Analysis

Popular Analyst Reveals New Bitcoin Pricing Model: Prediction Suggests ‘Bullish Run a Month Away’

27/06/2020 by Idelto Editor

The popular bitcoin analyst Willy Woo told his 132,000 Twitter followers that he’s working on a new pricing model that suggests a bull run is imminent. In fact, Woo says the model suggests bitcoin is close to “another bullish run” with “maybe another month to go.”

The price of bitcoin (BTC) has been declining during the last seven days, as BTC has lost 2% overall this past week. The value has been bouncing back and forth between $8,800 to a touch over $10k per BTC. At the time of writing on Sunday, June 27, 2020, the price has been fluctuating between $9,010 to $9,150 during the last 24 hours.

The $165 billion market valuation, still makes up 63% of the entire market valuation of all 5,000+ crypto assets. Despite the downturn, a number of analysts expect a bullish run to come to fruition in the near future. On Sunday, Willy Woo (@woonomic), the well known bitcoin chart analyst and the cofounder of Hypersheet tweeted that he’s been developing a new pricing model for BTC.

“This is a new model I’m working on, it picks the start of exponential bull runs,” Woo tweeted. “Bitcoin was setting up for a bullish run until the COVID white swan killed the party. This model suggests we are close to another bullish run. Maybe another month to go,” he added.

Showing another chart, Woo said that the second graph “very clearly shows how [Covid-19] was a model breaking outlier.” And another chart Woo published indicates that “the longer this bull market takes to wind up, the higher the peak price (Top Cap model). A long sideways accumulation band is ultimately a good thing,” Woo further stressed.

Essentially what the Hypersheet cofounder told his 132,000 Twitter followers is that his new model shows that BTC is “maybe” about a month away from lift-off. If it wasn’t for Covid-19, then Woo believes the bull market would have already started.

Of course, not everyone agreed with Woo’s prediction and the evidence stemming from his new model. “Technical analysis doesn’t work with BTC,” Adam Bornstein replied to Woo. “There are too many exchanges with too thin volume, too many [arbitrage] opportunities, and too much noise built into every move,” Bornstein added.

Although Woo stood up for his position and the analyst responded to Bornstein’s criticism. “I’d agree with you for intra-week moves, but this chart is 8 [years] of macro, where organic investment takes precedence,” Woo replied. Despite, Woo’s defense some still called the prediction “hopium.”

Other Bitcoin evangelists disagree with Woo’s prediction as well, as Tone Vays told the International Business Times (Ibtimes) there’s a chance “bitcoin’s price won’t exceed $10,000 until 2021.”

“Like I’ve been saying for months now, I have no reason to walk away from my prediction early in the year that Bitcoin is going to get stuck between $6,000 and $10,000 for the majority of this year,” Vays told the news outlet. Of course, Ibtimes also mentioned that Vays predicted a dive to $2,800 before the reward halving took place, but the analyst’s forecast never happened.

What do you think about the model Willy Woo created that says a bull run might be one month away? Let us know in the comments section below.

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Bull Run Imminent? Hodl Waves Chart Shows 60% of Bitcoin Hasn’t Moved in a Year

27/05/2020 by Idelto Editor

According to the creator of the analytical bitcoin data web portal, Look Into Bitcoin, a chart often referred to as ‘Hodl Waves’ shows a bull run could be imminent. The web portal’s analyst Phillip Swift recently tweeted that 60% of all the bitcoin in circulation hasn’t moved in twelve months. The last time this trend took place was in 2016, months before the start of the 2017 crypto bull run.

60% of Bitcoin’s Supply Hasn’t Moved in Over a Year

Last March, news.Bitcoin.com reported on a research report authored by Coin Metrics analyst Jacob Franek, which said as of March 1, 2020, roughly 42% of all BTC has not moved onchain in more than two years. However, since then on March 12, 2020, otherwise known as ‘Black Thursday,’ the price per BTC dropped to $3,600 per coin. Using today’s exchange rates, BTC has risen 154% since Black Thursday and is currently trading above $9,100 per unit. The study from Coin Metrics highlighted that “Hodl Waves” have grown larger during the last few months. Essentially, Hodl Waves data analyzes the Bitcoin network’s UTXOs over the course of a few years and people like to measure distinct holding periods.

Phillip Swift, the founder of the BTC monitoring web portal Look Into Bitcoin has noted that 60% of the bitcoin supply in circulation has not moved in over a year. Swift tweeted that this typically signals a trend toward the beginning of a bull run, as it did in late 2016 and into 2017. Swift stated:

60% of all bitcoin has not moved on the blockchain for at least 1 year. This is an indication of significant hodl’ing. The last time this happened was in early 2016, at the start of the bull run.

Glassnode: ‘Realized Cap Age Bands Help Navigate Bitcoin Cycles’

Swift’s findings and the Hodl Waves chart he shared, shows that the 60 percentile has held steady for close to six months. Some traders have said that Goldman Sachs and Hedge fund manager and investor, Paul Tudor Jones’s statements have made crypto investors more bullish.

“It is the likes of Tudor and Goldman that can help drive the next big wave of inflows into crypto,” explained one individual on Twitter. “Not the unicellular bitcoin Twiteratti with their stack sats and hodl mantras — Hence why it is important to pay attention to what they say,” he added.

On May 26, news.Bitcoin.com also reported on the data firm Glassnode’s outlook, which noted that BTC was seeing some declining market health. 17 hours ago after Phillip Swift’s Hodl Waves tweet, Glassnode tweeted about a chart that shows BTC’s “realized cap Hodl Waves.”

“Instead of using Bitcoin supply by age, UTXOs in each band are weighted by their creation price,” Glassnode tweeted. “The resulting realized cap age bands help navigate BTC cycles, gauge market tops, and the start of bull markets.”

What do you think about the Hodl Waves charts and theories? Let us know what you think in the comments below.

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Ross Ulbricht’s 9th Price Analysis Predicts Bitcoin Prices Below $3,000

13/04/2020 by Idelto Editor

The founder of the Silk Road marketplace, Ross Ulbricht, has published another analysis that attempts to predict the price of bitcoin. Ulbricht started sharing his price examinations last December and he leveraged the patterns of Elliott Wave theory to bolster his forecast.

Also read: Bitcoin Revolution: Wanna Earn $1,000 a Day? Government Warns About This Scam

Ross Ulbricht Predicts Sub-$3K Bitcoin Prices

Ross Ulbricht has been locked behind bars for a long time now and during the last few months, he’s been publishing his analysis reports concerning the price of bitcoin going forward. News.Bitcoin.com covered Ulbricht’s first research study and detailed that Ulbricht was using the Elliott Wave theory to formulate his findings. The principle was created by Ralph Nelson Elliott and the theory involves an analysis of trends like market highs and lows. In December, Ulbricht wrote that the current wave we are in today, it could take the price to regions between $93,000 to $109,000. However, the wave can take a long time to fully materialize and the wave right now may not extend until February 2021.

Ulbricht’s latest examination of bitcoin’s price is called “Bitcoin by Ross #9: A Strong Signal for Lower Prices” and the report is calling for a big drop. Ulbricht believes the price could drop back down below the $3,000 range again during this current cycle. “Estimating the extent and duration of wave two is difficult and imprecise,” Ulbricht wrote on April 11. “There is no limit to how low it can go (except $0) because wave one started at $0. And there is no hard limit to how long it could take. However, corrections will often end in the price range of the previous fourth wave of one less degree. That was wave four from back in 2014. Its price range was $175–$1,240. The two previous bear markets (of primary degree) reduced prices by 86% and 94%. An equivalent reduction by wave two would take prices to $2,800 or $1,200. Wave A of two reduced prices by 84%. An equivalent reduction by wave C of two would take prices to $2,200,” Ulbricht stressed. Ulbricht continued by adding:

In terms of duration, if wave C lasts as long as wave A, it will end around June or July 2020. However, waves C of two and wave C of four (not labeled in Figure 1) were considerably larger than the respective A waves. If wave C of two conforms to this pattern, it could drag on into 2021.

Figure (1) from Ross Ulbricht’s bitcoin price analysis.

Problems With Elliott Wave Theory

Ulbricht’s report also excludes outside market factors like the coronavirus effects on the economy. Additionally, he believes the end of wave two will lead to “extreme pessimism and possibly antagonism toward bitcoin.” He remarked that it will take great “fortitude” to purchase bitcoins in this environment but he thinks “the rewards as wave III takes prices to new highs will be well worth it.” Although, not all traders agree with Ulbricht’s market outlook and some have said the Elliot Wave chart he drew was incorrect. One particular issue noted was that “C waves must have five subwaves of an impulse,” explained the data analysis organization Haejin. BTC pundit, John Carvalho tweeted: “Dread Pirate Roberts is doing bearish TA now” and many of Carvalho’s Twitter followers responded with skepticism.

Figure (2) from Ross Ulbricht’s bitcoin price analysis.

Elliot Wave theories have always been controversial among traders and many analysts believe that the principle is no different than tarot cards. Benoit Mandelbrot, a mathematician criticized the Elliott Wave theory and claimed the theory is a bunch of “subjective judgments.” Elliott Wave theory’s biggest issue is the fact that observers cannot identify exactly when a wave begins and ends. In fact, there are many studies that state wave theories are not quantified precisely enough and no trader should be dependent on them. Although, some of the most popular cryptocurrency traders today leverage the Elliot Wave system and a good number of traders and market strategists wholeheartedly believe in them. Ulbricht also believes in the theory and the recently published study is the ninth installment to his price prediction series.

What do you think about Ross Ulbricht’s latest bitcoin price analysis? Let us know in the comments below.

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Blind Faith in S2F Models: Analysts Question Measuring Bitcoin’s Price With Stock-to-Flow

06/04/2020 by Idelto Editor

One of the most bullish charts for predicting the price of bitcoin is the infamous stock-to-flow (S2F) model. The S2F analysis shows the price of BTC could reach $55,000 in the near future. One advocate of the S2F model, the Twitter account known as ‘Plan B,’ wrote a report about the subject and the article was extremely popular and translated into multiple languages. However, skeptics believe the S2F model is faulty and it’s most prominent supporter has said S2F is not entirely accurate, but “an order of magnitude right.”

Also read: Evidence Shows Politicians and Wall Street CEOs Expected the Market Crash Well Before Covid-19

Can We Measure Bitcoin’s Value with Scarcity? Stock-to-Flow Model Suggests Its Possible

There have been hundreds of bitcoin price predictions over the last decade, but most of them stem from people pulling numbers out of thin air. Even when a myriad of analysts and crypto luminaries pick digital currency prices out of a hat and get it wrong, no one really cares. Although, there are a few models and charting techniques that many strategists and traders wholeheartedly believe in, like the signals from Bollinger Bands and Elliott Wave Theory. The analyst known as Plan B (@100trillionusd) has popularized the stock-to-flow (S2F) model, which measures the price of BTC using the number of coins in circulation and the flow or issuance rate. Plan B’s editorial called “Modeling Bitcoin’s Value with Scarcity” has gone viral and has been translated into a variety of different languages.

Blind Faith in S2F Models: Analysts Question Measuring Bitcoin's Price With Stock-to-Flow — Precious metals have been measured with stock-to-flow models for years. Plan B’s popular post called “Modeling Bitcoin’s Value with Scarcity” shows how BTC is the first scarce digital object known to man.

Essentially, S2F divides abundance with demand by treating BTC like commodities such as gold or platinum. So any analyst can use the model to evaluate the current BTC in circulation against the number of coins mined during a specific year. The bitcoin halvings, the period of time when the block rewards are cut in half, play a crucial role in the S2F model. Because the halvings make it harder for miners to stock crypto inventory the division of this rate by the value of measured abundance. Bitcoiners didn’t make the S2F model as it’s been used for quite some time with gold, the commodity with the most S2F ratio. In Plan B’s research article, he notes that bitcoin is the “first scarce digital object the world has ever seen [and] it is scarce like silver & gold, and can be sent over the internet, radio, satellite etc.”

The first stock-to-flow (S2F) chart that can be found in Plan B’s analysis “Modeling Bitcoin’s Value with Scarcity.”

“I calculated bitcoin’s monthly SF and value from Dec. 2009 to Feb. 2019 (111 data points in total),” Plan B wrote in his report. “Number of blocks per month can be directly queried from the bitcoin blockchain with Python/RPC/bitcoind. Actual number of blocks differs quite a bit from the theoretical number because blocks are not produced exactly every 10 minutes (e.g. in the first year 2009 there were significantly less blocks). With the number of blocks per month and known block subsidy, you can calculate flow and stock.” Plan B further states:

I corrected for lost coins by arbitrarily disregarding the first million coins (7 months) in the SF calculation. More accurate adjusting for lost coins will be a subject for future research.

Plan B’s S2F Model Predicts Bitcoin’s Price Will Touch $55K – Skeptics Say S2F Model Surrenders People to Beliefs of the Crowd

Plan B’s report concludes that the “[S2F model predicts a bitcoin market value of $1 [trillion] after next halving in May 2020, which translates in a bitcoin price of $55,000.” However, not everyone thinks the S2F model is accurate and a number of skeptics have attempted to invalidate the S2F concept in relation to bitcoin’s price.

Crypto Twitter and digital currency forums are filled with S2F skeptics who think the model is pure hopium and silly.

A recent report published on April 1, by the Seattle-based crypto hedge fund called “Lost in Space – Bitcoin and the Halving,” describes why SF2 econometric models are too simplistic. The firm Strix Leviathan details halving theories and stock-to-flow models could be false narratives as the report underlines that people should “not [exert] blind faith in one specific outcome.”

“Doing so leaves one’s investment subject to the whims and beliefs of the crowd while surrendering returns to the randomness of luck,” wrote Strix Leviathan portfolio manager Nico Cordeiro.

Despite the covid-19 effects on the global economy, BTC prices were initially affected on March 12 (the price dipped to $3,800 per coin) otherwise known as ‘Black Thursday,’ but prices have since risen back above the $7K zone. On April 5, Plan B tweeted a quote from the 19th-century British logician, Carveth Read, which admits predictions are not always correct all the time. The tweet said “‘It’s better to be approximately right than exactly wrong’ – Carveth Read. [The] S2F model is not dead accurate, but an order of magnitude right.” The analyst’s S2F model for bitcoin has been criticized on numerous occasions and especially after the coronavirus shocked the world’s financial system.

Despite the skeptics, a slew of bitcoiners wholeheartedly have faith in the S2F model and ‘stacking sats.’

‘Stock-to-Flow Does Have a Significant Influence on USD Price of Bitcoin,’ Says Report

Still, numerous people believe the S2F model might not exactly accurate, but pretty damn close. Another report published on March 27 tries to invalidate the statistics behind the S2F model, but the report rejects the theories that S2F doesn’t have an important role. “Whilst many tests have been able to be shown to be incorrect or have series errors, we have been able to reject the hypothesis that stock-to-flow does not have an important non-spurious influence on the US dollar price of Bitcoin,” explains the analysis called “Stock-to-Flow Influences on Bitcoin Price.”

#Bitcoin #s2f coefficient from ARDL info gives us a more conservative range than the OLS or VECMs. pic.twitter.com/SZlMuhWvhK

— Nick☣ (@btconometrics) April 3, 2020

“The bounds test for a level relationship in the ARDL model provides very robust evidence to reject the null hypothesis and conclude that stock-to-flow does have a significant influence on the U.S. dollar price of bitcoin,” the report concludes.

Plan B’s latest S2F chart published on Twitter on April 1, 2020.

Despite some criticism from crypto Twitter and other researchers, Plan B still seems confident in his model. “So BTC has been oscillating around S2F value of $7,000 for 2.5 years now,” Plan B tweeted. “Just like before 2016 halving ($300) and before 2012 halving ($6). Excited to see if we are going to add another zero after the halving in May,” Plan B remarked. The researcher also stressed a few days earlier on April 1:

Both bitcoin S2F cross-asset model (based on gold, silver etc) and S2F time series model (historical price path) point to $1 [trillion]+ BTC market cap in 2020-2024 (red circle, where orange and blue line overlap). $1 [trillion]+ market cap translates into $55K+ BTC price.

What do you think about the controversial S2F model? Let us know in the comments below.

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Cambodia Announces State Cryptocurrency as More Details Surface About China’s Digital Yuan

03/02/2020 by Idelto Editor

Cambodia Announces Own Cryptocurrency as More Details Surface About China’s Digital Yuan

With China still in the lead, other countries are advancing their projects to develop payment systems around central bank digital currencies (CBDCs). Cambodia, for example, has recently revealed it will mint its own coin within months. The news comes as more details about the digital Chinese yuan indicate its main purpose will be to substitute cash in a system that provides “controlled anonymity.”

Also read: China Issues Digital Currency Guide for Party Cadres

Cambodia Becomes the Next State With Own Coin in the Works

Cambodia will issue the government-backed crypto to fuel what has been presented as “a blockchain-based, peer-to-peer payment and money transfer platform.” Named ‘Project Bakong,’ the system is supposed to go live in the next few months, Phnom Penh Post reported, as it already has the support of 11 banks and more are expected to join in the near future.

Chea Serey, director-general of the National Bank of Cambodia (NBC), told the daily that the Bakong commenced in July, 2019. She insisted that the scheme will be operational within the current fiscal quarter. While the newspaper describes it as “a quasi-form of a central bank digital currency,” the central bank official stated that it will be the “national payment gateway for Cambodia.” Serey elaborated:

Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with. Eventually, we hope to allow cross border payment through the Bakong system too.

One of the private banks helping the project, Phnom Penh Commercial Bank (PPCB), has been working to deploy the new system at all of its branches. In comparison with traditional payment and money transfer options such as credit cards and mobile platforms, Bakong is cheaper and more convenient, PPCB President Shin Chang Moo noted.

The banker also commented on concerns that financial institutions like his might lose market share to Bakong. He believes that in the long run the project will facilitate the establishment of more inclusive financial ecosystems that will be beneficial for all stakeholders in the industry. Cambodia’s financial sector is still relatively immature in terms of number of service providers and users, he remarked.

Chang Moo made a clear distinction between Bakong and permissionless decentralized cryptocurrencies like bitcoin – the Cambodian digital currency project is a closed system backed by the country’s banks and financial authorities, which leaves no room for speculation. He also revealed that the Bakong wallets will be linked to bank accounts allowing users to exchange their digital coins for the nation’s fiat currency. “All the transactions will be done on a real-time basis with the records stored safely at NBC,” the banker said, adding that other central banks are likely to develop similar systems.

Japan Must Be Ready to Issue CBDC, BOJ Deputy Governor Says

Other governments and regulators have been paying attention to the accelerating developments in the field of CBDCs. These include much more developed economies and financial systems such as Japan. Although Tokyo has no immediate plans to issue a digital currency, the Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya recently stated that the institution must nevertheless be ready to do so. Amamiya was quoted by Reuters saying:

The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan.

But if Japan is still on the sidelines and Cambodia has only recently entered the digital currency race, China has been Asia’s leader in terms of progress towards actually issuing a CBDC. It started working on one about five years ago and stepped up its efforts after the announcement of private projects such as Facebook’s Libra. Although no timeframe has been announced for the anticipated launch, the People’s Bank of China (PBOC) is preparing to begin trials of the digital yuan with the participation of four state-owned commercial banks and three telecom operators.

The goals of those behind such projects may be quite different. In countries where governments have continued to suppress interest rates as an anti-crisis measure, digital currencies can make it easier for central banks to introduce and maintain negative deposit rates. Limiting cash in circulation may be another prime objective as authorities are targeting tax evasion, money laundering and other illicit activities while limiting financial privacy.

Chinese Digital Yuan to Provide ‘Controlled Anonymity’

An analysis published by the Chinese company Huatai Securities reveals more details about the Digital Currency Electronic Payment (DCEP) system which China is now finalizing. It’s become obvious that unlike decentralized cryptocurrencies, DCEP will operate in a centralized environment managed by the PBOC. Its “legally encrypted” currency will be a digital form of the renminbi (RMB). Unlike electronic payments based on platforms such as Alipay, which digitize money in the existing commercial bank account system, M1 and M2 money supply, the digital yuan aims to replace banknotes and coins, or the narrowest money supply type, M0. To achieve that, DCEP will also support offline transactions.

The digital yuan will be distributed through a two-tier system. The central bank will issue the currency to commercial banks against their reserves and then provide it to the public. Compared to the traditional fiat system, DCEP will offer the Beijing government and the Chinese central bank greater controls over all transactions, which is impossible with paper cash. As a substitute for cash, the CBDC will share characteristics with both paper currency and digital fiat currency. For example, the digital yuan is supposed to ensure what the report describes as “controlled anonymity of transactions.”

The current electronic payment methods such as bank cards and third-party payment platforms are tightly linked to real-name bank accounts, the authors explain. The DCEP system will transfer value without going through bank accounts. The central bank will have access to transaction data and can trace the digital currency sources using big data analysis, but commercial banks and merchants won’t be able to obtain that information. Individuals and businesses will open digital wallets through commercial banks and deposits and withdrawals will require a corresponding bank account. Similar to paper money, however, transfers between users won’t involve a link between their bank accounts and the network.

Digital yuan transactions will be processed through a centralized ledger. The DCEP consists of a central bank digital currency system which issues the coin and registers ownership, commercial bank digital currency systems performing banking functions, and a system providing authentication for the interaction between the central bank, commercial banks, and payment terminals.

What is your opinion about the race between governments to issue sovereign digital currencies? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock.

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