The Stabilization of Price
Dear Readers,
One look at the chart and there is a striking indisputable fact, that of reducing macro volatility, or in other words, the increasing stabilization of price. I’d also suggest another near indisputable fact, or if not a fact a performing theory [since 2018]- that price will develop along the lines of a logarithmic growth curve that has been explosive at first while leading to an increasing plateau of ‘price discovery’.
While this outlook of increasing price stabilization is a negative due to the lack of higher prices in the here and now, the positive is price may not decline as much as we’ve seen in previous cycles - price stability ‘cuts both ways’.
In the above chart, the striking feature is that lack of a parabolic rise in price over the course of this cycle. My contention here is that just as price action to the upside was more subdued, relative to previous cycles, so too will price action be to the downside - increasing price stability/ decreasing maco volatility equally applicable to both sides.
Zooming in a little on the weekly chart, a few points:
1] Testing of the shorter-term upward diagonal and a range forming
2] A possible year-long correction two thirds of the way through
3] What’s more likely, a substantial new low or re-testing of previous?
With a break of the diagonal, the focus is now on the sideward range, essentially a band ranging in the 60s and 70s. In LGC model terms [Logarithmic Growth Curve], BTC is once again a buy with price back in the shaded ‘buy zone’. Late investors, looking to hedge their currency holdings, along the lines of digital gold, would do well to buy in a few tranches over a period of time in this zone in my opinion. Though sentiment is weak, the LGC model is strong:
And keep in mind that the above relatively conservative chart/ model is only relevant as long as USD remains a relatively strong currency/ pricing mechanism, i.e.; systemic risk is another reason why you’d consider some exposure to BTC.
Assuming for the moment a year-long correction [which has been the repeating pattern over previous cycles] then another 4 months can be expected [through to October]. Given the further lapse of time required for a year-long correction, it looks reasonable to expect a multi-month sideward range setting up. This would build a solid platform for price moving forward going into next year.
Given the formation of a basing range, and the notion of a less volatile/ more stable price action, it would not at all surprise me to see this range hold over the course of the next quarter. This would mean that the low was in in February, with a likelihood of seeing that low near re-tested going forward. Could it go a little lower, to the bottom of the LGC ‘buy zone’? Sure, but you wouldn’t want to bet on it. Buying in a few tranches here within this range over time, in order to hedge your currencies, looks a better bet to me.
Finally, a look at the 200 week moving average.
Most noticeably on the above chart is the near flat-lining of this longer-term moving average. Once again, showing reducing macro volatility/ increasing price stabilization. A potential investor might also want to consider putting a bid in, for another tranche, at around the 60,000 mark. This would be for a possible final market capitualtion, where price would likely find macro support at the moving average and at the LGC curve itself.
Yes, price previously punctured the 4 year moving average in the last cycle [as per below], but also consider how far price got extended above it, and the rapid rise of that moving average due to the parabolic move. Also consider that price has observed this moving average in previous cycles [chart above]… so in a sense you could say the previous move below was an anomaly.
Until next time,
Stay [relatively] safe out there,
Dave the Wave.