An Argument for a 4 Month Parabola

Dear Readers,

Parabola - MacTutor History of Mathematics

Well here we are, a lot earlier than most expected, knocking on the door of all time highs. This has generally been a surprise as the 4 year cycle was the paradigm by which this very volatile market was made intelligible. However, as the market has matured and become more liquid, as was predicted, it is the forces of speculation in themselves that come to the fore. Where previously the market was thought to be primarily driven by the 4 year halving mechanism by which BTC was perceived to become increasingly scarce, it is now likely that scarcity per se will be the driver of price going forward. In this sense, BTC has effectively achieved its perceived scarcity in the minds of market participants. It is for all practical purposes understood as digital gold, an alternative currency, and will be increasingly bought on that basis by investors and institutional money, all of which was needed for BTC to continue on its path toward capitalization.

The LGC and the Monthly MACD

The long-term chart [price within the LGC channel] has price currently at a pivotal point. A break of the previous highs and the market could well once again be off to the races. That the market could heat up earlier than expected is itself to be expected, for didn’t it in 2021 [front-running the ‘cycle’], and didn’t it again during the first half of 2019, where we effectively saw a mini-parabola [as per the below chart]?

And so it is reasonable to be prepared for a possible break into full blown parabolic territory. That said, price is currently at the crossroads - will it meet resistance at previous highs as per 2019, or break through and run to new highs as per 2021? I’m favoring the later option whilst also recognizing I’ve no crystal ball that could provide clairvoyance and certainty. Remember, the point of TA and modeling is that it plots a middle course between the random nothingness on the one hand and the dogmatic certainty on the other. It gives you something to go on by providing reasonable outcomes on an indeterminate future.

Zooming in on the Monthly MACD

The dominant line on the chart has to be the macro downward long-term line of resistance connecting the previous peaks. What this denotes is the diminishing returns that are involved with the rapid capitalization of a new asset class [or rather a new currency]. Given the trend, it’s reasonable to assume a similar limitation to market momentum on the current up-trend. Keep in mind that the eventual goal of capitalization is a relative price discovery/ stability as compared to the exponential and parabolic moves up. At some point, in say a decade’s time, those exponential moves are expected to be a lot more subdued.. in so far as the LGC model [performing since 2018] continues to play out. Given the parabolic angle on the current MACD line, if it were to continue and be extended, it would soon hit or come near to the declining trend as drawn in 4 months.

Bringing this back to price in turn, if price were to run to the height of the LGC channel that would equate to something nearing 160K. This would be a ‘blow-off’ top of sorts, and within the confines of the macro channel that represents the development of a logarithmic growth curve - explosive gains at the start that eventually plateau. I think we are still a good few years away from this plateauing, and even then, given the annual depreciation of the pricing mechanism, USD, some allowance, or inflection point, will need to be made to this ‘plateauing’.

Interesting to note here, in zooming in on both the price and the MACD, are the equivalences - the first [previous] parabolic monthly candle has taken price from what I’ve termed the ‘buy zone’ for investors [shaded area] up to midway in the LGC channel proper. This also equates with an attainment of the previous highs… setting up for the explosive move.

Also of interest to note, with the midway of that LGC channel in mind, is that this is where the mini parabolic advance of 2019 met resistance. Herein lies the crossroads that price is currently at - is this a premature parabola a la 2019, or the real deal a la 2021? I give more weight to the second, as mentioned earlier, but only time can really tell with any certainty what is to unfold. Those that desire certainty should nip it in the bud as delusional, for risk and an element of uncertainty is unavoidable in extremely speculative markets. That said, fortune favors the brave, not the reckless or timid mind. That all said, if you’d been following the LGC channel these past few years, and in particular the buy zone, then you’d be set up in a very good position going forward, whether wanting to realize some profits on a possible spike, or wanting to continue sitting on your core BTC.

Until next time,

Stay, relatively, safe out there,

Dave the Wave.