Bitcoin price cycles

[uki]

I noticed something similar, although I don't put too much weight in the initial value of the first cycle; it was so early, before the first major public exposure and subsequent runup to $32.  I definitely agree that the cycles so far have tended to decrease in the amount of gain, and I am thinking the third would also be a somewhat smaller increase than the last. My personal feeling is that we would look for a peak price somewhere between 10x and 100x the starting price, or around $2300-$23,000.  Note that the peak doesn't last though, and tends to drop back to about the midpoint between the start of the runup and the peak, so that would mean a stable price more like $1500-$15,000.  On or about October, 2017.

Sure, the initial value of Bitcoin in the starting cycle may be a bit blurry, which makes it difficult to get the precise results for the max. peak and the stable value there.
But I believe the figures we just named are about right. Second cycle, is a clear cut. I pretty much agree with that observation regarding the third cycle, tending though to be more conservative in my predictions, i.e., closer to the lower bounds of the ranges you had just given. That is mainly caused by two things: speed of adoption of the new technology and the fact that it is much easier to turn 1 cent into $1 than the $100 into a $10k, although both are a 100-fold increase.

[morantis]

(Note: This is a follow-on thread to my original one about price cycles; however, as I have re-analyzed things, I think at this point it deserves a new starting point.  See that thread for more background.)

I have been looking at trends in the Bitcoin price for a while now, and I've been noticing something, which I will detail below.  I think what I am seeing is the result of a couple of things:

• Bitcoin is a unique ecosystem.  It has arguably been allowed to grow organically, and as such I think the price is exhibiting some natural cycles, not unlike what you would find in nature in cycles of sunspots, plant shapes, sea shells, tree rings, etc.
• Price is, of course, driven ultimately by people.  Now, individually people's behavior is almost impossible to predict, but in large groups, certain fundamental patterns will exist.  Basic human emotions such as fear and greed are behind a lot of it, but regardless of exactly why it is, people can be somewhat predictable in large groups, not unlike animal herds or insect swarms.

With that in mind, I looked again at the price of Bitcoin over time, and tried aligning some of the peaks in price.  Previously this wasn't overly successful (although some general similarities showed up), but this time i though I would see what would happen if I looked at a full cycle between the peak in June 2011 and that in November 2013.  It turns out that there is about 903 days between those peaks, so I am going to round this to 900 and plot the data.  Observe:



All of a sudden there is clearly some repetition to the price cycles.  The scale is different, of course, but the trend is up, and the major events correlate quite well.  Know what else?  That 900 cycle divides neatly into 3 phases of 300 days each:



Each of those phases is marked by some clear trends, which has repeated each time.  (And yes, I know we would only be in the third cycles, but at least now, if the concept holds, behavior can be seen in the previous 2 cycles).  I'll break each down below.  Note that a 300 day phase is about 10 months, which is quite a long period of time in Bitcoin.  Here are the same graphs in linear scale, each on their own graph:







Phase 1: Initial runup
This phase is marked by a generally level or rising trend in the price, with one or two distinct jumps in price.  Note that the price run ups, as has happened with every major price increase, are followed by a fibonacci retracement, but in each case ends up higher than before the runup began.  In each cycle, Phase 1 ends with price being about an order of magnitude higher than at the start of the phase.  (Cycle 1 Phase 1 I didn't get the data for the first 40 days or so; doesn't really have much impact, and with such as low price and relatively low number of people trading, I wouldn't bet a lot on it's worth.)

Phase 2: Long phase exponential increase with more volatility
Each of the major runups in the two previous cycles (one in each) has been another order of magnitude increase or more, followed by a retracement valley and then up again before the phase ended.  The end of the cycle has been between about 6x and 10x higher than the start.

Phase 3: Volatility and instability
The least predictable of the 3 phases.  Cycle one showed a general increase over time (~50% increase), while Cycle 2 had a drop-off of about half.  Note again that this is over 10 months, so while a long slow decline is painful, it's not that bad in comparison to the overall trend.  Interestingly, there is a "hiccup" in Phase 3 of each of the two cycles, occuring at almost the same time (about 2/3 of the way through the phase).

What drives all this?  I'd characterize Phase 1 as showing pent-up demand (and maybe fading memories) about the last major increase, which, by this time, would have been well over a year before (previous Phase 2).  Phase 2 shows confidence gained from Phase 1 resulting in increased demand.  Phase 3 shows some shakiness in the confidence and basically is a "rebuilding" phase.  All these things are probably affected greatly by media attention, which also (I suspect) goes in cycles. 

As I said above, I think people's behavior as a group follows trends, even if individuals' behaviors are not predictable.  It is the individual volatility, such as the implosion of Mt. Gox and the clamp down by China (both back in 2014) that is trying to break trends and cannot be predicted.

What does it mean going forward?  Maybe nothing.  I'll say again, as I did before, that past history does not predict future performance.  However, look at the points and trends which correlate between those two previous cycles.  That's a lot of coincidences.  The cycling also predicts that before March of 2016 we should have expected at least one or two major price spikes.  We had one this month; if the cycle holds, there will be at least one more before March 2016.  Note also that the halving occurs part way through Phase 2 of this current cycle, which is widely expected to drive price up. 

So maybe there is something.  Maybe not.  But I have been getting tired of all the meaningless posts lately and wanted to post something new.

Oh, and if you are into numerology, there are a lot of "3"s in this analysis!

Disclaimer: I'm tired, and am not going to proofread this post now.  Have a good night, all.

It is kind of like time travel though.  Now that you have made a prediction, that prediction in itself could change the way that people behave and thereby modify the future trends.  Once an object is observed, it is changed.

[calkob]

interesting, so should i buy or sell......lol

[Cablez]

There is not too much to discuss for about 300 days, then it will be very interesting or useless.

[hacknoid]

There is not too much to discuss for about 300 days, then it will be very interesting or useless.

Sadly, this is probably true.   However, by March 2016 (end of Phase 1) I'll have a better idea of how the cycle is shaping up compared to the previous ones.  And I'll put up updated charts periodically, just for info.

[uki]

There is not too much to discuss for about 300 days, then it will be very interesting or useless.

Sadly, this is probably true.   However, by March 2016 (end of Phase 1) I'll have a better idea of how the cycle is shaping up compared to the previous ones.  And I'll put up updated charts periodically, just for info.

Well, yes this is probably a long-term topic. But I will be very interesting how it progresses and already added it to my tracked threads.
Cycle predictions if spotted correctly can be very accurate, but as always there comes a question whether we have just one main cycle or several superimposing cycles so let's see how this unfolds. Closer to the halving event, we will probably see much more and we can draw first conclusions on the accuracy.

[jehst]

There is not too much to discuss for about 300 days, then it will be very interesting or useless.

If this is accurate, then the price should be at least $1000 within 150 days from now.

[Cablez]

Agreed, I have this topic watched.  I guess I just feel numb from being in bitcoin for so long, one can only take so many roller coaster rides.  I await good news. hehe

[Biodom]

interesting analysis.

To me, the price of bitcoin is an enigma in itself.
It's like lambda-infinitesimally (well, maybe not THAT infinitesimal) small in comparison with the capital markets, but NOT ZERO.
Why it is not zero, and if not zero, why not substantially higher?

GOOGL alone moved three bitcoin's cap worth just today and the move was "just" 2.74% of GOOGL-a small portion of the market.

[keystroke]

Agreed, I have this topic watched.  I guess I just feel numb from being in bitcoin for so long, one can only take so many roller coaster rides.  I await good news. hehe

Haha, but I love that feeling. It is cool to not care about huge price fluctuations. Although euphoria of the early days was very pleasurable there is something calming about being ready to expect the unexpected. Then again maybe I am just numb too; as a HODL'r they are just numbers on a screen at the moment...

[QuintLeo]

Technical analysis on Bitcoin is like technical analysis on penny stocks - worthless as the price can easily be manipulated by a single or a small group of investors, is very subject to news events, and the market is too small and immature.

[hacknoid]

Technical analysis on Bitcoin is like technical analysis on penny stocks - worthless as the price can easily be manipulated by a single or a small group of investors, is very subject to news events, and the market is too small and immature.

Well, yes - but, the market is larger and more mature now than it has ever been, and the analysis done on it so far is based on the history of that manipulated market.  So, I would argue that if a model has applied to this point, it should be able to apply in future.  That is basically what I was getting at in the OP; I think what we are seeing are the elements of human nature being applied to a market space.  The tendencies toward greed, fear, manipulation, profit taking, etc., are what has driven the shape of the price graphs up to this point in time.  And that, together with it being such as small market, is why, for example, each time there is a dramatic price rise we see a sudden fall back to a midpoint and subsequent instability... people are taking profits, becoming scared (in some cases), and jumping on opportunities (in others).  It makes for dramatic, but very definite and noticeable, changes in price.

[gerald-80]

There was an article a while ago, probably CoinDesk but I can't find it at the moment. Basically the study concluded that Bitcoin never sleeps. Overall trading volume doesn't correlate with open/close times in any particular timezones. If volume doesn't change with the time of day I don't think the price will either.

[hacknoid]

There is not too much to discuss for about 300 days, then it will be very interesting or useless.

If this is accurate, then the price should be at least $1000 within 150 days from now.

If the trend is followed like it was previously, then yes - in fact, I might expect that price even before the end of January.  But in general, I would expect at least some price rise between now and March (at least above the recent spike of ~$US500).

[David Rabahy]

https://www.washingtonpost.com/news/speaking-of-science/wp/2015/11/30/are-there-mice-on-mars/ -- humans tend to see patterns in randomness.  The one Bitcoin fundamental with a predictable period is the reward halving every 4 years; take it to the bank.

[hacknoid]

https://www.washingtonpost.com/news/speaking-of-science/wp/2015/11/30/are-there-mice-on-mars/ -- humans tend to see patterns in randomness.  The one Bitcoin fundamental with a predictable period is the reward halving every 4 years; take it to the bank.

You are taking about Pareidolia - "a psychological phenomenon involving a stimulus (an image or a sound) wherein the mind perceives a familiar pattern of something where none actually exists."  I'm not saying I see Jesus or anything familiar in the graph.  I am pointing out a repeating pattern that seems to be displayed in the data.  Humans also have an exceptional ability to spot recurring patterns.

[QuintLeo]

Technical analysis on Bitcoin is like technical analysis on penny stocks - worthless as the price can easily be manipulated by a single or a small group of investors, is very subject to news events, and the market is too small and immature.

Well, yes - but, the market is larger and more mature now than it has ever been, and the analysis done on it so far is based on the history of that manipulated market.  So, I would argue that if a model has applied to this point, it should be able to apply in future.  That is basically what I was getting at in the OP; I think what we are seeing are the elements of human nature being applied to a market space.  The tendencies toward greed, fear, manipulation, profit taking, etc., are what has driven the shape of the price graphs up to this point in time.  And that, together with it being such as small market, is why, for example, each time there is a dramatic price rise we see a sudden fall back to a midpoint and subsequent instability... people are taking profits, becoming scared (in some cases), and jumping on opportunities (in others).  It makes for dramatic, but very definite and noticeable, changes in price.

 And you're trying to analyse a manipulated market? By your own statement?

 DOH!!!!!!


 You can't time manipulation, the people that can manipulate do it on their own schedual when THEY feel like it.

[uki]

Technical analysis on Bitcoin is like technical analysis on penny stocks - worthless as the price can easily be manipulated by a single or a small group of investors, is very subject to news events, and the market is too small and immature.

Well, yes - but, the market is larger and more mature now than it has ever been, and the analysis done on it so far is based on the history of that manipulated market.  So, I would argue that if a model has applied to this point, it should be able to apply in future.  That is basically what I was getting at in the OP; I think what we are seeing are the elements of human nature being applied to a market space.  The tendencies toward greed, fear, manipulation, profit taking, etc., are what has driven the shape of the price graphs up to this point in time.  And that, together with it being such as small market, is why, for example, each time there is a dramatic price rise we see a sudden fall back to a midpoint and subsequent instability... people are taking profits, becoming scared (in some cases), and jumping on opportunities (in others).  It makes for dramatic, but very definite and noticeable, changes in price.

And you're trying to analyse a manipulated market? By your own statement?

 DOH!!!!!!


 You can't time manipulation, the people that can manipulate do it on their own schedual when THEY feel like it.

Well some gold bugs, analysing the market of gold in the last 15 years or so may disagree with you. They claim the market of gold is heavily manipulated and nevertheless they tend to analyse it, forecasting when the next orchestrated slam down will happen. And indeed, there are some patterns in it. In the end of the day, the humans are also behind the manipulation.

[bitlancr]

Agreed, I have this topic watched.  I guess I just feel numb from being in bitcoin for so long, one can only take so many roller coaster rides.  I await good news. hehe

Haha same here, I just like to lurk around these topics and hear everyone's opinion and speculations.

Based on that I make my own calculations and buy or sell.

Normally it makes me money, but these day, i've got not idea what to expect.

[hacknoid]

Technical analysis on Bitcoin is like technical analysis on penny stocks - worthless as the price can easily be manipulated by a single or a small group of investors, is very subject to news events, and the market is too small and immature.

Well, yes - but, the market is larger and more mature now than it has ever been, and the analysis done on it so far is based on the history of that manipulated market.  So, I would argue that if a model has applied to this point, it should be able to apply in future.  That is basically what I was getting at in the OP; I think what we are seeing are the elements of human nature being applied to a market space.  The tendencies toward greed, fear, manipulation, profit taking, etc., are what has driven the shape of the price graphs up to this point in time.  And that, together with it being such as small market, is why, for example, each time there is a dramatic price rise we see a sudden fall back to a midpoint and subsequent instability... people are taking profits, becoming scared (in some cases), and jumping on opportunities (in others).  It makes for dramatic, but very definite and noticeable, changes in price.

And you're trying to analyse a manipulated market? By your own statement?

 DOH!!!!!!


 You can't time manipulation, the people that can manipulate do it on their own schedual when THEY feel like it.

Well some gold bugs, analysing the market of gold in the last 15 years or so may disagree with you. They claim the market of gold is heavily manipulated and nevertheless they tend to analyse it, forecasting when the next orchestrated slam down will happen. And indeed, there are some patterns in it. In the end of the day, the humans are also behind the manipulation.

Exactly.  And there are many more people trading in the market than trying to manipulate it, so the trends will follow group behavior.  Individuals can have an immediate impact by a large or constant buy or sell, but there are plenty of other people that will act based on their interpretation of those events.

Aside from outright trying to destroy Bitcoin, what is the purpose of manipulating the market?  To make money.  Traders that know what they are doing can make money when the market goes up OR goes down; they don't care.  So, if someone is trying to manipulate the market, they would be stupid to try to force the market against it's general sentiment (remember the "bearwhale"?).  So yes, some whales may be manipulating the market, but they can only push it so far.  Unless they are controlling a large percentage of the trades, then market sentiment rules when looking at the larger picture.  I'm not concerned about the small, even inter-day trading here.  I'm looking at the long term trends.

Besides, even if I buy the argument that everything we have seen was due to manipulation, the graphs I've shown I think demonstrate pretty clearly that they have followed a pattern.  If it's worked for them for 6 years, why would they change that now?