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Major Moon Math Update: The Pre Halving Prognostication Update
The halving is coming and just like each preceding halving event bears argue that the halving is priced in while bulls argue that it’s impossible to price in the halving. The pattern repeats itself predictably. If you don’t believe me go back and look at the discussion threads leading up to the last halving. We see the same arguments using the same reasoning today that we saw back then.
Where does Moon Math stand on the controversy? That shouldn’t be hard to predict; both perspectives have important truths to observe. Unwrapping the truths and attaching ourselves to what seems most important is a hard problem, and maybe we can try to figure that out together.
https://www.tradingview.com/x/mgWU9IkM/
We’re going to unpack that graphic over the course of this post.
Bitcoin’s price moves ahead of itself a little before each halving event and cools off immediately after the price surges. That happens even though eight weeks before the last halving we saw the price almost double in a four week period. Bulls will be quick to point out that the price still jumped from a low of $430 to a high of $780, but the market showed that the price was unsustainable on the high end of that.
https://www.tradingview.com/x/pJK2Ppd6/
The 2012 halving also showed an unsustainable doubling of the price, from a low of $7.05 to a high of $15.50 8 weeks before the halving.
https://www.tradingview.com/x/zKx5pyYx/
Each time bitcoin breaks out like this before the halving we see the price recede back to more rational prices. Then, after the halving, the price rises into a slow multi-year parabolic advance.
To be clear, I do NOT see bitcoin’s price doubling again before the halving. That improbable event will take us to a new ATH and performance like that will out pace all previous halving events. It could happen, but $20k bitcoin before the third quarter of this year is an extremely low probability event. Instead, I think we’re seeing the impact of a mature and slower market. Instead of the price doubling over a few weeks we see it more than double over a year. Proportionally we’re right where we should be, and $10k bitcoin only seems like a slightly high premium for late market entrances.
The Moon Math narrative is that the price of bitcoin is stabilizing over time. We can see that by measuring the gap between Bollinger bands from week to week. https://www.tradingview.com/x/uN71Abe5/
BBand width shows us that volatility is trending down, but also that we’re seeing fewer periods of extended price stability. Overall, though, bitcoin is much less volatile in the past.
We can also see that we’ve been in an extended period of accumulation as measured by “on balance volume”
https://www.tradingview.com/x/VlEjfXgd/
The market is accumulating bitcoin week over week and the rate of that accumulation is, compared historically, very gradual. We haven’t seen rapid accumulation spikes pre halving, yet. The lack of obscene pre halving accumulation might convince some bulls that the market hasn’t seen what should be a pre halving surge. Those bulls might pause for a minute and observe the impact of leverage and the increased volume we’ve seen over the last several weeks. The pre halving surge is here, but the market might have priced in the “inevitable” surge and crash by way of leveraged short positions. Have short positions stabilized bitcoin’s price performance and prevented what would otherwise be a very irrational pre halving swing? Indeed, the market cannot rationally anticipate the impact of the halving event, but it can smooth out the peaks and valleys that we’ve seen in the past. Again, look at OBV and BBand widths on the weekly chart and try to tell yourself that bitcoin is less stable today than it was 4 or 8 years ago.
Retail’s share of overall market volume has also been increasing steadily.
https://www.tradingview.com/x/33C6kCoR/
The story is the same with (green) and without (red) Bitmex. More bitcoins are being purchased on unleveraged markets. Presumably those bitcoins are being held longer term.
On the twelve-hour chart we see a descending broadening wedge.
https://www.tradingview.com/x/dfi2jtzB/
http://thepatternsite.com/dbw.html
If this pattern confirms we’ll see an irrational pre halving surge, but I don’t think it we’ll see a local high before the halving.
The Final prognostication
Cash, stability, volume, fractals, fundamentals, classical charts… everything is pointing to business as usual for the halving, but with less gusto. The price isn’t going to do a lot in 2020 and any substantial breakout will probably be kyboshed by way of shorts on leveraged markets. It’s going to look a lot like past halvings; the price will look and feel flat, which is what our final chart projects.
Behold, the price projected using the price performance of the last two halvings. The blue line describes what I think will happen: https://www.tradingview.com/x/kdrfJNAR/
And now zoomed out:
https://www.tradingview.com/x/1B9PVdF0/
So, as always, zoom the fuck out.
Good hunting
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