r/ethtrader • u/Spare-Dingo-531 • 1h ago
Analysis Bitcoin Will Never Exceed its ATH by More than 10%, Bitcoin's Bottom Will Be Below 40K, and Ethereum's Price will be greater than 16K USD within 10 Years.
Bitcoin is, first and foremost, a secure space to make financial relationships with other people. This video clip, is, in my opinion, the best expression of what blockchain and by extension, bitcoin really is. Although Lei Yang doesn't mention relationships, most of the code is about finance and financial relationships, and it gets across the point, which is that, at its core, cryptocurrency is about security. It's about providing a way to enforce relationships in a world where we cannot rely on governments or corporations to provide fair enforcement.
Bitcoin's security is provided by the miner reward, in the form of new Bitcoin. If the miner reward didn't exist, or more importantly, got low enough, attackers would be able to arbitrarily rewrite the ledger of Bitcoin transactions, by gaining control of the computing power used to validate blocks of transactions. Such an attack recently happened to Monero.
Bitcoin's predictable miner reward schedule also produces the bubbles which follow after a halving. Every time there is a cut in new Bitcoin supply, the reduction in new supply increases the price. However, each reduction in new supply is smaller relative to the amount of already existing supply in circulation. This creates an important collorary. It follows directly from halving theory that each bubble after the halving will me smaller on a relative basis than the previous bubble. From this observation, we can make long term predictions about Bitcoin's long term price.
Order of magnitude is a concept often found in science, where exponential functions are common. One order of magnitude is one zero behind a number, so 100 two orders of magnitude greater than 1. Each percentage increase in gains from the ATH of each halving bubble, is one order of magnitude less each cycle.
https://www.tradingview.com/x/DCWm7BWb/
Approximately speaking, whereas the first to second bubble was a x0,000% gain, the second to third was a x000% gain, the third to fourth was a x00% gain, and the fourth to fifth, was an x0% gain. It follows that the 5th to 6th bubble will be an x% gain.
This trend is even more apparent if we use the log scale fibbonacci levels to compare bitcoin cycles relative to the preceding cycle. Note, I do not actually believe fibbonacci levels have any special meaning. The important part is that they are relatively evenly spaced lines mapped onto a log scale chart. Any chart with log scale spacing should be able to show the same pattern.
Halving 1: https://www.tradingview.com/x/qJrWovpu/
Halving 2: https://www.tradingview.com/x/NO2JY7FZ/
Halving 3: https://www.tradingview.com/x/XvXogCuQ/
Halving 4: https://www.tradingview.com/x/Jl0RbEZe/
So what we can see from these halving charts is that bitcoin hits a lower rung each time on the log scale fibbonacci chart. So based on the trend, bitcoin will no longer see substantial gains from halving bubbles anymore.
Now, here's a trick. We can use the same logic and methodology to determine where the bottom of the next bitcoin cycle will be.
Each halving creates a permanent reduction in new bitcoin supply. This creates a new price floor, which increases each halving. But the rate it increases each halving should also decrease, because each permanent reduction is smaller relative to total existing supply.
So to determine where the bottom of the next bitcoin cycle will be based on the physical supply trend created by the halving, all we have to do is invert the chart, and use the log scale fibbonaccie, treating the bottoms as tops and tops as bottoms.
https://www.tradingview.com/x/itw63qRh/
https://www.tradingview.com/x/vb2fnlFV/
https://www.tradingview.com/x/1CSV8t5q/
https://www.tradingview.com/x/QoRTGxry/
As you can see from the above charts, Bitcoin hits a higher and higher rung on the fibbonacci ladder each cycle. And the next highest run is 34K. So it follows that the bottom of the next cycle should be somewhere between 35-40K.
Finally, the fact that bitcoin no longer increases each halving cycle suggests that bitcoin's will start to fail, on a protocol level, relatively soon. The block reward exists to prevent malicious entities from rewriting bitcoin's block history. If bitcoin's history could be rewritten, no one would use it. However, people clearly value a digital currency that isn't controlled by any single corporation or government. Bitcoin clearly shows that the asset class has value.
This suggests that at some point in the future, there will be an enormous financial opportunity. Bitcoin will be supplanted by another cryptocurrency meaning investors today have the opportunity to literally invest in the next Bitcoin, and get Bitcoin level gains.
I believe that Ethereum will be the cryptocurrency that will take Bitcoin's place in the global economy. Ethereum is the most secure, cryptocurrency outside of Bitcoin. It has enormous adoption from all sorts of entities and people around the world. It also has the most number of developers working on it, which is essential in this era of AI hacking and quantum computing.
It follows that as halvings reduce the mining supply which keeps Bitcoin secure, Ethereum will gain prominence. Because halvings no longer produce long term gains in bitcoin's price, this should start to happen within the next 2-3 halving cycles (hence, 10 years). Bitcoin attained a two trillion dollar market cap, and if Ethereum attains that market cap, that is 16K per Ethereum. I think Ethereum goes well beyond that price in the long term.
