Every year i post an outlook using entropic methods explained in the technical section of this blog. Here you can find the 2015, 2016, 2017, 2018, 2019, 2020 and 2021 forecast update, where you can find more information about this approach.
Updated values for bitcoin (in brackets values of last year) using daily data since August 2010 (average data of 4 main exchanges when possible).
|Growth Factor G||1.00130 (1.00104)|
|Shannon Probability P (see this as entropy)||0.5254 (0.5232)|
|Root mean square RMS (see this as volatility)||0.049 (0.055)|
Bitcoin’s entropic values versus the Usd improved during 2021, the Growth Factor (G) grow to 1.00130% compounded daily or 160% yearly, higher then 1y ago. The optimal fraction of your total wealth to invest in bitcoin rised to 5.1% (~0.5254*2=1.051 – 1 = 0.051 or 5.1% roundable to 5%).
Volatility continues to drop year after year and that’s normal as bitcoin gets bigger and bigger so less prone to volatility.
The BTCUSD growth factor is much better then conventional markets except the Shannon Probability that still match the US Stock Markets (around 0.522); it means that out of 100 days an asset goes up 52 days and down for 48 days, on average. I am not surprised of this because the same agents trading in conventional markets are more or less the same as those trading in the crypto market, so they have the same entropy or mental disorder.
|2022 Price forecast||Full Historical Volatility||Half Historical Volatility|
|Forecast using only G*||~77,000$||~77,000$|
|Upper bound adding volatility||~199,000$||~123,000$|
|Lower bound subtracting volatility||~29,800$||~48,000$|
*77000 is obtained with 1st January as a starting price (around 48000$) times (1.00130^365)=~1.6 | 48000*1.6=~77000, just change 365 with the number of days you prefer for a different forecast.
What happened in 2021?
A year ago, I predicted a top of $121,000 using full volatility and about $72,000 using half of historical volatility, the latter being more likely to be hit and this is exactly what happened considering some room of error.
This market has made a low in June at $28,750, 10% above the $25,000 forecasted support level, again using half historical volatility.
During 2022 I recommend to hold your position till the upper boundary of the next cycle defined by monthly kama upper resistance bands ($80,000-$130,000) in accordance with the forecasted value of $123,000 using entropy methods and half historial volatility.
As I said in the previous October update, I continue to believe that conditions in this market have changed since the other halving cycles which usually saw a Top around 19 months after the halving date. I expect a consolidation in 2022 with a slightly bullish sideways phase.
A very strong support zone remains the $30k to $48k price range that might be fine tuned during the year using Kama monthly price bands.
Should there be an excess of volatility I would advise you to take advantage of the event with some profit-taking between 120 and 200 thousand dollars; if volatility push the price down to the support area of $30,000-$48,000 do the opposite, buy:)
I’m at your disposal for any questions; see you at the next update and Happy New Year!
16 thoughts on “Long Term Update: 2022 Outlook with entropic methods”
Happy New Year Enky!
Thank you Enky, been waiting for this for months haha. Cheers and Happy New Year!
Thank you, Enky. Always look forward to your posts, and especially your annual end of year outlooks. Cheers!
Thank You too. I am thinking of doing an update in June to recalibrate the forecast for the second half of this year.
Always a treat to see your yearly forecasts. Would be an extra bonus to get another one in 6 months. Thanks, and keep up the good work!
Thank you Enky. When do you think that the Lower bound (using historical volatility) will cross 100K i.e. when will we see Bitcoin price more than 100K consistently through the year? Are we 4 years away from that happening? more?
Very easy to calculate with the software I use to calculate these forecasts. The answer is 2465 days (around 7 years) but probably less because as time goes by volatility drops thus reducing this time period. it’s more likely to be 4 years or so compensating with the fact that volatility drops with the pass of time. By 2026 btcusd will probably stay above 100k usd forever.
Thank you Enky! Happy New Year! BUÉK!
Been a long time old friend this is Elix.
What do you think of the current situation of equities and crypto? Bitcoin hit 32k today and could go towards 21-17k before resuming the uptrend. Do you see that’s possible based on your bands? Obviously the cycles have changed greatly since the early days
I think we are at a major crossroads, but I really don’t know which way it will go (weekly 2nd lower band has been tested yesterday BTW), if I have to make a prognosis I think that my support at 30k usd has a 70% chance of holding this year. If broken, support is at around 15k usd, i’ll buy for sure at this level but very unlikely to be hit this year.
About equity a rally to 4500 for the SP500 is likely but 4000 is still the downside target.
Tough call indeed. Either way looks like we’re in a bear market across equities and crypto as fears of a global recessions on top of the pandemic and Feds policy affect the market.
For sure if bitcoin goes to 15ks (+- $5k) I’d load up.
Best of luck!
There will be an update on a new model i’m working on, building price bands using bitcoin network hash speed. 15-17k usd is the forecasted price using network speed.
Hi Enky, Any thoughts on potential bitcoin price movements following the recent geopolitical events?
I’ve nothing to add about geopolitical events, I stay focused on the chart. Resistance above the market is 44,000$. Support remains my 29,800$ support level forecasted in january in my last update. Btcusd should remain bounded in this price range 30k-44kusd.
However, I note a certain resilience of the price despite the winds of war blowing impetuously over the whole of Europe.
What about a quarterly update? Would be glad to hear your thoughts!
I don’t have much to add, it’s been 4 months that bitcoin hasn’t been able to break my monthly average at around $45,000.
I think it won’t go down to the first support, around $23000, so the most likely thing is that this low volatility period will continue but eventually btcusd will break the monthly average and get back above $47-48k later this year.
Comments are closed.