BTC: $18,483
OBTC: $9,352
VG: 6.56
One of the potential uses of VG is to assess how the present compares to the past, and speculate where that places BTC in the current market cycle.
I have seen people compare this rally to three key ones from history: Q2 2019, Dec 2017, Q3 2016. As mentioned before, it is clearly unlike Q2 2019, having been above the ~4–5 VG range for an entire month. It is also unlike Dec 2017 which had VG in the 8 and 9 region.
However, this rally does have similarities with Q3 2016. We got the break into the ~5 range and above, seemingly making a run at the prior ATH. There is one key difference, though — the current rally appears to have gone parabolic sooner in BTC terms, broaching the ~6–7 region fast, which typically marks overextension. In early Jan 2017, BTC took a run at the previous ATH directly moving up from 6 to 7, and was met with one of the steepest corrections in the previous 2016–17 bull market. Indeed, last week I speculated that this would be too early to test the prior ATH, given VG would be over 7.
This rally has a somewhat different signature — we have VG consolidating in the ~6.5 range for a week now. In this regard, it’s a mix of Jan 2013 and Q4 2016. However, OBTC is not about short-term speculation — all we care about is that we are in *that* phase of the market cycle.
PS (27th Nov 2020): Adding a note here for myself, BTC price is now $17,100. I was second guessing VG, as I absolutely should, but in the end, it was right once again, approaching VG of ~7 without consolidating in the ~5–6 region first proved to be unsustainable. Still, it was a genuine possibility that something different happened and it consolidated in the ~6–7 region instead, before breaking 7, and I’ll continue being vigilant to new and unexpected outcomes.
