@Giovann35084111 As different windows can give different tc, what is your thought process in accepting a tc? Also, how do you choose a window size for the lppls model to calculate?
@moneyordebt Hi,
I recently built my own lppls model inspired by the show. Varying window sizes can change Tc, how do you determine which window size provides the overall best fit?
If bitcoin's cycle pattern continues, price should remain inside or near this blue cloud. The ETFs pushed us out of the cloud and now we're reverting back. We're 3+ months away from upwards acceleration and we could see prices go up 4x by the end of 2025.
---
Many anticipate bitcoin's four year price pattern to continue. These are the bitcoin 'cycles.'
Price fractals take historical price data and overlay it onto the present and future. You've probably seen bitcoin fractals that overlay price values by halving.
There are two issues to address with fractals:
1) How should you select the start date and interval length
2) How should you scale the prices
Re: 1)
I've looked at the cycle patterns as days since halving and a simple four year cycle. Intuitively, the number of days since halving makes sense because people believe the cycles are due to the decrease in new supply. However, the peaks better align to a simple four year cycle and I don't believe that the decrease in issuance drives the cycles, not anymore anyway. Instead, I think the pattern is purely psychological, it exists because people believe it exists. For these reasons, I use four year fractals. I also don't bother to align the start date with a halving because four years is four years, no matter where you start.
Re: 2)
The price today is much larger than it was several years ago, so people have to scale the price fractals one way or another. A common method is to use percentage gain from the starting date. This leads to fractal plots that show bitcoin reaching $1M+ in the next year or two, which is unreasonable. Bitcoin's yearly percentage gain has decreased steadily over the years as the asset has matured--growing from a tiny speculative asset to a trillion dollar goliath that trades on US stock exchanges. We need a better way to scale the fractals and I use a time metric based on the power law support.
---
The power law support tells us Bitcoin's minimum price. A pattern that's held from $1 to today, a pattern that I believe will hold for years to come.
In previous plots, I've shown how you can measure bitcoin's price as 'years ahead of support.' This is my favorite metric because it boils everything down to time. How long could it be, in the worst case, before prices are forced upwards by the power law support.
In this plot, I scale the fractals based on the 'years ahead of support' metric. I think this will remain relatively stable because time means something to all of us. If you know that it could be 5+ years before the support catches up to the current price, you will likely be hesitant to commit additional capital. No one wants to risk their time--our true currency.
---
This plot uses three four-year fractals. I compute their mean and fill the range between the min and max values. The filled area is what I call the "fractal cloud." The fractals are:
1 Jul 2011 - 30 Jun 2015 (contains the 2013 peak)
1 Jul 2015 - 30 Jun 2019 (contains the 2017 peak)
1 Jul 2019 - 30 Jun 2023 (contains the 2021 peak)
The time axis shows the dates from 1 Jul 2023 - 1 Jul 2027. This allows us to see how well the fractal cloud has predicted bitcoin's price over the last year, while also showing us where prices could go after the cycle peaks.
Bitcoin's actual price is shown in red. If the red line stays within or near the blue cloud, then the patterns of past cycles are repeating. If it starts to deviate significantly, that tells us something is changing.
---
Does the price have to stay within the cloud? Absolutely not. This time could be different, in fact it already is. The ETFs pushed bitcoin's price to $70k+ this spring, well outside of the fractal cloud. But, with recent price action turning downward, we appear to be reverting back to the pattern of previous cycles.
---
There's a lot to unpack here, especially if this is your first time seeing this content. I'll post some animations and plots that help explain these concepts in the comments below.
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