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OK, so I posted the above, which was based on my overall sense of how Bitcoin behaves when zoomed in to the month/week/day level. But then I thought, is this really true? Is Bitcoin's monthly/weekly/daily performance really random? Well, I'm currently on a long holiday leave, so I have plenty of time on my hands, so why not analyze some real historical price data to test things out?
So I fired up MATLAB and downloaded Bitstamp's BTC/USD historical price data for day open/close prices, from 2016 up to now (3721 days). I then plotted each day's price performance in terms of
daily loss (in red) and
daily gain (in green). Each dot is one day, and the horizontal axis spans 2 months per row. Note that there may be a shift by a couple of dots per row, as I'm assuming a 366-day year. Here's what came out:
...which confirms and experimentally proves that zooming in to the day level results in a random loss/gain pattern. I postulate that the same holds true to the weekly and monthly levels, hence my original post.
And then I thought: instead of showing loss in red and gain in green, as a 0/1 state, it would be more interesting to show the actual day close - open differences in USD. This should clearly show the 4-year cycles and how the daily fluctuations have played out over the years. And that's what I did. I used a heat map, starting with black (for maximum loss) up to white (for maximum gain), and shades of orange (Bitcoin's trademark color) in between. Sure enough, the 4-year cycles appeared in full glory. Here's the resulting heat map:
I hope you like the results, and I hope they help you change your mind if you were thinking of selling your corn!
You are basically doing a data analysis search, where you want to see if the price of Bitcoin actually moves randomly over time, or if there is a pattern. The way you have analyzed the daily open-close data from 2016 to now in Matlab is quite informative. If you can see on your chart that the red and green dots are spread out almost evenly, then yes, Bitcoin's daily performance behaves a lot like a random walk. However, if at a certain time, such as before the halving or during a bull run, there are more consecutive green days, then that can be called the effect of the market cycle, not random,
Short-term, random, long-term pattern.
Your analysis really goes a long way, you have basically created a visual proof that shows that Bitcoin's movement on a daily basis is like a random walk, but when viewed on a larger timeframe, weekly, monthly, even 4 year scale, a clear cyclical pattern of 4 year cycles is visible, your heatmap idea is especially great because the black orange white gradient shows the intensity of the profit and loss, which is much deeper than just 0:1 profit and loss.
The 4 year cycles were especially visible during the bull run from 2017 to 2021, it practically proves that Bitcoin's price is random in the short term, but if, in the long term it follows a clear cycle.
So if you are thinking of selling corn I think this heatmap will change your mind,
Patience is the real key here!
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