Bitcoin Price Prediction

Bitcoin Price Prediction March 5th 2017

Bitcoin Price Prediction March 5th 2017. Bitcoin is currently in a significant 1 day uptrend with huge buying taking the price up to the 1276 range.  Strong buying at this point has caused a move out of the upper Bollinger Band range. Liike an elastic band we should see a correction over the next few days down to $1160. I predicted a price run up from the $600 price back in August. At this point I expect consolidation for a time with the price trading between $1200 and $1300 looking for negative news to move it lower. In the past Bitcoin has traded alongside the S&P I have no clue why there is a correlation but I expect a move lower in the S&P thus taking Bitcoin lower. Taking a look at the chart below we see Stochastic RSI is at 95 and should reverse over the next couple of days. The CCI is at 101 and should move to the lower range. 

Bitcoin price prediction

Bitcoin Price Prediction.

The weekly Bitcoin price chart shows a move out of the Bollinger Band to range indicating a pullback is in order. I think Bitcoin is just looking for some bad news here to induce a small correction.

Bitcoin price prediction

Bitcoin Price Prediction
Model price based on tx rate: 7-day average: $12587, 28-day average: $12436.

Model price = 10-0.638 * (tx per day)2.181 / # total coins.

Those with long memories will recall that this model has long indicated a price significantly over spot, fading the entire bear market; it was predicting significantly under spot when I started running it privately. It is revived to track against the current bull run.
Price modelling based on tx rate, hashrate and number of unique addresses

Further to my previous post (longer writeup here) in which I explain the methodology, I have updated the price models and present here the historical price history against the modelled price history. I’ve ignored the first 800 days and the last 100 days of history to generate the coefficients.

graphs here

black line: price
blue line: 0.1484*(# unique addresses per day)2.055 / total # bitcoins
red line: 0.2395*(# transactions per day)2.177 / total # bitcoins
magenta line: 2.2699e5*(hashrate)0.6255 / total # bitcoins

While hashrate is not so closely correlated with price, there is a clear relationship between price and the other two metrics. Also, the divergence between price and modelled price has switched sign. If you believe the model, this would indicate a good entry point since I suspect the price is being supported by actual transactions on the network.

data source: API

edit: the blog link above did actually contain example code, but I seem to have deleted it accidentally. If you want to recreate or play with the data, check back in a few days, when I have found my backup.

I dont get this. if the SEC has decided to approve the ETF, shouldnt they just go and announce it?

Not necessarily. As discussed before around here, the SEC is never in a rush to do anything, and it’s likely there’s a bit of “cover your ass” by letting the decision go as far as it can. If approved and somehow a disaster, they can at least say they weren’t jumping the gun and ignoring their diligence. Same if they make them withdrawal it – it seems like they gave them a solid shot even if they never even had a chance. Everyone’s as happy as they can be. It’s for this reason I expect the announcement close to the deadline (within a few days) or on it. Too early, even if they’ve already decided to approve it, and it can send the wrong message.

Why tell these guys that they are going to approve it beforehand?

Bitcoin Price Prediction. Market makers aren’t speculators, so I wouldn’t assume KCG or Convergex to have a position in bitcoin before they know they can use it as collateral to market make. In other words, having bitcoin (and fiat, both on exchanges) is a necessity to market make in this case. If they’re not speculators – which, we can’t say for sure, but market making firms generally focus on market making for fee rebates and spread capture / ETF basket arbitrage – then it’s most likely that the firm would not want to purchase bitcoin until they know they can absolutely use it in market making activities. Again, they’re risk averse to speculation. Aside from the exposure they need to have in order to facilitate their production of liquidity, they would prefer if the underlying didn’t move and they could just make money on their services. Therefore, it would make sense that the SEC would want to give these firms a heads up that the ETF was approved before they announce, so that the firms don’t have to battle the approval rally while trying to accumulate the collateral (read: buy lots of bitcoin). Also, anecdotal, but this long rally began on the 15th… one day after the market makers met in person with the COIN crew, their lawyers, and the SEC in person… which wasn’t announced for 8 days. I feel like we’ve been over this before….

Shouldn’t they be prepared beforehand regardless of the result?

Again, no. If they buy lots of bitcoin, and then the decision is a negative and the price drops, they either need to dump for a loss or hold through it. Both make them speculators, not market makers. They do not want bitcoin unless they are using it as a tool to market make and arbitrage with. It’s pretty simple. Market making and HFT firms don’t hold positions for appreciation, they hold them to provide liquidity. If they aren’t going to be providing liquidity, bet your ass they won’t want to acquire the underlying. And bitcoin is a thin market. I’ve estimated the three market makers would need at least a combined 20 baskets (20k btc). That kind of order isn’t cheap or without slippage. It’s my thought that the market makers were told to acquire their collateral at the meeting on the 14th because of pending approval, and then the meeting was announced after the market makers had acquired enough to satisfy the SEC’s liquidity concerns.

what’s the point of the announcement if a not so small number of guys already knew it?

The SEC is no joke. Any one of those people talk, and it’s jail time. I realize we all think bitcoin is the wild west (as is evidenced by so much talk about insider trading in here recently), but this isn’t the wild west anymore. This is the SEC. Think anyone on the winklevoss team is gonna risk 3 years of work and all the future fees from their product just to makr some of their already rich friends richer? No. They’re in this for the long haul, and something like this can’t really be approved without making sure things will go well behind the scenes anyways, which means lots of people preparing… but all of whom have a lot to lose if they open their mouth. This is a non-starter to me – has no bearing on the current discussion. They can’t get it ready to go if they don’t know it’s coming.