Update #9: When? Now…

BTC: $26,478
OBTC: $11,114
VG: 7.72

While it’s too early to “confirm”, by breaching past ~7.5 and $25K simultaneously, we have all but confirmed that BTC is in the thick of initial price discovery.

The first part of price discovery is always an unpredictable and volatile time, where we discover our first points of macro resistance. No one knows where it’s going to end, and with a sample size of only two (or at most, three) there’s nothing much we can infer from OBTC & VG either.

That said, we should be looking at VG ~9 as our first targets over the mid-term, i.e. Q1 2021. There’s no point considering a BTC equivalent price this early, as OBTC tends to shoot up rapidly in this phase. For example, VG ~9 currently is $34,000, but it could easily be >$40,000 by the time BTC price actually gets to $34,000.

I’ll discuss three possibilities. Remember, we have no idea how it’ll play out from here, till we find our first point of resistance, so these are not forecasts at all, just three possibilities as food for thought.

First one would be we follow the 2013 path. Indeed, thus far, the VG signature has been closest to 2013. While it was early retail discovering a new asset class then, it is now institutions adopting it for the first time. So, we should not rule out the possibility of an exponential growth, topping out near ~10 some time as early as mid-2021. That could be the end of this sub-cycle, and we could head down and sideways for several months/years.

Second, we revert back to the “mean” as per the 2017 cycle, which would imply we go sideways, down, back up, and continue on till we hit the parabolic melt up phase later in 2021 or early 2022.

Third, with a new market of big money adopting BTC as a bonafide reserve asset, we simply have new rules. We should no longer expect extremely volatile boom and bust cycles every 2–5 years, and we’ll just align with the traditional markets. I.e. a steady march on up with mostly just noise in the weekly timeframes, with a significant correction every couple of years, and short cyclical bear markets every decade or so. It is still very, very early to even consider this, but perhaps this is the cycle where BTC attains maturity as an asset.

Finally, there’s absolutely no denying that BTC is currently heavily overextended on weekly and monthly timeframes. We have some evidence from VG to suggest it could heat up much farther, of course. But we always have to be prepared for the possibility of a significant correction. It is likely, though, that any correction greater than >15% will be bought up very quickly given current market conditions, but as we know, BTC can turn around on a dime.

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OBTC

OBTC is an attempt to value BTC using on-chain activity. I’m just a bitcoin investor, not a professional quant, please do not take this conjecture too seriously