Short Term Update

I revised the weekly range forecast to $320-$400, this price range should work also for the next week. First support lie at $345 and is valid till sunday, then for the next week i see $320 as a good support. What is happening to btc? Well after a double top the market decided to correct a bit, at this point i think that is reasonable to expect a weekly mid-term correction that should end around $280-$300. I still think, after years, that we can’t have a prolonged bear market if the network hashing speed is constantly increasing, i’d be much more worried of a dropping network speed instead of the price that most of the time is wildly influenced by massive volatility typical of an illiquid asset like this one.

bitstampUSD  1 Day   #5 2016-01-16  09_53_13.305

I’d like to conclude spending two words about the recent media havok about bitcoin’s future ignited by a recent open letter from a blatant liar with an inflated ego, i prefer to not enter in details but as more the media erupts against bitcoin as more bullish is the future of bitcoin itself. I like very much to use the media as a contrarian indicator for investment decisions because the entire art of speculation consists of choosing the perfect moment to invest in a way opposite to that suggested by popular opinion.

Once things settled down there will be a long term update aiming to understand if there is the opportunity in the coming weeks to average down my long term position.

 

Long Term Update: 2016 Outlook with entropic methods

Chek this post of one year ago for a brief explanation of the theory beyond this forecast. This year I propose again the same analysis and it will be a main guide about support and resistance levels for all 2016.

Updated values for bitcoin (in brackets values of last year)

 BTC/USD
Growth Factor G 1.000166 (1.000553)
Shannon Probability P 0.515 (0.518)
Root mean square RMS (or volatility factor) 0.053 (0.056)

More or less bitcoin’s entropic values dropped a bit, with less volatility and a smaller value for the growth now 0.000166% compounded daily or 6% yearly growth down from 22% of 1y ago.

 2016 Price forecast  Full volatility  Half volatility
Forecast using only G* 458$ 458$
Upper bound adding volatility 1257$ 760$
Lower bound subtracting volatility 167$ 277$

*458 is obtained with today price (432$) times (1.000166^365)=1.06
432*1.06=458, just change 365 with the number of days you prefer for a different forecast.
For a more aggressive forecast you can use 1.001742 instead of 1.000166, this bigger value for growth doesn’t consider measurement error due to the short dataset I used, only 1145 days of historical data. Use this bigger value at your own risk:)

Conclusions

As usual i recommend to consider the support/resistance levels obtained with a halved volatility value thus for 2016 btc has an high probability to stay inside the $277-$760 price zone with a strong support at around $170 in case of panic selling.
At the same time i think that at the end of a strong buying climax period it’ll be hard to see btc price above 1250$ and very unlikely if not impossible to see it at or above 3400$ (using twice the value of historical volatility).