3 Logarithmic Charts and 1 Prediction
In the last 10 days, the price of Bitcoin decreased by about 10k dollars. Such price pullbacks inevitably raise doubts about the crypto market. The bull rally, which was suggested by many experts that it would take place in November and December, did not start, and, on the contrary, prices declined.
I think it is not possible to predict short-term crypto price movements. So I'm not surprised that the expected rally didn't occur. In such turbulent times, looking back and examining long-term price movements will enable us to look to the future with more confidence.
I want to start with Bitcoin. In the logarithmic chart below, the blue line shows the expected value of the Bitcoin price.
In the chart, we see that Bitcoin prices showed high increases in 2013 and 2017. The expectation of many experts was that this situation would be repeated in 2021. Although the Bitcoin price is above the trend line, the expected bull rally did not start.
On the Ethereum chart, we see the great rally in 2017. In 2018, prices regressed and came back to the trend line. We can't see any signs of a 2017-like rally on the chart yet.
In the chart showing the total market value of the crypto market, the rally in 2017 stands out. In the following years, prices followed a closer course to the trend line.
At this point, I would like to repeat some of the data I mentioned in my previous articles.
- Bitcoin price doubles on average every year.
- Ethereum price triples on average every year.
- The total value of the crypto market is increasing by an average of 2.44 times every year.
According to the regression models I created by taking advantage of the long-term trend of prices, current crypto prices are around 20%-25% higher than they should be. However, I don't think this poses a big problem. Prices are only 2-3 months ahead.
Prediction
The bull rally mentioned in the crypto media will never happen. Because unlike the years 2014 and 2017, many institutional investors have been included in the equation. Moreover, everyone knows the two bull rallies and the two bear markets that followed them. This time, the rise will be more measured.
On the other hand, I don't think the crypto market needs a bull rally. It will be enough for us that the prices increase 2 to 3 times every year when they are in the normal course.
Thank you for reading.
Image Source: https://undraw.co/
Prices often cause great surprises. Or, make pain to the maximum number of investors (Maximum Pain Theory).
The maximum pain, for both groups would be if bitcoin didn't make any significant move in the next couple of years...
Greetings @muratkbesiroglu, although we are ending the last bullish wave in the price of BTC, I consider that this correction is healthy and if we want to observe a bitcoin above 100k we should hold on a little longer.
Therefore, perhaps this prediction is too hasty, remember that just 2 months ago the price was below 40k and managed to rebound and be placed around 67k, it is already a lot what this great asset has been doing.
First of all very nice explaination , I agree with you as we can see bitcoin always give good return every year even all crypto do. Ups and downs in the crypto always happen we just need to hold tight and wait for the good return.
For now, one cannot tell 2021 is not yet over and cryptocurrency in general is on predictable.