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).
|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.
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!