The Four Seasons Model of BTCUSD (WIP; for hypothesis testing)
Aktualisiert
• Cleaned up version of the previous analysis of BTCUSD’s macro trends; renamed as the BTCUSD Four Seasons to give it some personality.
• WIP. Subsequent updates will contain living lists of 1) assumptions; 2) falsified hypotheses; 3) hypotheses currently being tested; 4) potential hypotheses that may be tested in the future.
• There appears to be 4 distinct phases in each BTCUSD bullrun. These are: 1) C_Winter; 2) C_Spring; 3) C_Summer; and 4) C_Fall.
• C_Winter (the penguin) starts from the 2nd BTCUSD peak per bullrun and ends at the next halving event. C_Winter bottoms above the 0.382 of C_Summer. Overall volatility, as measured by ATR, drops compared to that during C_Summer, but as the market trends downwards, there is not much news in MSM. Winter is a good time to replenish long-term stores and a bad time for adventure. DCA in BTC between 0.382-0.500 of C_Summer.
• C_Spring (the leaf) starts from the halving event and ends at the 1.618 of C_Winter. BTC.D tends to drop ~2months from the start of C_Spring. Overall volatility increases compared to that during C_Winter, but as the market trends upwards, news is positive. Spring is the time to plant after the frost has melted. DCA 50% of BTC out into ETH and OTHERS.
• C_Summer (the Sun) starts from the 1.618 of C_Winter and ends at the 4.236 of C_Winter. We see BTCUSD’s 1st peak, which is heralded by BTCUSD’s monthly RSI hitting the multi-year trendline. C_Summer bottoms around the 1.618 of C_Winter. Overall volatility decreases compared to that during C_Spring, but as there are more new investors, news is gloomy. Summer is the time for fun so as to recharge for harvest. Watch BTCUSD’s monthly RSI and DCA out BTC, ETH and OTHERS. Look for BTCUSD’s recovery from bottom, *only then* DCA in BTC, ETH and OTHERS. It may be a good time to engage in mid-term trades for OTHERS, with the overall aim of adding to ETH. Get out of OTHERS by 4.236 of C_Winter.
• C_Fall (the apple) starts from the 4.236 of C_Winter and ends at the 2nd BTCUSD peak, which is heralded by BTCUSD’s monthly RSI hitting the 2nd multi-year trendline. Overall volatility increases compared to that during C_Summer, but as BTCUSD trends upwards, the news is effervescent. Fall is the time for an explosion of activity and harvest; it is also the season when things often die. C_Fall tends to be the shortest amongst the four seasons. Get out of OTHERS into ETH for this reason. While watching BTCUSD’s monthly RSI, DCA out of BTC and ETH. Keep an eye on Belford’s Law.
Disclaimer 1: Anything I write about is NOT investment advice. Please do your own due diligence before making any investment decisions. I’m not responsible for any of the gains and/or losses of your investments.
Disclaimer 2: I have mild dysgraphia, and I write in a rather formulaic manner to overcome this disability.
• WIP. Subsequent updates will contain living lists of 1) assumptions; 2) falsified hypotheses; 3) hypotheses currently being tested; 4) potential hypotheses that may be tested in the future.
• There appears to be 4 distinct phases in each BTCUSD bullrun. These are: 1) C_Winter; 2) C_Spring; 3) C_Summer; and 4) C_Fall.
• C_Winter (the penguin) starts from the 2nd BTCUSD peak per bullrun and ends at the next halving event. C_Winter bottoms above the 0.382 of C_Summer. Overall volatility, as measured by ATR, drops compared to that during C_Summer, but as the market trends downwards, there is not much news in MSM. Winter is a good time to replenish long-term stores and a bad time for adventure. DCA in BTC between 0.382-0.500 of C_Summer.
• C_Spring (the leaf) starts from the halving event and ends at the 1.618 of C_Winter. BTC.D tends to drop ~2months from the start of C_Spring. Overall volatility increases compared to that during C_Winter, but as the market trends upwards, news is positive. Spring is the time to plant after the frost has melted. DCA 50% of BTC out into ETH and OTHERS.
• C_Summer (the Sun) starts from the 1.618 of C_Winter and ends at the 4.236 of C_Winter. We see BTCUSD’s 1st peak, which is heralded by BTCUSD’s monthly RSI hitting the multi-year trendline. C_Summer bottoms around the 1.618 of C_Winter. Overall volatility decreases compared to that during C_Spring, but as there are more new investors, news is gloomy. Summer is the time for fun so as to recharge for harvest. Watch BTCUSD’s monthly RSI and DCA out BTC, ETH and OTHERS. Look for BTCUSD’s recovery from bottom, *only then* DCA in BTC, ETH and OTHERS. It may be a good time to engage in mid-term trades for OTHERS, with the overall aim of adding to ETH. Get out of OTHERS by 4.236 of C_Winter.
• C_Fall (the apple) starts from the 4.236 of C_Winter and ends at the 2nd BTCUSD peak, which is heralded by BTCUSD’s monthly RSI hitting the 2nd multi-year trendline. Overall volatility increases compared to that during C_Summer, but as BTCUSD trends upwards, the news is effervescent. Fall is the time for an explosion of activity and harvest; it is also the season when things often die. C_Fall tends to be the shortest amongst the four seasons. Get out of OTHERS into ETH for this reason. While watching BTCUSD’s monthly RSI, DCA out of BTC and ETH. Keep an eye on Belford’s Law.
Disclaimer 1: Anything I write about is NOT investment advice. Please do your own due diligence before making any investment decisions. I’m not responsible for any of the gains and/or losses of your investments.
Disclaimer 2: I have mild dysgraphia, and I write in a rather formulaic manner to overcome this disability.
Kommentar
Erratum:• C_Spring (the leaf) starts from the halving event and ends at the 1.618 of C_Winter. BTC .D tends to drop ~8months from the start of C_Spring. Overall volatility increases compared to that during C_Winter, but as the market trends upwards, news is positive. Spring is the time to plant after the frost has melted. DCA 50% of BTC out into ETH and OTHERS.
Kommentar
Assumptions• With time, the only direction BTCUSD goes is upwards.
• All other coins may die in time to come.
• Forecast momentum instead of price.
• Volatility clustering.
• Power-law distributed fat tails.
• Short-term unpredictability; long-term trends.
Falsified hypotheses
• Failure of 8W SMA, during periods of bullish momentum, leads to retest of 20W SMA.
• C_Winter bottoms at 0.382 of C_Summer.
• 2nd BTCUSD peak per bullrun at 5.764 of C_Summer
Hypotheses ongoing falsification
• Bullish momentum denoted by 8W SMA over 21W EMA over 20W SMA.
• Failure of 8W SMA, during periods of bullish momentum, leads to retest of 21W EMA.
• C_Winter bottoms between 0.382 – 0.500 of C_Summer.
• Volatility alternates between the 4 seasons.
• BTC.D trends upwards during C_Winter; ETH.D and OTHERS.D downwards.
• BTCUSD’s upward trending accelerates 2 months after halving.
• BTC.D starts to trend downwards 8 months after halving.
• C_Summer bottoms around 1.618 of C_Winter
• Parabolic last run at 4.236 of C_Winter
• Trendlines linking monthly RSIs of two peaks per bullrun across the years
• Belford’s Law: 1st digit of 2nd peak to start with “1”
• 2nd BTCUSD peak per bullrun between 4.618 and 5.764 of C_Summer
Potential hypotheses to be subjected to falsification
• (Weak) inverse correlation between ETH.D and OTHERS.D
Kommentar
I might be too hasty to conclude that the hypothesis that "failure of 8W SMA, during periods of bullish momentum, leads to retest of 20W SMA" has been falsified. Let's see if BTCUSD will retest 51.8K.Kommentar
That was fast. The 20W SMA has been retested. Let's call it a night and see whether it holds when we wake up.Kommentar
Interestingly, similar to the 2013 and 2017 bullrun, we just tested the 0.382 of C_Summer. Might this be the spring that launches us towards the 4.236 of C_Winter, instead of the retest of the 20W SMA that was hypothesized in the previous analysis of BTCUSD Macro treends? List of hypotheses updated below, with updates denoted by "*".Comment: Assumptions
• With time, the only direction BTCUSD goes is upwards.
• All other coins may die in time to come.
• Forecast momentum instead of price.
• Volatility clustering.
• Power-law distributed fat tails.
• Short-term unpredictability; long-term trends.
Falsified hypotheses
• C_Winter bottoms at 0.382 of C_Summer.
• 2nd BTCUSD peak per bullrun at 5.764 of C_Summer
Hypotheses ongoing falsification
• Bullish momentum denoted by 8W SMA over 21W EMA over 20W SMA.
• C_Winter bottoms between 0.382 – 0.500 of C_Summer.
• Volatility alternates between the 4 seasons.
• BTC.D trends upwards during C_Winter; ETH.D and OTHERS.D downwards.
• BTCUSD’s upward trending accelerates 2 months after halving.
• BTC.D starts to trend downwards 8 months after halving.
• C_Summer bottoms around 1.618 of C_Winter
• Parabolic last run at 4.236 of C_Winter
• Trendlines linking monthly RSIs of two peaks per bullrun across the years
• Belford’s Law: 1st digit of 2nd peak to start with “1”
• 2nd BTCUSD peak per bullrun between 4.618 and 5.764 of C_Summer
*• Failure of 8W SMA, during periods of bullish momentum, leads to retest of 20W SMA.
*• Test of 0.382 of C_Summer prior to C_Fall (at 4.236 of C_Winter).
Potential hypotheses to be subjected to falsification
• (Weak) inverse correlation between ETH.D and OTHERS.D
Kommentar
Damn my brain for being too slow and taking so long to realise that we have just established the floor for C_Winter! This may well be very important for 2024!
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