Second Bite of the Coin


By Monish Chhabra ǀ November 22, 2021

In May this year, we suggested biting into bitcoin. At that time, it was near $30,000, down from its peak of almost $65,000 in April.

We postulated with 70% statistical probability that it would bottom around $28,000-$30,000 range. Bitcoin then bottomed around $29,000 over June-July period.

This is depicted by the arrow ‘A’ in the blue graph of bitcoin, below.

Also shown is the dotted-blue line which depicts the average upward trend, and the orange line which shows the lower-bound of the band within which the price fluctuates.

This lower-bound orange line is where we expect to see the price find its bottoms, with high statistical probability. Arrow ‘A’ was one such point, and now we are getting close to another bite of this coin – the arrow ‘B’.

After testing the previous peak, bitcoin is cooling off once again.

This time, 70% probability dictates a low point around $52,000 - $55,000 range, likely over the next few weeks.

This region around arrow ‘B’ might be the last juicy dip, before the spike begins to major new highs.

Our clue is again statistical – by January 2022, the low-point on the orange line would be higher than the previous peak price of bitcoin. This is represented by the arrow ‘C’ in the graph below.

'C' is where the dotted-green line indicating the level of the previous peak, coincides with the lower-bound orange line. This is where the bottom of the band has risen enough to justify the peak.

Statistically, at 'C' there is no room left for the price to fall below the old peak. And when it can't go lower, it rips to new peak.

This is exactly what happened at the arrow ‘D’ last year.

After peaking in February 2020, the price of bitcoin halved by March 2020. It then rose and fell a few times, until reaching the point ‘D’ in September 2020.

That is when the lower-bound orange line caught up with the level of the previous peak in dotted-green.

Once the price got trapped between the green and the orange lines, it had no space left below to fall. What followed thereafter, was a massive ride to new heights.

That is the kind of setup we see at around ‘C’ by January next year. How far up can it go - once it breaks through - is discussed in our previous reports, here and here.

This is a tale of two bites.

The bite ‘A’ in June was deeper.

Statistics told us; things would likely not get much worse.

The bite ‘B’ now is juicier.

Statistics tells us; things could likely get much better.

This write-up is for informational purpose only. It may contain inputs from other sources, but represents only the author’s views and opinions. It is not an offer or solicitation for any service or product. It should not be relied upon, used or construed as recommendation or advice. This report has been prepared in good faith. No representation is made as to the accuracy of the information it contains, nor any commitment to update it.