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 and 2018 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 main exchanges when possible).
Growth Factor G
Shannon Probability P
Root mean square RMS (see this as volatility)
0.058 (0.059 )
Bitcoin’s entropic values versus the Usd deteriorated in 2018 although volatility has fallen a little bit, the Growth Factor (G) decreased down to 1.00088% compounded daily or 138% yearly down from 280% of 1y ago. Also the optimal fraction of your total wealth to invest in bitcoin dropped a bit in 2018 with a 4.4% instead of 7.7% of 1y ago (0.522*2=1.044 – 1 = 0.044 or 4.4% roundable to 5%)
Generally these values are still much better then conventional markets except the Shannon Probability that now 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.
2019 Price forecast
Full Historical Volatility
Half Historical Volatility
Forecast using only G*
Upper bound adding volatility
Lower bound subtracting volatility
*5269 is obtained with 1st January as a starting price (around 3820$) times (1.00088^365)=~1.37 | 3823*1.37=~5269, just change 365 with the number of days you prefer for a different forecast.
Using different approaches the support area for 2019 is around 1700$-3200$ while the resistance price area is above 9000$.
What went wrong in 2018?
A year ago, I forecasted a maximum top of $121000 never reached during the year. I halved the volatility factor (rms) to find a more realistic price level and i obtained 68000$, a value missed again by BTC/USD.
This market has been very weak all the year but the definitive sign of weakness has been the breaking of the support around six thousand dollars followed by an important minimum at about 3100$, a price level that I showed you a few months ago.
In that tweet i identified an additional support area from 2100$ to 3200$ that so far has not yet been visited.
If possible I recommend to buy inside this price area otherwise another trading opportunity will be to buy on strength when BTCUSD will break above the monthly 5 periods Kama average (i’ll tell you when with a tweet), this average is now around 6200$ but next month will probably drop to 5700$ .
For this year i think that i’ll consider the support/resistance levels obtained with a full volatility value with the result to have for the whole 2019 a good probability to stay inside the 1700$-16000$ price zone.
At the same time 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 30k USD (price calculated using the equivalent of 1.5 times the historical volatility of bitcoin while the initial 16k usd target is calculated using the historical volatility)
I’m at your disposal for any questions; see you at the next update and Happy New Year!
After several months since the last update there are no particular news, at the time I wrote that “…..My opinion is that the bitcoin will continue to remain for most of the year within the levels calculated with the KAMA (yellow) and therefore remains a good opportunity to buy the price area from 4000 to 5500 dollars…..” and my opinion has not changed since then.
I have read everywhere that the descending triangle pattern will soon tell where bitcoin will go, whether to break upwards or downwards. I can’t say which way the price will take but usually when too many investors/traders expect one thing the market has the habit of doing the exact opposite.
The bitcoin usd cross might test the 4k level for a short period of time followed by a strong upmove; a last shakeout move tends to shake out the weak hands before the next big move, many investors will be very scared in seeing the bitcoin go down to 4k usd, I do not and possibly I could decide to buy again in that price range (4000$-5200$).
To conclude it’s very important to see if the level of 5200$ will be tested and broken before year’s end, if so an interesting buying opportunity might arise. If not, then another buying opportunity might be to enter the market if bitcoin moves above the Kama monthly average now at 8650$.
XBT/USD weekly price range 14300$-17500$ | This week we return to a lower volatility level for calculating VWAP volume deviation lines, so we have a third and fourth deviation line not as far apart as they were in previous updates. The trend remains steadily UP also because the minimum done at 11000 dollars is clearly higher than that of 12 November at around 5600 dollars; I therefore expect a new maximum in the weeks to follow above 20000 dollars.
For the resistance zone the most probable range is from 17k to 21k dollars while for the support zone the range is 11000$-14300$.
The RSI oscillator has dropped almost to the oversold area with its average at about 47 that still has to turn upward to confirm a reversal in the trend.
With the other template i follow with KAMA average and deviation lines i’ve some doubts that XBTUSD will go towards the interesting long term support zone of 7500-9000 USD.
In the event of an unexpected catastrophic news, the support area on the weekly chart rises to USD 4300-5800.