Could Bitcoin actually be the most frustratingly predictable asset ever?
Are traditional investors (and most everyone else) in denial that this thing could be so predictable?
I always had this pet theory after seeing participating in and analyzing a few different bitcoin cycles:
BTC is a fractal and will express that fractal pattern indefinitely.
What is a Fractal?
a curve or geometric figure, each part of which has the same statistical character as the whole. Fractals are useful in modeling structures (such as eroded coastlines or snowflakes) in which similar patterns recur at progressively smaller scales, and in describing partly random or chaotic phenomena such as crystal growth, fluid turbulence, and galaxy formation.
tldr:
There’s a pattern that repeats.
It repeats at different scales over time.
The pattern can deviate slightly, but always reverts to a bounded range that fits the pattern.
It’s visible everywhere: nature, math, and even markets.
Especially crypto markets.
In my humble philosophy, there’s a fractal nature to human behavior when reflected in efficient / pure markets.
Bitcoin is a pure free market:
free trade
no down time
open participation
no intrinsic manipulation
fully transparent data
One primary characteristic of cryptocurrency that contributes to the fractal is the unstoppable, constant price discovery against its core mechanism of codified issuance.
And it is following a cycle.
If you look at most all of the Bitcoin bubbles and bursts, whether the peak price was $0.12, $12, $1.200 or $20.000, you’ll see this pattern play out.
The standard pattern:
Each cycle will look exactly the same in form but the price and length of the cycles would vary with a range that still reflects the fractal bounds.
Let’s look at past Bitcoin bubbles
2013 1st half:
2013-2015
2017-2019
Right now I believe we are at the first sell off phase of the next bubble, heading into the next cycle peaking in late 2021.
In 2018 during the depths of the bear market, I came across a video that harmonized with my theory.
“ I find Bitcoin, because it is so universal, so global, with so many different avenues of exchange that I find price discovery to be more natural and more reflective of, kind of, the raw participation of the asset class as opposed to something that’s possibly more regulated and manipulated in more traditional markets. So I find cycles in Bitcoin work really well” - Bob Loukas
Man, Bob Loukas really nailed it on the head for me here.
It has a cycle. And it is fractal.
Below are two of his videos covering this topic of the cyclical nature of Bitcoin and crypto.
I urge you to watch them critically.
As you watch this, consider where we are at today and how prescient Bob is in this video from early 2018.
Here’s an update from him. Humble and thoughtful guy!
Bob’s most recent for the current year:
I continue to think Bob is on the right path and my investments strategy in 2021 maps to his cycle theory with my fractal theory layered on top.
I’m definitely not the first to observe this. I take no credit for “fractal” market theory.
I just wanted to share my perspective and get this brain dump on paper.
What do you think? Please comment below.
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