as no short selling and50% margins. Bitcoin is up 13% on Monday after an initial surge of 22% Sundaynight.
DavidLin is the Associate Producer for Kitco News. He graduated from McGillUniversity with a Bachelor of Commerce, majoring in Finance.
The views expressed in this article are those of the author and may not reflect those of
The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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