The 5th Wave of Bitcoin
Introduction
The Bitcoin halving is approaching, and it will mark the beginning of the 5th wave of Bitcoin, which is expected to be an explosive wave. Halving takes place every 210,000 blocks, and with the Bitcoin network having surpassed 815,500 blocks mined, the next halving is anticipated to occur at block 840,000. Specialized websites are currently forecasting its date for April 2024 [1,2]. This impending event is generating significant excitement and anticipation in the cryptocurrency community, as it has historically had a profound impact on the Bitcoin ecosystem, including supply dynamics and market sentiment.
We are currently approximately 160 days away from the upcoming halving [1,2], where the inflation rate will decrease to 0.8% in 2024. At that point, Bitcoin will boast one of the most meager inflation rates in the global economy [3]. This presents our generation with an exceptional opportunity that our predecessors were deprived of.
In the current study, we have applied and fine-tuned the Bitcoin Waves model to forecast Bitcoin prices for the 5th wave. This model anticipates the forthcoming wave by estimating future waves through linear combinations of previous ones [4–6].
All Bitcoin Waves
The Bitcoin Waves model aims to predict the next wave by approximating the future wave as linear combinations of prior waves, much like Molecular Orbital Theory or Quantum Mechanics. When using the 1st wave to forecast the 2nd wave, the cosine similarity stood at an impressive 83.98%. Following this pattern, the 1st and 2nd waves were combined and compared to the 3rd wave, resulting in a cosine similarity of 96.18%. As for the 4th wave, the model exhibited favorable performance characteristics, with a cosine similarity of 88.8% (Figure 1).
Impacted by the pandemic, the 4th wave did not reach the value it could have achieved in the first half of 2021, when a minimum of $99,700 was anticipated. However, the second peak at the end of 2021 closely aligned with projections.
The 5th Wave
After 2024 halving, the Bitcoin annual inflation rate will drop to 0.8% and the Bitcoin Waves model designs sunny days for bitcoiners. The price could reach 176.7k in Apr 2025 (Figure 2).
According to the model, the bull run is expected to kick off in February 2024, reaching its zenith on April 19, 2025, with a slight margin of error of 36 days and a value of $176,722.90. In the event of another black swan event, such as the COVID-19 pandemic affecting the market or significant geopolitical conflicts and economic downturns, the model predicts a peak of $106,033.8. However, under the circumstances of a robust global economy, Bitcoin could potentially surge to $247,412.10. Will you be on the sidelines for this?
Conclusion
The approach employed in this study is versatile, swift, and straightforward. The Bitcoin Waves model has introduced intriguing adjustments, enabling us to envision a potential future for Bitcoin through linear combinations. What if the model proves to be accurate?
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Acknowledgments
The author is grateful to Satoshi Nakamoto, Hal Finney, Nick Szabo, Changpeng Zhao, Sabrina Moraes, Fernando Ulrich, André Fauth, Criptomaníacos, and Vela Trader.
References
1. When Is The Next Bitcoin Halving? [Updated] | CoinMarketCap | CoinMarketCap
2. Bitcoin Halving Countdown | CoinGecko
3. https://tradingeconomics.com/country-list/inflation-rate
5. https://medium.com/coinmonks/bitcoin-what-was-what-is-and-what-probably-will-be-8aba4d01eb7b
6. Predicting 2022–2032 price action with Bitcoin Waves model | by Edgar Moraes | Coinmonks | Medium
