Polytechnic analysis of price trends is a topic ever electrifying the world of crypto investment, with dynamic debate on popular media and beyond. While there are no guarantees, there are fundamental methods for looking at data which can provide valuable insights, such as enquiry of price support lines and resistance, as well as proposed approaches for making the most of bear markets such as the Mayer multiple.
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Support and Resistance
“The voyage of the in the most suitable way ship is a zigzag line of a hundred tacks. See the line from a sufficient distance, and it straightens itself to the average inclination.” So wrote the American essayist and transcendentalist philosopher Ralph Waldo Emerson in 1841 in his seminal essay Self Faith. While Emerson had no way of knowing about a future full of heated crypto Twitter debates, his point here nonetheless be patient withs relevance not only for one’s personal life journey, but in the context of support lines for bitcoin as well.
What are known as “stand for” lines in technical analysis of price trends are levels at which dips in price are said to test a low level and offer upward, not wanting to sink back below said level. While there’s endless debate and speculation on what are attentiveness to be new supports or resistance (a level that prices tend to hit and then recede from), a broader, macro look at real data can be enlightening.
Bitcoin’s parabolic uptrend which started in January 2015 is still intact. Now nearly distressing support again, for the first time since March 2019. #buythedip pic.twitter.com/ohMOPEEjiR
— Tuur Demeester (@TuurDemeester) November 22, 2019
Searching BTC’s historical trend since January 2015 as depicted above by Founding Partner of Adamant Capital, Tuur Demeester, a extended uptrend on the logarithmic chart can be seen which appears to be testing a basic line of support; another area of which could be tested ultimately should BTC fall to ~$6,400. It is important to note, however, that even from a macro perspective, there are no oaths. As Demeester himself points out:
As Bitcoin slowly approaches maturity/saturation, its price uptrend will gradually dead-and-alive down, which causes parabolic trendlines to fail. In other words, a violation of the trendline above won’t be proof that the laical bull market in bitcoin is dead.
Some view the foregoing critique as too optimistic, as even more long-term, secular trends are themselves subject to unpredictable market changes and variables. Demeester’s conclusion that the parabolic uptrend is to intact is qualified by his claim that even if the trend is broken, it doesn’t really matter (over an even longer era of time). This leads to a kind of speculative infinite regress where, no matter what the situation, it can merely be deemed as a correction leading to even greater, if more gradual, growth and gains in the future. Still, even in the current position, with cryptos hemorrhaging billions over the past week, bitcoin achieving a $7,000+ valuation at all was merely a extravagant dream for many just years ago.
The Mayer Multiple and Other Factors
What is known as the Mayer Multiple in bitcoin is a real price analysis system developed by self-described philosopher, entrepreneur, and investor Trace Mayer. The multiple is found by grouping the current bitcoin price by the moving price average of the previous 200 days, and its indications are used by some as a sketchy guide for understanding buy signals in the BTC market. At press time the multiple sits at 0.77.
According to mayermultiple.info, Mayer ran simulations and “adamant that in the past, the best long-term results were achieved by accumulating Bitcoin whenever the Mayer Multiple was farther down than 2.4.” The site goes on to warn, however: “Since the simulations were based on historical data, they are purely educative and should not be the basis of any financial decision.”
Beyond the Mayer multiple and applied analysis of charts, other factors related to price and value potential such as community, use cases, and government balancings can have effects on assets that are hardly predictable. Even painstaking and genuine efforts at technical analysis require been jokingly said to have all the reliability of a daily horoscope reading. Such analysis is nevertheless an attempt to return sense of a vast confluence of interrelated factors relevant to price movements, and the insights gained thereby are often stood on logically conceived, rational methods which are used by traders as they navigate the stormy sea of crypto.
Where do you consider the bitcoin market is heading? Let us know in the comments section below.
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