Is Bitcoin becoming more predictable?

Ben Weiss, Wednesday, 26 June 2019

Bitcoin predictable

What a time to be alive, well, for crypto enthusiasts at least. Bitcoin hit yet another milestone this weekend as it blasted through the $10,000 barrier and settled above $11,000. It was a near-16-month high, and it’s in-keeping with the excellent year that Bitcoin has had in 2019. Notoriously, it’s considered one of the most unpredictable markets around, evident by the colossal 2017 crash, but could Bitcoin now be becoming more predictable?

Slow but steady

We ask this for two reasons. The first, is the pattern it has followed during the surge back towards its all-time high of $19,529.9. Where the rise last time out was fairly drastic, this time has seen a much more gradual rise. In just three weeks prior to its all-time high, Bitcoin rose over 11,000 points. In comparison, in the last 12 weeks (since the first major rise of the year), Bitcoin has risen by just over 7,000 points. Even factoring in the latest peak above $12,500, it’s still rising slower than before.

Bitcoin predictable

When Bitcoin was last at the price it’s at now, that initial rise and bubble was in full swing. At around the $8,000 mark in mid-November 2017, its price began to skyrocket as Bitcoin experienced exponential growth. The fact that we have surpassed that mark now and no bubble looks to be developing bodes well. Instead, a steadier incline is occurring.

Perhaps the steep rise is yet to come.

For the time being though, these gradual pushes are followed by short levelling-out periods that are key in managing expectations.   

A precedent to follow 

A second reason that might indicate Bitcoin is becoming more predictable is that in essence, we’ve been here before. The fact that Bitcoin has (nearly) reached $20,000 before has set the bar at that level. Be it intentionally or not, that is now the main target that investors are looking at. Sure, it’s nice to pass the milestones of $10,000, but that $20,000 mark is where most people’s sights are set.

For those investors who backed Bitcoin as it was on its upwards curve towards $20,000, they will be losing money. Even the ones who invested below $12,000 initially might still be chasing the healthy PnL they once had at Bitcoin’s peak. If they have kept their trades/investment in Bitcoin open for this long, it seems as though they’re holding out to either get back to even or get back to the profit that they once had.

Of course, Bitcoin could crash at any point, but in a trading sense it seems that there’s that safety net until the former high is reached. At that point, Bitcoin will be in unchartered territory.


Is it predictable that Bitcoin will reach $20,000?

It’s tough to judge predictability. If a proposition turns out to happen (in this case Bitcoin reaches $20,000), people will say it was inevitable, but just because it happens it’s not necessarily predictable.

In this case though, it seems to be only going in one direction, and the only thing to disrupt this momentum will be some news that significantly undermines the Bitcoin’s purpose. As its price continues to rise, it will surely only gain more traction. The real test will come when the price rises into the unknown of above $20,000.  

At that time, we will really see if Bitcoin is destined to be something or whether it simply tapped into, or rather created, a certain trend at the right time.

Is Bitcoin becoming more predictable? Perhaps. But as soon as (or if) we reach $20,000, it will become the most unpredictable it has ever been.

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