Bitcoin Corrective Wave Metrics

28 Mar

Analysis of long-term corrective waves from ATH's of different historic periods

Facts:

The drop of 93.75% back in 2011 was the biggest correction of all time.
With time the corrections after new established ATH's got gradually smaller.

I'll use fibonacci retracement to measure those heavy drops as ATH - 1 and bottom as 0 to document how measurements of historic drops could define levels of forthcoming waves.

-93.75% capture:

2.272 made next ATH of 2013
1.618 defined the 2015 bottom

Similarly, -86.96% fib measurement defined:

Next ATH of 2017 at between 2.272 and 2.414
Level of 1.414 called the bottom

-84.22% drop:

This time 1.618 called ATH of 2021
Level between 1 and 0.786 made 2022 bottom

Logistic curve partially explains why forthcoming bottoms got close to the previous ATHs

The question is, could that be a sign of already saturated market which would cause btc to sidetrend making a long-term diamond pattern. Despite of Bitcoin being deflationary asset, the rate of growth has been slowing down, as the % of bullrun waves got smaller.
Knowing about positive correlation BTC and SP500, we can deduce that BTC wouldn't have grown if not for SP500. This dependence would be a venerability for Bitcoin, if SPY drops in the nearest future.

Nevertheless, many authors in TradingView are optimistic about further growth. The fact that current price still holds at previous ATH levels, could indicate that crowd could be actually right.


So to estimate where it would stop, I'll use most frequent fib levels which defined both next bottoms and ATH's.
Levels are: 1.272, 1.414, 1.618 and 2.272