Bitcoin Boom: History Is Repeating Itself

Charting is controversial because in a random market, charts of the past do not predict the future. However, not all markets are random and the ones that may be are random in a bounded way. That is to say, the Nasdaq will not be 1,000,000 on Monday nor will it be below 1,000. So right there a chart of the past tells you something about the future. There are many flavors of random, but this article is not a course on them. This paragraph is simply to say that charts can be good at predicting the future but you have to be very careful.

You can always keep redrawing charts and adapting them to look more like the past predicted the future. If you keep drawing plausible lines some will fit but if you have a study and the market is running along it on rails then you may just have a view on something non-random.

Let’s look at some old charts of bitcoin predictions of mine.

This is from December:

Well that is about as on the nail as you will get, if I may say, with a bag of profit attached for those brave enough to believe in fractals.

This is based on the following created at about the same time:

The idea that history is repeating gives plenty of opportunity for tuning. This second chart is what I feel is a toppy version of this bull run.

So here we are now:

So here is an overlay of the past prediction with now. I’ve offset the current period a little so you can compare the current pattern:

So all you have to do is decide: was the break mid-$70,000 the end or simply the fat correction in this prediction by me in December?

Here is another chart from November predicting the same progression yet even earlier:

To me the answer is obvious, but when we start to get above $80,000 it’s going to get hard to predict as the top of these verticals are often momentary, ephemeral and more random. Personally, I think $120,000 is the “top” if you are aggressive. However, I’ll be sweating once the number is over $80,000 but grimly holding on. When the media is screaming on every page, $500,000 is coming I’ll be bailing whatever the price!

However crazy you might think it is, bitcoin is following the vertical of 2020-2021, which in turn followed the vertical of 2017 and you might say has all the field marks of all the previous verticals, there is it staring you in the face. Fluke or future, that’s your call.

To me, we appear to be in the midst of exactly ‘a big shake’ that the past delivered on the previous boom. Anyone brave enough to trade crypto needs a plan whether it’s based on philosophy, econometrics or technical analysis and so far the above thesis has been spot on and pretty much unchanged from the basic idea I’ve been writing about for what is now years. I invite you to go back and read my pieces since before the last bitcoin boom.

Disclosure: I hold bitcoin.