Crypto Analysis | BTC On A Sustainable Path

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BTC is slowly climbing to higher highs

Just last month I reemphasized the 35-48k target range. As of now we are still on that path. Here is the chart from last time:

We have now seen several weeks of consolidation. Previously, this has ended in a pump to higher highs. It would be a bit awkward if BTC's momentum would now just simply wane amid all of the hype we have seen over the last months. But let's have a look at the slope of the current channel that price is residing in to see if it can maintain further similar price action. I stumbled upon this technique just recently, and it looks pretty promising. Simply by looking at the slope of a trend line we can make a good judgment it it can hold in the foreseeable future.

% gain per month determines sustainability

We can do this by drawing a trend line of the support and analyzing it over a month to se the % gain over that time. When we do this for the current trend line, we get around 8%. From what I have seen in the charts, this is a very sustainable value. In fact, anything under around 10% seems to be able to support continued price action for several months if not years.

The macro support line seen as the thicker blue line has a slope with a % gain of only around 3% and can therefore be considered to be very stable. How does past data agree with this?

In 2016/17 we had a very similar price action. Price stayed in a channel for several years in fact. This channel also had around 8% gain per month:

Unsustainable Trends

Keep in mind that the charts I am showing here are all logarithmic. So a linear trend line actually shows an exponential trend on the normal scale.

We can see here in the last bull run, how the trend keeps getting more and more unsustainable as shown here:

The supporting trend lines have higher and higher % gains per month and the time that price moves with them gets shorter and shorter. 10% lasted for almost several years; 22% only about half a year; 38% for several months and the >100% one only around a month. This is the tell tale sign of a bull market.

Conclusion

My point here is that the current price channel for BTC is very sustainable with around 8%. We are also up only round 100% from the lows and it would be remarkable if price would head back down again very soon. Instead, the 35-48k target seems very reasonable. If could, however, still take several months to get there.

 

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As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!

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