Long Term Update: 2017 Outlook with entropic methods

Every beginning of a new year i post an outlook using entropic methods explained in the technical section of this blog. Here you can find the 2015 and 2016 forecast update, where you can find more information about this approach.

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

 BTC/USD
Growth Factor G 1.000722 (1.000166)
Shannon Probability P 0.519 (0.515)
Root mean square RMS (see this as volatility) 0.045 (0.053)

Bitcoin’s entropic values versus the Usd improved a bit in 2016, with volatility that is dropping and a larger value for the growth now 0.000722% compounded daily or 30% yearly growth up from 6% of 1y ago. Also the optimal fraction of your capital to invest in bitcoin improved in 2016, to minimize risks you can invest in bitcoin up to 6.4% of your total wealth.

 2017 Price forecast  Full volatility  Half volatility
Forecast using only G* ~1235$ ~1235$
Upper bound adding volatility ~2900$ ~1900$
Lower bound subtracting volatility ~520$ ~800$

*1320 is obtained with today price (around 950$) times (1.000722^365)=~1.30
950*1.30=1235, just change 365 with the number of days you prefer for a different forecast.

Conclusions

Also for this year i recommend to consider the support/resistance levels obtained with a halved volatility value with the result to have for the whole 2017 a good probability to stay inside the 800$-1900$ price zone with a strong support at around 520$ in case of panic selling.
At the same time i think that at the end of a strong buying climax period, if any, it will be difficult to see the price of a bitcoin over 2900$.

I want also to emphasize the fact that year after year the volatility of Bitcoin is falling although it’s not yet at the level of traditional investment assets like stocks, neverthless this is a good sign and it tells us that bitcoin as an investment asset is improving.
To give you an idea consider that the volatility of the SP500 index is 6 times less then Bitcoin and a stock like Apple is 3 times less volatile then Bitcoin. Keep in mind that during the 2013 peak bitcoin volatility was twice what it is now.

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

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6 thoughts on “Long Term Update: 2017 Outlook with entropic methods

  1. Martin

    Hi enky. Short question: I sold my btc past week at 960usd when price was going down. I had that btc stored for like a year, but I didn’t bought it, I mined ltc and then converted it to btc… by your post I feel I should buy some and save them for a couple months. How much you think is a fair price to buy at? Should I wait to go a bit down (like 900usd) or should I buy immediately before it goes higher?

    1. A fair price is the mid point of my regression channel, on the weekly chart it is around 750 but rising. I can’t answer to your last question the max i can do is to suggest this strategy: buying 50% of your position right now and the remaining 50% if there will be a correction. At the moment i’m not selling i think a new ATH is ahead this year.

  2. An avid student of Gann

    Using Gann methods on a monthly basis, it’s hard to see how we’d have a monthly closing much above $1650 during 2017. That is not to say it’s impossible, it’s just hard to fathom because of how well BTCUSD has aligned with Gann-based levels. In order to get there, price and time must be rebalanced several times. I’m eyeing $1050 and $1060 as significant horizontal resistances, along with the ATH of $1164 at Bitstamp. By this method, $2900 probably does not come into play until year 2018.

    Enky, congrats on the accuracy of these forecasts in prior years. I always enjoy reading your analyses.

    1. i’m talking about extreme deviations from the equilibrium point, i believe too it’s hard to go to 2900 in 2017. I studied Gann in the past even planetary movements and i always found it fascinating but at the moment i’m not using it, maybe i’ll post something about it this year. Are you using square of nine?

      1. An avid student of Gann

        I do use the Square of 9 to determine the dates of potential turning points; this has worked with remarkable accuracy (and the next turning point according to my square, FYI, is January 28th, plus or minus 4 trading days). For price I prefer Gann arcs/squares (i.e. the kind found on TradingView). I find the square of 9 works well to determine price support/resistance on short-term charts i.e. daily, 4-hour, 8-hour, etc., but not for long-term forecasting of price@time. Speaking of TradingView, there is a rather remarkable chart of a logarithmic Andrew’s pitchfork which seems to pre-determine BTCUSD’s price trajectory quite well. According to that pitchfork, the median price by the end of 2017 would be approx. $2000. https://www.tradingview.com/chart/BTCUSD/B9JrxV9Y-Will-this-be-Bitcoin-s-price-trajectory-over-time/

        If you’d like to trade notes on Gann in the future, please let me know your email address. Much of what I know I learned from Jim Fredrickson who writes for CryptoCoinsNews, and it came mostly from an exchange of emails and my own study, although his columns are definitely worth a read.

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