Bitcoin Halving — Historical Scenario Analysis Charts in Excel & Googlesheets
This ain’t your older brother’s BTC halving. Analyzing price movements around the Bitcoin block reward halving starts with getting your head around the historical data AND the holistic context, here’s how to do it.
Any seasoned professional trader or portfolio manager will tell you that all market moves are relative to the context of the prevailing market.
One of the most frustrating things about most Bitcoin halving predictions and models is that they ignore this context almost entirely, instead relying purely on what the trendiest technical indicator chart from a TradingView chart ‘implies’.
For example — thought exercise: Can you really compare today’s market with 2012 where institutional participation was effectively zero?
Using an approach that seeks to identify changes, patterns or correlations in the broader holistic context (aka looking at the absolute and relative/weighted changes of relevant metrics in the context of the prevailing market) can help identify tradable patterns, relationships and trends for the upcoming halving in May 2020.
This article highlights a few examples of those pitfalls and provides a (hopefully) more flexible and holistic tool to use. You can download the Bitcoin Halving Historical Scenario Charts Template here
EXAMPLES — COMMON (APPROACH) SCENARIOS
Prediction #1: History will repeat itself… right?
@SomeTwitterExpert
“Bitcoin returned an average of XYZ% in the 30, 60 and 90 days following the last two halvings. That means buying $100 BTC right now should yield you ~XYZ% returns in the same period… give or take…ish…”
Pitfalls
- How many algo trading bots were actively arbitraging the markets during the last two halving events?
- What was the average bid/ask spread, market depth and overall liquidity during the prior events compared to now?
Prediction #2: Supply/Demand is a universal law and also 100% applicable to a commodity / asset / blockchain/ (rat poison?) like Bitcoin (cough) — and thus scarcity will drive the price action… right?
@SomeTwitterExpert
“After the 3rd halving there will only be XYZ BTC remaining and assuming XYZ inflation schedule based on the ‘code’ + increased demand, the demand will cause a supply squeeze and drive the price up…”
Pitfalls
- How many derivatives exchanges were active during the last two halving events? (or total exchanges)
- How many retail/institutional investors could instantly put on 100–400x downside leveraged trades on Bitcoin?
- Scarcity — how many altcoins (aka investment alternatives) were there available for investment during the last two halvings?
Prediction #3: XYZ onchain metrics have increased by XYZ% vs. the last two halvenings, this implies an upside of XYZ% for the third halving event… right?
@SomeTwitterExpert
“Because the ABC (insert buzzword) price/metric ratio during the prior two events was X and the (insert buzzword) metric increased after the prior halving events then the price should follow (aka mean revert) and trade up XYZ%…”
Pitfalls
- What else changed since the prior halving events relative to the [insert buzzword] metric or price/metric ratio?
- Does your chosen [insert buzzword] metric have an input that may have changed since the last event…?
- Does your chosen [insert buzzword] metric have multiple providers, sources or versions?
Looking only at a longer period after the event certain trends start to clearly stick out, this volume pattern is an interesting divergence from # of transcations…. hmm…
This isn’t intended to be a market prediction or guidance on how to trade the market (no trading advice ever*)-but it is supposed to help you think about your own analytical context and approach to these events.
HOW TO USE THE TEMPLATE
(WATCH THE QUICK VIDEO)
Using the Cryptosheets template you can easily select various periods before & after the previous halvings to measure the changes in the holistic context of other network & activity metrics
Example of using multiple adjustable factors at the same time to calibrate your analysis
https://app.cryptosheets.com/#/templates/357
Give it a try for free by checking out the template… what do you have to lose?
▶️ Cryptosheets is free to sign up and start using now.
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TAGS: bitcoin, btc, halving, halvening, excel, googlesheets, template, cryptosheets, block rewards, bitcoin inflation, crypto, blockchain, halfing, halfening, bitcoin halfening, bitcoin halvening chart, bitcoin halvening dates, bitcoin halvening date, bitcoin halving date chart
IMPORTANT NOTE(s)
This story was originally published at https://medium.com/cryptosheets
NONE of what has been written here is or should (ever) be construed or interpreted as investing or trading advice
