Expecting the Unexpected
Bitcoin Data Newsletter
Hello everyone!
In preparation for the next Bitcoin cycle, I have decided to format this edition of the Bitcoin Data Newsletter a little differently. If you were around during the last Bitcoin cycle, you may remember the last Bitcoin top predictions. The bare minimum was agreed to be about 100k, with many much higher than that at 250k+. When Bitcoin did actually top at 64-69k, many people were completely caught off guard. I myself was expecting a price target of at least 100k but was able to identify that Bitcoin had topped when data had shown me so.
This is not a new concept though, in fact this is something that is repeating every cycle. It is what deters people from being able to profit. The mass set price targets in their mind and when Bitcoin fails to reach those levels, they too have failed to take profit. Last Bitcoin cycle allowed me to realize just how difficult it is to anticipate what is to come, which leads me to todays topic, “Expecting the Unexpected.”
This Newsletter will Cover:
The least and most likely scenarios
What if Bitcoin doesn’t go up?
What if the sentiment cycles are broken?
Could Bitcoin go to 250k?
Could Bitcoin see an early top?
-I will talk about this and more in todays issue.
This is the monthly free version of my newsletter, but I also write a premium version that includes more long term data analysis and charts, as well as some shorter term analysis. It is released more frequently (Bi-Weekly) and is $15 a month, thanks for your support!
This newsletter will be structured to show what I consider to be the least likely, to the most likely unexpected scenario. Let’s get started.
Number 5- Bitcoin Does Not Go Up
I see this as the least likely scenario. This has been painted many times throughout Bitcoin history. These fears become increasingly present near bear market bottoms. The amount of destruction this would require to crypto is astronomical. The events that would need to take place for this to happen include collapse of all major crypto exchanges, governments banning the buying and selling of Bitcoin, and money made unable to be transferred to banks. This along with a 51% attack, an event where 51% of Bitcoin miners join together to create a separate blockchain, and have that blockchain’s hash rate equal to the amount they are using to mine. This is extremely expensive and highly unlikely. But this is what it would take for this to happen.
Not only would these events need to occur, people would need to stop wanting Bitcoin. An asset with finite digital scarcity that has proven itself to have increasing value over the past 14 years of its time.
The next least likely scenario gives too much value to Bitcoin:
Number 4- Bitcoin goes to 250k+
In order for Bitcoin to go to a price like 250k, it would require a rate of exponential growth that has never been seen before. Looking at past returns from cycle bottoms to tops it is clear that Bitcoin is going through cycles of diminishing returns. From the first to the second cycle saw a 79% reduction in gains from the last cycle. The cycle after that took a whopping 84% gains reduction. For Bitcoin to go to 250k, it would have to take at maximum only 20% gain reductions. This math is clearly not on par with history.
This is combated with, “Last cycle top was only so low because of all the paper Bitcoin in the system.” If anything, that would have inflated the value, so that argument does not make sense. There are other arguments as to why the last top was so low, but in actuality, the reason the top was so low was because returns are diminishing, drastically. If you want to invest in Bitcoin to make a lot of money, you may not get many more chances with exponentially large gains.
If it were possible for Bitcoin to go 250k, how would it happen? It would take the same amount of drastic measures as Bitcoin not going up, but in the opposite way. Banks would need to adopt Bitcoin and allow storage of it. A true Bitcoin ETF would need to be created. Large governments would need to use the asset as backing to their money. Although many predict these things will happen, these are monumental movements that are unlikely to happen in the span of one cycle.
The reality is, as Bitcoin grows, in order to make more gains it requires tremendous amounts of money. Many trillions of dollars. It also takes a lot of time for this amount of money to move into the space. Contrary to popular Bitcoin maximalist opinion, I do not believe Bitcoin will take over the world, rather it is an online digital store of value that people use to make money.
The next scenario looks at the possibility that Bitcoin stops operating on sentiment cycles:
Number 3- Sentiment Cycles are Broken
This situation I see as equally unlikely as it is likely. Based on my November 28th Cycles Theory, and the 4 Year Cycles Theory, it seems clear that Bitcoin goes through structured periods of under and overvaluation, based on the halving mechanic which reduces the Bitcoin supply. When supply is reduced and demand stays the same, it triggers a leap of overvaluation, and then a subsequent undervaluation. This has repeated every 4 years. But what if it didn’t? What if these cycles are broken?
This would be possible if the saturation of indicators and widely available Bitcoin data completely change the psychology of the market. As the pattern repeats itself and more people anticipate the cycle continuation, it could cause Bitcoin to ignore it’s sentiment cycles and start to correlate more with the overall market. This could look like as depicted, with minimal and sideways price action, and a general trend up overtime.
I do not think this will be the case, as although many do have access to popular indicators, still many do not believe they are right or useful. On top of that only a handful of these indicators even proved to be right in the last cycle, and that will likely be the case again this cycle.
I also notice strong bearish sentiment at current prices for Bitcoin, similar to bear market bottoms in the past. This leads me to believe that the Bitcoin pattern is continuing to repeat, on schedule according to the 4 year cycles. After the supply is reduced by the halving in April 2024 I expect as every cycle in the past, Bitcoin will become overvalued and make a new All Time High.
Now we move into the scenarios I believe are more likely:
Number 2- Bitcoin Makes an Early Top
Twice before Bitcoin has made short term tops Mid cycle. These tops did not exceed the cycle macro tops, however that could be a possibility this cycle. If this were to be the case we could probably expect to see this sometime late this year or early 2024. This top could be closer to the median price of 34,500, or something very unexpected and be an entirely new top.
It seems much more likely if this were to be the case, the top would not surpass the previous ATH of 69k, and rather be between 35-50k. In order for this to happen there would need to be a massive amount of good news surrounding the crypto space to surface, which is typical during a bull market. Bitcoin could not to make new lows below 15.5k, or this would probably not be possible in this time frame. The after math could be another extended bear market, or more likely a short term bear market followed by the macro All Time High at the end of the cycle (2025) like we have seen in the past.
Now we can examine the final and in my opinion the most likely case:
Number 1- Bitcoin doesn’t break 100k, Again.
The King of all unexpected scenarios, what if Bitcoin fails to pass 100k again? This cycle, as the last, many seem very sure that Bitcoin, although it was unable last cycle, will this time surpass the almighty 100k price mark. However it is entirely possible, and I would argue likely, that it doesn’t. A price mark in the high 80k’s- to mid 90k’s is on the table. An event that almost no one would see coming, but also lines up with diminishing returns.
Like most of you, I hope this does not happen. However it is important to be prepared for this scenario or else you will end up like the many that were unable to sell the top or near it last cycle. Influencers lead many astray to think that it was impossible for Bitcoin to not pass 100k, and did not even consider 64 or 69k to be a possible top. Many lost money because of this.
The good news is there’s another chance. Bitcoin is very undervalued at current prices and there has never been a better time to buy. You are now aware of this as a possibility and you can be prepared if it were to happen. Data will help you determine weather or not this is the case when the time comes, as it did for me during the last Bitcoin top. Of course I will continue to share my thoughts and analysis to help guide you.
In Conclusion
There are many possible scenarios that Bitcoin could encounter over this coming cycle that could catch many off guard. As I explained, the least likely scenario is that Bitcoin trends downwards and fails to make any new ATH, as that would completely contradict past data and require many catastrophic events. While the most likely scenario is that Bitcoin does make a new ATH on schedule, but the price comes far short of everyone’s expectations yet again.
The difficult part of making money in crypto is choosing your sources of information, as there are many misleading narratives both in the positive and negative direction. They are just that though, stories. Data has proved to be very reliable over Bitcoin’s lifespan and I believe you can trust it to guide your decision making again this cycle. Winners ignore the stories, and listen to the data.
Thanks for reading this edition of the Bitcoin Data Newsletter! I hope you found this information useful and if you have any comments or questions feel free to ask. The premium newsletter will be released later today, and I will cover what’s happening with Bitcoin in the short term, and detailed explanations of some long term charts.
Best Wishes,
CryptoCon