So last time I left you with a slightly positive view.
Which was that the average Big Crash is 63% and we are already 59% down right:
Bitcoin Biggest Crashes - Is an 80% Dip Normal?
As mentioned yesterday Big Crashes take about 6 months, and we currently are 6 months from the November top so we could be bottoming out. If we would use these Big Crashes as a reference.
The Big Picture
Now those numbers are all coming from a +/- 6 months view, but as I am becoming a 4-year cycle disciple I would like to have a look if this positivity holds when looking at the last 2 years of these cycles.
Why the last two years? It seems that both the top and the bottom happen in the 2nd part of the 4-year cycle.
End of Cycle 3 - 2020 to Now
We went from BTC being at $10.000 in Sep 2020 to 68.000 in Nov 2021 is 6.8X increase in 14 months. And back to 26K in May 2022 still 2.6x after 20 months.
End of Cycle 2 - 2017 to 2019
Now I am gonna compare the 2020-2022 period of this cycle to the same period from the previous 4-year cycle (2017-2019)
From the Bottom to the Top:
In Jan 2017 BTC was at 1K and went all the way to 20K in Nov. 2017. So basically a 20X bottom to top over 11 months.
We can see exactly the same happening in 13 months of this cycle. Going from Oct 2020´s 10K to Nov 2021 68K BTC, but this cycle it was only a 6.8X and no 20X.
Hence people (me included expected another leg up...the extended cycle). That my friends looks like it´s not happening anymore.
From the Top to the Bottom:
From the Nov. 2017 top, which was 20K Bitcoin went all the way down to 3.5K which it reached in Dec 2018. That dear reader is indeed an 84% drop at the end of the previous cycle, and it only took a year from the Top to the Bottom.
Now the top of this current cycle was also in November, and if it takes a year where will we end as we are already 59% down in 6 months?
Let's stay positive, one cycle is no cycle, I am sure the cycle prior to 2017-2019 looks much better.
End of Cycle 1 - 2013 to 2015
So let´s see that other cycle.
We went up from $75 in July 2013 to $1100 by the end of November 2013. A beautiful 15X in 5 months' time.
From that $1100 top Bitcoin crashed to $175 in Jan 2015. And believe it or not.....that is another 84% drop...??
So everything points to an 84% drop at the end of each cycle.
That would bring Bitcoin down to 11K by November 2022.
The devil is in the detail:
This cycle we only did 6.8X so far, compared to 14X and 20X in the previous cycles. Therefore an 84% crash from top to bottom might be slightly unrealistic.
Logic would dictate that something that increases exponentially, decreases exponentially..... so if the increase is less exponentially so is the decrease.
So or many people (myself included) are currently wrong and we will see an extended cycle, that will do a 15X from that 10K bottom before the 84% dip.
Or the bottom needs to be measured in another way. So I went and ha a look at how much higher the bottom after the top is compared to the starting point.
So let´s see what that would look like:
In 2017 BTC went up 20X and bottomed out at 3.5X from the starting point before the run-up.
In 2013 BTC went up 15X and bottomed out at 2.3X from the starting point before the run-up.
So if the top drops 25 % the bottom does do a similar thing. Although it should be 2.6 and not 2.3, but let´s follow that model a 10X would bottom out at 1.75X ($17.500)
A 5X would bottom out at 1X ($10.000).
So a 6.8X would bottom out at 1.25X. This would mean 1.25X times the 10K we started from = 12.5K
Now maybe I am a Cuckoo, but this makes sense in my head, but the outcome is just as bad.
Bottom Line
Based on these numbers from the previous cycles we would bottom out at $12.500 this cycle.
This would be the 82% drop from the top of which and dropped 59% already so just another 23% to go.
That does not sound so bad until you see what that will do to your portfolio, especially when you are holding lots of ALTS.
Now, do I believe this is real?
Yes, this chance is very real.
The more I dive into these cycles, the more obvious the pattern gets.
A bottom between 12.5K and 15K is to be expected based on the historical data.
Do I still believe 21K is the absolute bottom as I claimed before?
I am less certain, but. This is again a big butt.
But I think 21K still is the most feasible.
First of all, because our surge up is very minimal compared to the two previous cycles.
Secondly, due to the mass adoption, more people are more eager to buy the dip than ever before. And buying that dip with this forever pending supply squeeze might just stop us from dipping 84%. If 21K holds we would only dip 68% this time around.
Ending on a Positive Note
As I do not want to be known as the Baby of Doom and Gloom have a look at this. Because even if BTC would go down to 12K or 14K as per the below graph, there is a light at the end of the tunnel. We just need to wait till November 2024 to see it.
This chart shows how it would be if from today's price (on any other day in the past selected from the dropdown above the chart) change would repeat its pattern from the previous cycle. It goes 1458 days ahead (full cycle).
Hope you enjoyed my post, remember to check part 1 for the details on the biggest BTC crashes.
And Don`t forget that hitting the like button is one of the few free things in life.