Bitcoin: Cycles, Seasons and Symmetry
Many of my articles over the years attempt to outline the cyclical nature of Bitcoin’s price action. In one of my first articles ever written for The Gold Forecast which was published on May 12th, 2020, I naively attempted to devise a formula that could prove that not only was Bitcoin’s price growing at a rate that could be predicted far into the future, but also that price ascent could be quantified into a mathematical equation.
I tried to use the halving events of Bitcoin whose price did seem to follow a sort of “seasonal” sentiment change based around these block reward halving events.
That first attempt proved not to work out when crunching the numbers and checking my work later that night found that his first attempt was far off. The next day (May 13th, 2020), I wrote a piece titled “Formula Revised” in which I put forth the following formula.
B$ = Bitcoin Price after next halving event in USD.
$AE = Bitcoin’s price at the last halving event in USD.
PR = Previous block reward.
To illustrate that this equation has been a valid method for finding the price of Bitcoin at the next halving event, let us plug in the numbers for the second and third halving since the equation uses the price at the previous halving the first event can not be found this way.
The second halving occurred on July 9th, 2016.
$AE = $12.35
PR = 50 BTC per block
The price at the time of the second halving was $650. Solving for B$ would have given you a value of between $598 and $647, so it came within a couple of dollars of the actual price. Let’s solve for the third event.
The actual price at the third halving was $8,821, so it was a few hundred dollars away from our answer. As you can see, this equation isn’t exact. It would actually be a lot closer if we ended the equation with +7% instead of ±5%. That would have given us a value of precisely $650.19 for our first equation solved and a sum of $8693.75 for our second equation. So, using this reformed equation, what does it predict the price at the next event scheduled for Spring 2024 to be?
Only time will tell if this equation will continue to work. However, with the value it has given for the price of the third event, I feel pretty optimistic that Bitcoin, which at its base is a mathematical formula, can likely be quantified into the same absolute certainty that it was born out of.
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