Tag: forecast

Long Term Update: 2026 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading4 Comments

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, 2021, 2022, 2023, 2024 and 2025 forecast update, where you can find more information about this approach.

Updated values for bitcoin (in brackets values of 2025) using daily data since August 2010 (from now on I will use only BITSTAMP data, as today there are not many differences between major Bitcoin exchanges.).

   BTC/USD
Growth Factor G 1.00094 (1.00099 )
Shannon Probability P (see this as entropy) 0.5217 (0.5295 )
Root mean square RMS (see this as volatility) 0.045 (0.047)

The entropy levels of Bitcoin against the USD showed no improvement in 2025. The Growth Factor (G) dropped a bit to 1.00094% daily compounded, equivalent to about 41% annually. The optimal portion of your total wealth to allocate to Bitcoin is now 4.3% (~0.5217*2=1.0434 – 1 = 0.0434 or ~4%) and it went down a bit due to a flat year.

“For those who may have forgotten, the Shannon Probability measures the persistence of Bitcoin’s price movement, indicating the likelihood that the asset will experience a positive trend. A value of 0.52 suggests that, out of 100 days, Bitcoin is likely to show an upward movement on 52 days, and either a decline or no significant movement on the remaining 48 days.”

Bitcoin’s historical volatility dropped slightly this year, the only positive development amid otherwise challenging data, and aligns with expectations for a maturing asset in terms of capitalization. However, as noted in updates over the past two years, the pace of decline has slowed considerably, and volatility remains substantially higher than that of other assets, underscoring Bitcoin’s persistent nature as a highly speculative investment.

 
 2026 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* or Growth Factor ~124,000$ ~124,000$
Upper bound adding volatility ~292,000$ ~190,500$
Lower bound subtracting volatility ~52,700$ ~80,800$

*124,100 $ is obtained with 1st January as a starting price (around 87890$) times (1.00094^365)=~1.41   |  87890*1.41=~124000$, just change 365 with the number of days you prefer for a different forecast.

What happened in 2025? 

In this 2025 this market went up but failed to break through the equilibrium point that I calculate every year in January, which was set at around $132,000. The market corrected down to the annual support calculated with half historical volatility at about $85,000. As shown for those who follow me on Twitter, there were also weekly supports from my deviation bands at around $83,000. Considering that the updated forecast for 2026 still includes $80,800 as support, the area between 80 and 90 thousand dollars remains an interesting support zone.

I was hoping for something better this year, at least a quick visit above $132,000, but that didn’t happen. For this year, the directional bias remains unclear, though key levels are well-defined., but the support zone at around $53,000 remains very interesting, it’s both the last level of this year’s forecast and also a support from my monthly deviation bands calculated from the KAMA average. I refer you to my latest post on Twitter.

Conclusions

After holding my long position for nearly three years, initiated in February 2023 at approximately $22,500, this is a good moment to reassess the risk/reward profile at current levels.

The 2025 data tells a nuanced story, while Bitcoin delivered positive returns, the entropic indicators showed marginal deterioration. The Growth Factor declined and Shannon Probability dropped , these aren’t alarm signals, but they suggest that the statistical edge has weakened a bit compared to when I entered the position.

At current prices around $88,000, I’m sitting on roughly 290% gains. My approach for 2026 is conditional.

If $80,000 breaks down decisively, I will take profits. This level represents both the lower bound of my half-volatility forecast and a psychologically significant threshold. Even at $80k, I’d be locking in approximately 255% gains, a reasonable exit after a historically strong run.

My reentry target would be the $50,000–55,000 zone. This area aligns with both the full-volatility lower bound at $52,700 and my monthly KAMA deviation bands. 

On the other hand, if $132,000 breaks to the upside, I will hold and reassess at the upper bound levels. This is not a bearish call, it’s risk management after a successful multi-year trade. The data doesn’t justify aggressive positioning in either direction at these levels.

Feel free to reach out with any questions, and I’ll see you in the next update. Happy New Year!

Charts

Bitcoin’s cumulative volatility follows a compelling logarithmic decay curve, at the current trajectory, convergence with typical US equity volatility levels is still 15 to 20 years out. A reminder that, as an asset class, Bitcoin remains in its infancy.
Projected levels for 2026
Here’s what happened in 2025, where the market failed to move above the equilibrium point calculated using only the Growth Factor (G).

Long Term Update: 2025 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading18 Comments

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, 2021, 2022, 2023 and 2024 forecast update, where you can find more information about this approach.

Updated values for bitcoin (in brackets values of 2024) using daily data since August 2010 (from now on I will use only BITSTAMP data, as today there are not many differences between major Bitcoin exchanges.).

   BTC/USD
Growth Factor G 1.00099 (1.00099 )
Shannon Probability P (see this as entropy) 0.5295 (0.5224 )
Root mean square RMS (see this as volatility) 0.047 (0.047)

The entropy levels of Bitcoin against the USD showed no significant improvement in 2024. The Growth Factor (G) remained steady at 1.00099% daily compounded, equivalent to about 44% annually. The optimal portion of your total wealth to allocate to Bitcoin increased to 6% (~0.5295*2=1.0448 – 1 = 0.059 or ~6%), driven by a year-long upward trend in Bitcoin’s price, which boosted the Shannon Probability from 0.522 to nearly 0.53, an improvement, but still modest.

“For those who may have forgotten, the Shannon Probability measures the persistence of Bitcoin’s price movement, indicating the likelihood that the asset will experience a positive trend. A value of 0.53 suggests that, out of 100 days, Bitcoin is likely to show an upward movement on 53 days, and either a decline or no significant movement on the remaining 47 days.”

Bitcoin’s historical volatility has remained relatively unchanged this year, aligning with the average recorded since the inception of its historical data in August 2010. Currently, it remains stable at a comparatively high level, particularly when measured against traditional assets such as gold, stocks, bonds, and forex currencies, refer to the chart at the end of this post for more details.

As i said in my last year update it seems that a volatility plateau has been identified, and it is notably substantial higher compared to other assets. This suggests that Bitcoin continues to be a highly speculative asset as its volatility is still too high to be considered a viable reserve asset for central banks, despite increasing recent discussions around its potential in this role. 

 2025 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* or Growth Factor ~132,300$ ~132,300$
Upper bound adding volatility ~328,000$ ~209,300$
Lower bound subtracting volatility ~52,300$ ~85,100$

*132,300$ is obtained with 1st January as a starting price (around 91900$) times (1.00099^365)=~1.44   |  91900*1.44=~132300$, just change 365 with the number of days you prefer for a different forecast.

What happened in 2024? 

A year ago, I predicted an upper boundary of $151,000 using full historical volatility and approximately $96,000 using half of that volatility. These targets were calculated based on the opening price on January 1, 2024, which was around $44,000. The calculated support levels were $24,900 and $39,000.

The year turned out to be overwhelmingly positive, with Bitcoin surpassing the initial calculated resistance of $96,000. This reflects notable strength in the uptrend, as BTCUSD reached an all-time high of $108,300 in December. The most probable resistance level of $96,000 held true, as the year-end price stayed below it, which aligns with expectations.

Looking ahead to 2025, I will focus on levels calculated using reduced volatility (half the historical value) since this approach often yields more reliable results. This gives us a key support level at $85,000, which is highly significant. If Bitcoin spends too much time below $85,000 during 2025, it may signal the end of the uptrend that began from the $16,000 low in 2022.

In a bearish scenario, should it materialize, I would anticipate a potential low in the $50,000 range during 2025.

Conversely, if Bitcoin holds consistently above $85,000, the first major resistance to watch is around $210,000. This could mark the end of the current uptrend that started in 2022 and would represent a strong peak. Any value exceeding $210,000 should be considered a clear speculative bubble. I do not expect the upper limit of $328,000 to be breached throughout 2025.

Conclusions

For this year, I may consider taking profits on my position if the market shows signs of weakness below the critical $85,000 level. As a reminder, I initiated my bullish position in February 2023 at approximately $22,500.

I also recommend cautious long-term trading strategies this year. The growing speculation around Bitcoin as a potential reserve asset for central banks could lead to a spectacular market top. In that scenario, preliminary support levels for 2026, calculated using a starting price of $91,900 on January 1, 2024, and a two-year window, suggest potential declines between $54,000 and $100,000. If Bitcoin reaches a significant top, potentially at or above $200,000, these levels become plausible targets for a subsequent correction in 2026. These values are provided as a preview to illustrate possible directions, but only if such a dramatic peak occurs this year.

That said, I remain firmly confident in the $85,000 support level as a key indicator of the current uptrend’s strength. Regardless of the various scenarios discussed, keep this level in mind as your primary reference point.

As for the upper boundary, I believe it is highly improbable to reach or surpass $328,000 during 2025.

Feel free to reach out with any questions, and I’ll see you in the next update. Happy New Year!

Charts

Bitcoin’s cumulative volatility as expected is dropping every year and is stabilizing towards a value that is still a bit high compared to other traditional assets (stocks, gold, bonds range from 0.01 to 0.03) but the very high average returns of btc compensate the high volatility. The values represent the root mean square of logarithmic returns of bitcoin daily data.
Projected levels for 2025
Here’s what happened in 2024, where the market spent a lot of time around the equilibrium point calculated using only the Growth Factor (G).

Long Term Update: 2024 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading19 Comments

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, 2021, 2022 and 2023 forecast update, where you can find more information about this approach.

Updated values for bitcoin (in brackets values of 2023) using daily data since August 2010 (from now on I will use only BITSTAMP data, as today there are not many differences between major Bitcoin exchanges.).

   BTC/USD
Growth Factor G 1.00099 (1.00090 )
Shannon Probability P (see this as entropy) 0.52237 (0.5214 )
Root mean square RMS (see this as volatility) 0.0471 (0.049)

The entropy values of Bitcoin versus the USD have experienced a slight improvement in 2023. The Growth Factor (G) has marginally risen to 1.00099% compounded daily or 144% per year, surpassing the 139% observed one year ago. The optimal fraction of your total wealth to invest in Bitcoin has also slightly elevated to 4.5% (~0.52237*2=1.04475 – 1 = 0.04475 or ~4.5%), a figure that can still be rounded to 5%, similar to last year’s recommendation.

The volatility of Bitcoin has not exhibited an increase this year, considering the average value since the inception of its historical series in August 2010. Currently, it maintains a stable position at a relatively high value when compared to other assets such as gold, stocks, bonds, and forex currencies.

It seems that a volatility plateau has been identified, and it is notably substantial higher compared to other assets. This suggests that Bitcoin continues to be a highly speculative asset. In the year 2023, the growth factor of BTCUSD still outperforms traditional markets significantly, except for the Shannon Probability, which aligns closely with that of the US stock market (around 0.52). This implies that, on average, out of 100 days, an asset rises for 52 days and declines for 48 days.

 2024 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* or Growth Factor ~61,400$ ~61,400$
Upper bound adding volatility ~151,000$ ~96,000$
Lower bound subtracting volatility ~24,900$ ~39,000$

*61400 is obtained with 1st January as a starting price (around 42650$) times (1.00099^365)=~1.44   |  42650*1.44=~61400$, just change 365 with the number of days you prefer for a different forecast.

What happened in 2023? 

A year ago, I predicted an upper boundary of $58,000 using full volatility and about $36,500 using half of historical volatility, these two targets were calculated based on the opening price on January 1, 2023, which was around $16,500. The calculated support levels were $9,100 and $14,500. 
The year has proven positive, surpassing the initial calculated resistance level of $36,500, which coincided with the monthly KAMA average. This signals a notable strength in the uptrend, with BTCUSD transitioning from a position of weakness to one of strength by rising above the monthly average.

Conclusions

For this year, it might be a smart move to also consider a lower value for volatility, let’s say 25% of the historical volatility, as I don’t expect a new all-time high but rather a consolidation phase a few months before, during, and after the halving. Therefore, determining a resistance level at around $77,000, calculated with a precise 1/4 of historical volatility—a method I don’t typically employ but find plausible for this year. This is due to my belief that it might be challenging for the volatility to remain high for a significant amount of time, making it less likely for BTC to surpass this $77,000 level.

I might consider taking profit if the market shows signs of weakness around this level. I remind you guys that I had opened a bullish position in February 2023 at approximately $22,500.

Furthermore, I have cautious long-term trading recommendations for you this year. The hype surrounding ETFs might culminate in a “sell on news” scenario on the day the ETF gets approved. There’s a possibility of subsequent gradual declines in Bitcoin prices toward calculated support levels for the next year, ranging between $24,000 and $39,000. Don’t forget that the most probable support area is around the monthly Kama, which is inside the support windows for this year ($24,900-$39,000).

Instead of anticipating any catastrophic scenarios this year, in contrast to the previous year, which appeared more susceptible to bearish scenarios, I maintain my view of the $24,900 support as very solid.

About the upper bound i’ve to admit that it is very unlikely to reach and/or break $151,000 during 2024.

I’m at your disposal for any questions; see you at the next update and Happy New Year!

Charts

Bitcoin’s cumulative volatility as expected is dropping every year and is stabilizing towards a value that is still a bit high compared to other traditional assets (stocks, gold, bonds range from 0.01 to 0.03) but the very high average returns of btc compensate the high volatility. The values represent the root mean square of logarithmic returns of bitcoin daily data.
The first lower monthly kama average price band will probably slowly reach the $25,000 support level during the 2023.
I’ve added the equilibrium point computed using the G growth factor at $61,400.
The chart is monthly and begins at the end of November ’22 bottom.

Long Term Update: 2023 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading7 Comments

I will be busy in the coming days, so the yearly update for 2023 is being released early.

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, 2021, and 2022 forecast update, where you can find more information about this approach.

Updated values for bitcoin (in brackets values of 2022) using daily data since August 2010 (from now on I will use only BITSTAMP data, as today there are not many differences between major Bitcoin exchanges.).

   BTC/USD
Growth Factor G 1.00090 (1.00130)
Shannon Probability P (see this as entropy) 0.5214 (0.5254)
Root mean square RMS (see this as volatility) 0.049 (0.049)

The entropy values of Bitcoin versus the USD have remained relatively consistent in 2022. The Growth Factor (G) has decreased slightly to 1.00090% compounded daily or 139% per year, which is less than the 168% seen one year ago. The optimal fraction of your total wealth to invest in Bitcoin has slightly decreased to 4.3% (~0.5214*2=1.0428 – 1 = 0.0428 or 4.3%, which is still roundable to 5% like last year).
The volatility of Bitcoin, unlike in previous years, has not decreased this year if we consider the average value from the beginning of the historical series, around August 2010 and it appears that for now, it remains stable at a fairly high value when compared to other assets such as gold, stocks, bonds, and forex currencies.
Despite a challenging year in 2022, the BTCUSD growth factor is still much better than traditional markets, except for the Shannon Probability, which still matches that of the US stock market (around 0.52). This means that on average, out of 100 days, an asset goes up 52 days and down for 48 days. 

 2023 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* ~23,000$ ~23,000$
Upper bound adding volatility ~58,000$ ~36,500$
Lower bound subtracting volatility ~9,100$ ~14,500$

*23000 is obtained with 1st January as a starting price (around 16500$) times (1.0090^365)=~1.39   |  16500*1.39=22900, just change 365 with the number of days you prefer for a different forecast.

What happened in 2022? 

A year ago, I predicted an upper boundary of $199,000 using full volatility and about $123,000 using half of historical volatility, these two targets were calculated based on the opening price on January 1, 2022, which was around $48,000. The calculated support levels were $48,000 and $29,800. 
It has been a negative year as we have never gone beyond the first calculated support level of $48,000, indicating a general weakness, while some support at $29,800 was seen during the year until May, after which even that level was abandoned and broken to the downside.
It should be noted that the first support at $48,000 acted as resistance during the spring when Bitcoin was unable to break through this support from below. When yearly supports act as resistance, it is evident that the market is weak.

Conclusions

I do not have any clear long-term trading recommendations for you this year as the Federal Reserve’s change in monetary policy to combat inflation has reduced the liquidity necessary to support strong Bitcoin prices. It may be wise to wait for a potential change in policy, but I expect Bitcoin prices to gradually decline towards calculated support levels for next year ($9,100 and $14,500). Based on my analysis using monthly bands based on Kaufman’s average, the most probable support area is around $12,000 (as shown in the chart section below), inside the 9,000$-14,000$ support price range for 2023.

If market volatility increases significantly above historical average, it may be a good opportunity to engage in a short-term trade by buying Bitcoin within the price range of $6,500 to $9,000. The value of $6,500 has been calculated using twice the historical volatility of Bitcoin as a reference and I consider it a rock solid support level in the event of a catastrophic market downturn.

If there is an improvement without making new lows, it is evident to me that resistances should be sought around $36,000, where we have the first resistance level computed with entropic methods and where there is also the monthly Kama average.
It is very unlikely to break $58,000 during 2023.

Unfortunately, this year I do not have a clear idea, I remain pessimistic however looking for a target at $12,000 where eventually buy something should I notice an improvement in market liquidity.

I’m at your disposal for any questions; see you at the next update and Happy New Year!

Charts

Bitcoin’s cumulative volatility as expected is dropping every year and is stabilizing towards a value that is still a bit high compared to other traditional assets (stocks, gold, bonds range from 0.01 to 0.03) but the very high average returns of btc compensate the high volatility. The values represent the root mean square of logarithmic returns of bitcoin daily data.
The second lower monthly kama average price band will probably slowly reach the $12,000 level during the 2023.
I expect to find similarities between the levels calculated in the Kama indicator i use and those used with this approach, the formulas for calculating the bands in my indicator are the same as those used in this update.

Long Term Update: 2022 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading15 Comments

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).

   BTC/USD
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. 

Conclusions

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!

Charts

Bitcoin’s cumulative volatility as expected is dropping every year and is stabilizing towards a value that is still a bit high compared to other traditional assets (stocks, gold, bonds range from 0.01 to 0.03) but the very high average returns of btc compensate the high volatility. The values represent the root mean square of logarithmic returns of bitcoin daily data.
Monthly Chart BTCUSD with 2022 Price Forecast using entropic method.
The first lower monthly kama average will probably slowly reach the $30,000 level during the 2022.
I expect to find similarities between the levels calculated in the Kama indicator i use and those used with this approach, the formulas for calculating the bands in my indicator are the same as those used in this update.

Long Term Update: 2021 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading14 Comments

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 and 2020, 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 important exchanges when possible).

   BTC/USD
Growth Factor G 1.00104 (1.00087)
Shannon Probability P 0.5232 (0.5219)
Root mean square RMS (see this as volatility) 0.055 (0.056 )

Bitcoin’s entropic values versus the Usd improved during 2020,  the Growth Factor (G) grow to 1.00104% compounded daily or 146% yearly, higher then 1y ago. The optimal fraction of your total wealth to invest in bitcoin rised to 4.6%  (~0.5232*2=1.046 – 1 = 0.046 or 4.6% 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.
These values are still 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.

 2021 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* ~42,400$ ~42,400$
Upper bound adding volatility ~121,000$ ~71,850$
Lower bound subtracting volatility ~14,750$ ~25,000$

*42400 is obtained with 1st January as a starting price (around 28985$) times (1.00104^365)=~1.463   |  28985*1.463=~42400, just change 365 with the number of days you prefer for a different forecast.

What happened in 2020? 

A year ago, I forecasted a maximum top of $29380 almost reached the last day of the year.
This market has made a low in March that I like to call a “selling climax bottom” when the bearish momentum is exhausted during a major event, this low (3850$) was a bit above the 3370$ support level forecasted 1 year ago using full historical volatility.
During 2021 I recommend to hold your position till the upper boundary of the next cycle and, personally, i’ll continue to hold  my position opened at ~9100$ and I will not buy more bitcoins during 2021.

Conclusions

For this year i think that there is a good probability to reach an incredible new all time high above 100,000$!
Like one year ago,  i think that it will be wise to reduce your bitcoin investment if the price goes above ~200k USD (price calculated using the equivalent of 1.5 times the historical volatility of bitcoin).

For your curiosity, if there will be an explosion of volatility for whatever reason (massive migration of institutional investors from gold to bitcoin), using twice the value of historical volatility our target is ~350,000$ instead of 121,000$

I’m at your disposal for any questions; see you at the next update and Happy New Year!

Charts

 

Bitcoin’s cumulative volatility as expected is dropping every year and is stabilizing towards a value that is still a bit high compared to other traditional assets (stocks, gold, bonds range from 0.01 to 0.03) but the very high average returns of btc compensate the high volatility. The values represent the root mean square of logarithmic returns of bitcoin daily data.
Last 3 years of annual forecasts

Long Term Update: 2020 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading1 Comment

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 and 2019, 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 important exchanges when possible).

 BTC/USD
Growth Factor G 1.00087 (1.00088)
Shannon Probability P 0.5219 (0.5222)
Root mean square RMS (see this as volatility) 0.056 (0.058 )

Bitcoin’s entropic values versus the Usd stayed stable during 2019 although volatility has fallen a bit like in 2018,  the Growth Factor (G) decreased a bit to 1.00087% compounded daily or 137.7% yearly, close to the value of 1y ago. The optimal fraction of your total wealth to invest in bitcoin is unchanged to 4.4%  (~0.522*2=1.044 – 1 = 0.044 or 4.4% roundable to 5%)
These values are still 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.

 2020 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* ~9951$ ~9951$
Upper bound adding volatility ~29380$ ~17097$
Lower bound subtracting volatility ~3370$ ~5790$

*9949 is obtained with 1st January as a starting price (around 7227$) times (1.00087^365)=~1.377   |   7227*1.377=~9951, just change 365 with the number of days you prefer for a different forecast.

What went wrong in 2019? Nothing:)

A year ago, I forecasted a maximum top of $16150 never reached during the year.
This market stayed above the 3000$ support forecasted 1 year ago but it didn’t go to the 1700$ support level using full historical volatility. On the other side it tried to reach the 16150$ resistance level with a top at 13880$ on June ’19.
During 2020 I recommend to buy inside the half volatility support area between 5790$ and 9950$ (target price using only the growth factor G) having already an open position from ~9000$ I will not buy more bitcoins during 2020.

Conclusions

For this year i think that there is a good probability to stay inside the 5790$-17100$ price zone with an equilibrium point at 9950$.
Like one year ago,  i think that at the end of a strong buying climax period, if any, it will be wise to reduce your bitcoin investment if the price goes above 50k USD (price calculated using the equivalent of 1.5 times the historical volatility of bitcoin while the other 17k usd target is calculated using 0.5 times historical volatility)

For all of you that are probably asking why i haven’t mentioned my fresh new bitcoin price model in this update i answer saying that i prefer to don’t mix different approaches. Aniway actual value of the Bitcoin FairPriceLine is roughly 5800$ and it’ll be at 10600$ at the end of 2020, same support price area of my quantitative approach (5790$-9950$)

I’m at your disposal for any questions; see you at the next update and Happy New Year!

Long Term Update: 2019 Outlook with entropic methods

On By CryptoAdvisorIn Long Term Trading4 Comments

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 and 2018 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).

 BTC/USD
Growth Factor G 1.00088 (1.00280)
Shannon Probability P 0.5222 (0.5384)
Root mean square RMS (see this as volatility) 0.058 (0.059 )

Bitcoin’s entropic values versus the Usd deteriorated in 2018 although volatility has fallen a little bit,  the Growth Factor (G) decreased down to 1.00088% compounded daily or 138% yearly down from 280% of 1y ago. Also the optimal fraction of your total wealth to invest in bitcoin dropped a bit in 2018 with a 4.4% instead of 7.7% of 1y ago (0.522*2=1.044 – 1 = 0.044 or 4.4% roundable to 5%)
Generally these values are still much better then conventional markets except the Shannon Probability that now 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.

 2019 Price forecast  Full Historical Volatility  Half Historical Volatility
Forecast using only G* ~5269$ ~5269$
Upper bound adding volatility ~16150$ ~9230$
Lower bound subtracting volatility ~1720$ ~3000$

*5269 is obtained with 1st January as a starting price (around 3820$) times (1.00088^365)=~1.37   |   3823*1.37=~5269, just change 365 with the number of days you prefer for a different forecast.

Using different approaches the support area for 2019 is around 1700$-3200$ while the resistance price area is above 9000$.

What went wrong in 2018?

A year ago, I forecasted a maximum top of $121000 never reached during the year. I halved the volatility factor (rms) to find a more realistic price level and i obtained 68000$, a value missed again by BTC/USD.

This market has been very weak all the year but the definitive sign of weakness has been the breaking of the support around six thousand dollars followed by an important minimum at about 3100$, a price level that I showed you a few months ago.
In that tweet i identified an additional support area from 2100$ to 3200$ that so far has not yet been visited.
If possible I recommend to buy inside this price area otherwise another trading opportunity will be to buy on strength when BTCUSD will break above the monthly 5 periods Kama average (i’ll tell you when with a tweet), this average is now around 5000$ but next month will probably drop to 4800$ .

Conclusions

For this year i think that i’ll consider the support/resistance levels obtained with a full volatility value with the result to have for the whole 2019 a good probability to stay inside the 1700$-16000$ price zone.
At the same time i think that at the end of a strong buying climax period, if any, it will be wise to reduce your bitcoin investment if the price goes above 30k USD (price calculated using the equivalent of 1.5 times the historical volatility of bitcoin while the initial 16k usd target is calculated using the historical volatility)

I’m at your disposal for any questions; see you at the next update and Happy New Year!

Long Term Update

On By CryptoAdvisorIn Short Term Trading2 Comments

BTCUSD Monthly Chart KAMA Average 5 periods and deviation lines.

Since the last update on February 13 there are not many new developments. The monthly KAMA average is flat, which allows us to calculate fairly reliable levels of support and resistance. As you can see nothing interesting happened with the BTCUSD cross that remains inside the supports and resistance levels (yellow lines).

I have added a new indicator that calculates supports and resistances using as a starting point the close of the previous month (with the idea to forecast next month support/resistance levels), in this case the close of February at about $ 10300. I have used the last 50 months, just over 4 years from the bear market’s lowest point in 2015, to calculate volatility.

The drop we have seen in recent days has reached an intermediate level, -1.5 standard deviations, so I can say that there has not been a level of extreme volatility but not even normal.

My opinion is that the bitcoin will continue to remain for most of the year within the levels calculated with the KAMA (yellow) and therefore remains a good opportunity to buy the price area from 4000 to 5500 dollars, while it is to be evaluated a reduction of any bullish position should the BTCUSD go above 25 thousand dollars.

I also give you some short term indications for the next days, the first resistance is $9500, you might see a Top not exceeding $9500 before the BTCUSD resumes its descent. A break above $10000 would mean that at least in the short term the bearish trend is over.

 

ITA Version here

Weekly Range Update

On By CryptoAdvisorIn Short Term Trading

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range 6800$-8600$ | This week the 2-month VWAP updates to 6100$ from last week’s 4800$; new data is replacing the old ones and it may happen that you have some slight changes on the price level of the reference average.

The resistance zone ranges from 8600$ to 9800$ and is defined by the 2nd and 3rd deviation line of the 2-month VWAP.

The support area ranges from $6100 to $6800 and is defined by VWAP and an intermediate level between the VWAP and the 1st deviation line.

I think it is very difficult to see a test down to the VWAP at $6100, if there were to be some profit taking the market should not fall below $6800, considering that the RSI oscillator turned upside without testing the oversold area i still believe that this market will go over 8000$ eventually after a small correction towards our first support at 6800$.

The other template I use on Tradingview with KAMA average and deviation levels is very similar to this one; the weekly KAMA is at 5800$ not far from the 6100$ of the 2-month VWAP.
The resistance zone is 8000$-9300$, slightly lower than the one presented with this update of 8600$-9800$.
Basically we have a decent correlation between the two templates (VWAP using Sierrachart and KAMA using Tradingview. com)

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to 3200-4000 USD.

ITA Version Here.

Weekly Range Update

On By CryptoAdvisorIn Short Term Trading1 Comment

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range is 6500$-7600$ | The resistance zone ranges from $7600 to $8700 and is defined by the two deviation lines furthest from the VWAP.

I think it’s time for a correction to the first support located at $6500, the buying area for this week is from $6500 down to $5400. I think it is very difficult to reach $5400, a minimum at $6500 is much more likely and would not compromise the possibility to see a new ATH this week.

As explained many times in the past, it is important to look at where bottoms and tops are located to understand in which direction is headed our cross XBTUSD , given the great strength of the last two weeks it would be more consistent to have a minimum at $6500 rather then $5400.

To conclude the first level to observe is $6500, the next $5400 and without unexpected negative news it’s very unlikely this week to test the VWAP at $4350.

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to 2250-2875 USD.

Since many people asked me more details about these extreme price levels, I want to spend few words on how the support area is calculated in case of a strong drop due to unexpected negative news. I use the last 52 weeks to calculate bitcoin volatility and starting from the closing price of the previous week I project two support values using 6 and 7.5 times the initial value of the calculated volatility. In the past I have explained the concept of the “six sigma”, which concerns the construction quality in industrial processes and I have applied it in this field to calculate support levels and resistance levels which are practically inviolable and which obviously only apply for the current week.
A value of six times is used, with an extra tolerance of 1.5, to arrive at a maximum deviation that uses 7.5 times the initial volatility.

ITA Version here.

Weekly Range Update

On By CryptoAdvisorIn Short Term Trading, weekly range update

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range 5350$-6600$ | The most obvious thing for this week is that the XBTUSD cross will spend most of the time in a sideway movement between 5350$ and 6000$ considering that it comes from a rise with a strength never seen before since I follow bitcoin.

The buying area is the same reported in the previous update, ranging from 4700$ to 5350$, the resistance zone from 6000$ to 6600$.

The RSI oscillator and its average are both overbought as logical after the sharp rise seen in recent days. I believe that this will be an interim week with the price remaining between 5300 and 6000 USD, so I think a strong bearish movement is unlikely to push bitcoin down to the 2 months VWAP , now at 4100$.

In the event of an unexpected catastrophic news, the support area on the weekly chart rises to 2400-3100 USD.

ITA Version here.