BETI: Bitcoin Exponential Trend Index and technical analysis

[Asrael999]

When there is a stock market crash and recovery, it may be a sign that the crisis has reached the turning point. But today's markets are manipulated to the core, and inflation is running rampant. average P/E= 7 or P/B = 1 are reasonable (currently both 5x higher).

What does that even mean? P/e and p/b?

Price/Earnings and Price/Book Value

both different measures at looking at shareprice valuations

[zimmah]

When there is a stock market crash and recovery, it may be a sign that the crisis has reached the turning point. But today's markets are manipulated to the core, and inflation is running rampant. average P/E= 7 or P/B = 1 are reasonable (currently both 5x higher).

What does that even mean? P/e and p/b?

Price/Earnings and Price/Book Value

both different measures at looking at shareprice valuations

so basically for the average stock, the price of the stock (all the stock combined) is 35 as much as the earnings of [i assume last year] and 5 times as much as the book value (=networth) of the company?

But realistically you would expect t to be 7 times the p/e because you'd expect your investment to pay off in about 7 years, or to be roughly the same as the p/b because that's what the companies networth is (and usually if a company is doing well the networth grows, so you'll make profit anyway? But somehow the stocks are blown up beyond proportion and it would take decades for them to pay off at this rate, if not something were to happen in those decades which causes the stock to crash?

[jl2012]

Given that there will be no big crash in the following 9 hours, it's very likely to break -1.75 today (30 Oct)

[Asrael999]

When there is a stock market crash and recovery, it may be a sign that the crisis has reached the turning point. But today's markets are manipulated to the core, and inflation is running rampant. average P/E= 7 or P/B = 1 are reasonable (currently both 5x higher).

What does that even mean? P/e and p/b?

Price/Earnings and Price/Book Value

both different measures at looking at shareprice valuations

so basically for the average stock, the price of the stock (all the stock combined) is 35 as much as the earnings of [i assume last year] and 5 times as much as the book value (=networth) of the company?

But realistically you would expect t to be 7 times the p/e because you'd expect your investment to pay off in about 7 years, or to be roughly the same as the p/b because that's what the companies networth is (and usually if a company is doing well the networth grows, so you'll make profit anyway? But somehow the stocks are blown up beyond proportion and it would take decades for them to pay off at this rate, if not something were to happen in those decades which causes the stock to crash?

You can look at a company in many ways.
What is its Balance Sheet worth (Book Value)?, most stocks trade at a slight premium to this, where stocks trade at a discount they are generally considered undervalued - or might be suffering from distress

What is the value of future profits? An equity can be considered to be the price the market will pay today for the present value of all future profits of the company.  ie the NPV of all future earnings, Companies that have low growth prospects trade on low multiples of current earnings, growth stocks tend to trade on high multiples of current or next years earnings as future earnings are expected to be growing at a large rate. In good terms P/E's and P/B's get inflated as the market expects a bright and rosey future - (prices in perfection) - in bad times the reverse.

Right now the equity and bond markets (all asset classes imo) seem to be pricing a very rosey picture in the face of severe headwinds from the global economy, but that doesn't mean a crash is going to happen imminently just that one could or may happen, and (again imo) the more it is delayed by "policy action" the worse it will be when it comes.

[uki]

Given that there will be no big crash in the following 9 hours, it's very likely to break -1.75 today (30 Oct)

Probably this question was already asked in here back at the early days of this thread, but I will try to bring this issue into a discussion once again.
Whenever I am running simulation or an experiment, I am interested in a stationary process. Meaning the initial (warm-up) behaviour should not have been considered when talking about long-term trend. Have you tried to remove the first two years of data and redraw your charts? I am wondering if that would correct your expected values to a more reasonable levels, as for today it seems that the chart will be stuck in the -2 area even with slowly rising prices, and only a bubble-like event could bring us to -1 values, not to mention even the expected price.

[SmoothCurves]

This chart is amazing. Thank you for uploading. If we get back to +1.5 that's close to 50k per coin? That would be a life-changing amount of money for most people on this board.

[ssmc2]

Given that there will be no big crash in the following 9 hours, it's very likely to break -1.75 today (30 Oct)

I thought -1.75 was around 320? Didn't we already break it?  Oh, and thanks for the updates! This thread is one of my faves

[jehst]

Price to break the +1.87 all-time-high   11902.78

[jl2012]

Given that there will be no big crash in the following 9 hours, it's very likely to break -1.75 today (30 Oct)

I thought -1.75 was around 320? Didn't we already break it?  Oh, and thanks for the updates! This thread is one of my faves

This analysis use 1 day VWAP, so it has to be >320 on average.

[VirosaGITS]

Given that there will be no big crash in the following 9 hours, it's very likely to break -1.75 today (30 Oct)

I thought -1.75 was around 320? Didn't we already break it?  Oh, and thanks for the updates! This thread is one of my faves

This analysis use 1 day VWAP, so it has to be >320 on average.

And the analysis use straightforward extrapolation. There is a huge diminishing return on growth as you go up and reach a global market level of cap. Also there's the rule that whenever things go up, they will go back down. It might go back down to 270 or 280, or 320 if it raise to 400 but it will. A straitforward line upward is not going to happen.

At least not within such a short time. Maybe over 10-20 years.

[jl2012]

Date:    30-Oct-2015
VWAP:    324.42
x:    1931
a:    0.00434
b:    -0.86297
Rsq:    0.82376
The day's expected price:    1843.97
Actual price / expected price:   17.59%
Log(Actual price / expected price)   -1.738
Price to break the -2.23 all-time-low   198.53
Price to break the +1.87 all-time-high   11937.60
Predicted date for today's price:    24-Sep-2014
Days ahead:    -400.28
Daily price rank:    406
   
   
(See OP for explanation)   
   
   
   
https://www.wolframalpha.com/input/?i=e+%5E+%28+0.0043410899563647++%28+number+of+days+since+jul+17%2C+2010+%2Fdays+%29+-0.862969560464771+%29   

[jl2012]

[jl2012]

-1.5 is the next target? It's $411 now

[rpietila]

And the analysis use straightforward extrapolation. There is a huge diminishing return on growth as you go up and reach a global market level of cap.

In theory, the current price should be the probability-weighted-average of future scenarios, discounted to the present with discount-rate.

In the very beginning of Bitcoin, we wonder how "nobody" realized that it could become a million times more valuable in 5 years? Why did sirius sell 5kBTC for $5?

A few answers:
- information not spread
- buying additional coins does not give a real-life edge (if you are broke and in a small probability make $20M instead of $10M not a big deal for most)
- discount rate is high, making a large payoff in the possible distant future be of little value now
- time sink/stress generator - many don't want to invest until it is big since while it is much less upside, it is also easier and safer (I refused to order a promising free energy device just because of the hassle. I can order it a few months later).

In practice, there was a time when log-linear trendline was the best fit to the data. Currently not too sure about it.

There is a diminishing return on profits when a large enough market cap is reached. But this means diminished risk of losses as well. If BTC reaches the $100 trillion cap which is required for it to dethrone fiat, the diminishing upside kicks in starting at 10,000 times higher price than current. Clearly this is still a better investment than most re:upside.

[uki]

And the analysis use straightforward extrapolation. There is a huge diminishing return on growth as you go up and reach a global market level of cap.

In theory, the current price should be the probability-weighted-average of future scenarios, discounted to the present with discount-rate.

In the very beginning of Bitcoin, we wonder how "nobody" realized that it could become a million times more valuable in 5 years? Why did sirius sell 5kBTC for $5?

A few answers:
- information not spread
- buying additional coins does not give a real-life edge (if you are broke and in a small probability make $20M instead of $10M not a big deal for most)
- discount rate is high, making a large payoff in the possible distant future be of little value now
- time sink/stress generator - many don't want to invest until it is big since while it is much less upside, it is also easier and safer (I refused to order a promising free energy device just because of the hassle. I can order it a few months later).

In practice, there was a time when log-linear trendline was the best fit to the data. Currently not too sure about it.

There is a diminishing return on profits when a large enough market cap is reached. But this means diminished risk of losses as well. If BTC reaches the $100 trillion cap which is required for it to dethrone fiat, the diminishing upside kicks in starting at 10,000 times higher price than current. Clearly this is still a better investment than most re:upside.

Thanks rpietila, for pointing that out. That is exactly my point, and that is what I wrote in my post #285, just few posts above yours. To me it is high time to revise the initial assumption of this simulation and that is why I was interested if OP could have a comment on that. I believe that just removing, say first two years, from the calculation would provide you with much more precise prediction. And, that is what I believe, is the real goal of this experiment, not to have an unrealistic expected value to goes through the roof. 

[jl2012]

Hopefully we are leaving the -1.75 zone and heading to -1.5 at $412

Date:    2-Nov-2015
VWAP:    347.89
x:    1934
a:    0.00433
b:    -0.85756
Rsq:    0.82334
The day's expected price:    1848.06
Actual price / expected price:   18.82%
Log(Actual price / expected price)   -1.670
Price to break the -2.23 all-time-low   198.97
Price to break the +1.87 all-time-high   11964.09
Predicted date for today's price:    12-Oct-2014
Days ahead:    -385.44
Daily price rank:    384
   
   
(See OP for explanation)   
   
   
   
https://www.wolframalpha.com/input/?i=e+%5E+%28+0.00433270545089737++%28+number+of+days+since+jul+17%2C+2010+%2Fdays+%29+-0.857560903415988+%29

[jl2012]

Look at the 2 charts. I think something is really happening. The following 2 graphs are weekly RSI at MtGox and Bitstamp. It is now in the overbought zone, first time since the $1200 ATH. Historically, overbought weekly RSI is equivalent to a bubble. A "full bubble", however, would have weekly RSI > 90 but now it's only 76.




The following 2 graphs are daily RSI at MtGox and Bitstamp. It reached 90 few days ago, and is still staying overbought. Again daily RSI has never reached this level after the late 2013 bubble.

[jl2012]

If we are in a bubble, even a mini one, how high it may go? The Bitcoin Exponential Trend Index (BETI) may give us some hints. The mid-2012 mini bubble went from -1.25 to -0.5 (+0.75). The early-2013 bubble went from -0.75 to 1.5 (+2.25). The late-2013 bubble went from -0.125 to 1.625 (+1.75).

After the long bear trend, I believe we are more likely in a mini bubble like the mid-2012 one, that may send us from -2 to -1.25 (+0.75) in a few weeks. In that case, the target price will be around $530 for this mini bubble. A full bubble may happen next year around halving which will create a new ATH and push BETI above 0.

[jl2012]

Date:    3-Nov-2015
BETI:   -1.559
VWAP:    389.22
x:    1935
a:    0.00433
b:    -0.85594
Rsq:    0.82325
The day's expected price:    1850.08
Actual price / expected price:   21.04%
Price to break the -2.23 all-time-low   199.18
Price to break the +1.87 all-time-high   11977.18
Predicted date for today's price:    8-Nov-2014
Days ahead:    -359.99
Daily price rank:    326
   
   
(See OP for explanation)   
   
   
   
https://www.wolframalpha.com/input/?i=e+%5E+%28+0.00433019316137494++%28+number+of+days+since+jul+17%2C+2010+%2Fdays+%29+-0.855938591308718+%29   

[zimmah]

If we are in a bubble, even a mini one, how high it may go? The Bitcoin Exponential Trend Index (BETI) may give us some hints. The mid-2012 mini bubble went from -1.25 to -0.5 (+0.75). The early-2013 bubble went from -0.75 to 1.5 (+2.25). The late-2013 bubble went from -0.125 to 1.625 (+1.75).

After the long bear trend, I believe we are more likely in a mini bubble like the mid-2012 one, that may send us from -2 to -1.25 (+0.75) in a few weeks. In that case, the target price will be around $530 for this mini bubble. A full bubble may happen next year around halving which will create a new ATH and push BETI above 0.

In my opinion a full bubble will likely follow in less than three months but no sooner than one month after the mini-bubble.

The full bubble might be on a scale we haven't seen before.

This might be wishful thinking, but most of the charts seem positive on this.