This Guys Math Says Bitcoin Put in a High

I like to read different methods of pricing bitcoin. I came across this one on reddit which points to $7,500 as a top. Permanent or short term top, who knows. But his logic is interesting. Remember – see both sides.

From Reddit

Bitcoin Will Crash Below $3000. https://bitcointalk.org/index.php?topic=2396770.0

Bitcoin rises from $611, June 2016, to the current price of near $8000. This is an exponential rally, a rise with an accelerated rates. Such a rally defines a market bubble as it will very quickly reach a level that cannot be sustained – when the bubble must burst crashing the market. The past examples are the Dutch Tulip Bubble of 1637 and the Dot.com bubble of 2000. Such bubbles always bring prices to levels where it started.

That exponential markets must crash may be just a simple law of nature. In order for such inflated prices to be maintained, there must be some support from the underlying fiat money supply. The maintenance of trading volume means generally a greater money supply allocation to such a market; it is likely such cannot be maintained at a point in time causing the market to burst.

I have done an exponential curve fit of bitcoin prices from 2016/10/6/611 to 2017/11/16/7843. Extrapolation of the exponential curve (y = A exp (kx)) is done and the figures shown below.

Data: coindesk.com 1 year data number of points = 25 curve fit : y = 501.428 exp (0.006268 x)

2016/10/6/611 0, 611 2016/11/19/751 44, 751 2016/12/26/903 81, 903 2017/1/26/915 112, 915 2017/2/26/1180 143, 1180 2017/3/16/1173 161, 1173 2017/4/23/1284 199, 1284 2017/6/1/2452 238, 2452 2017/6/28/2584 265, 2584 2017/7/30/2746 297, 2746 2017/8/19/4206 317, 4206 2017/8/26/4387 324, 4387 2017/9/11/4190 340, 4190 2017/9/13/3874 342, 3874 2017/9/22/3603 351, 3603 2017/9/28/4185 357, 4185 2017/9/30/4353 359, 4353 2017/10/6/4370 365, 4370 2017/10/12/5439 371, 5439 2017/10/24/5519 383, 5519 2017/10/28/5733 387, 5733 2017/10/31/6447 390, 6447 2017/11/9/7146 399, 7146 2017/11/15/7280 405, 7280 2017/11/16/7843 406, 7843

days 0, 2017-11-16, $6389 days 10, 2017-11-26, $6802 days 20, 2017-12-6, $7242 days 30, 2017-12-16, $7710 days 60, 2018-1-15, $9306 days 90, 2018-2-14, $11231 days 120, 2018-3-16, $13555 days 150, 2018-4-15, $16359 days 180, 2018-5-15, $19744 days 210, 2018-6-14, $23829 days 240, 2018-7-14, $28759 days 270, 2018-8-13, $34708 days 300, 2018-9-12, $41889 days 330, 2018-10-12, $50556 days 360, 2018-11-11, $61015 days 540, 2019-5-10, $188558 days 720, 2019-11-6, $582704 days 900, 2020-5-4, $1800738 days 1080, 2020-10-31, $5564849 days 1260, 2021-4-29, $17197135 days 1440, 2021-10-26, $53144558 days 1620, 2022-4-24, $164233406 days 1800, 2022-10-21, $507532895

The extrapolation data may be used to predict when the bitcoin bubble may burst. The method is to make use of proof by contradiction. It makes an assertion X; then it uses deduction logic starting from X to arrive at other statements of truth. If if arrives at a statement such as : 3 < 2, which is clearly false, then a contradiction exists refuting the assertion X. We can us this method on the extrapolation data.

Assertion : Bitcoin can reach $507,532,895 in five years, by 2022.

Unlike in mathematics, we cannot here make deterministic deduction using pure logic. We can only make a judgment based on our common sense and intuition and say how likely something may happen.

Most of us very likely would dismiss bitcoin at $507,532,895 by 2022. So we try other extrapolation figures. Say we also dismiss $5,564,849 in 2020, 3 years from now. So when is this bitcoin bubble likely to burst.

The price based on the exponential trend has the figure $6389, days 0, 2017-11-16. We are now doing at $7800 at this point which seems too high above trend. In the least there should be a significant correction – or it may even mean this:

Bitcoin bubble may burst any time now.

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