Bitcoin Brief: Week of 1/14/2019

The Next 7 Days

This market moves incredibly quickly, so the majority of forecasting efforts are in vain. However, we can still leverage shorter interval prediction models by using non-parametric statistics and probability. These methods are designed to serve as “headlights” driving down a dark road, i.e. you won’t be able to see everything, but you can see enough to keep you on the road safely.

January 21, 2019 — Simulation Ranges

The simulated price range over the coming 7 day period are as follows:

  • 80% Confidence Interval: $2887.40 and $3984.99
  • 90% Confidence Interval: $2752.62 and $4175.87
*data from Coinbase Pro

January 21, 2019 — UP or DOWN Binary Classification Prediction

Our 7 day model suggests that with a 70.21% probability, the price of $BTC will go UP over the coming 7 day period, i.e. the price of $BTC will be higher at the end of January 21, 2019 than it was on January 14, 2019.

Technical Analysis

We will not make specific price predictions but rather highlight key resistance and support levels that may act as a trading band or catalyst. On the 4 hour chart, both RSI and SWTO are trending upward, which is positive for price over the coming week.

*tradingview.com

However, using the slow Ichimoku Cloud settings (20/60/120/30), both the Senkou A and Kijun are likely to offer strong resistance around the $3800 level without a meaningful increase in buying volume, i.e. VFI above 0. Current support is around $3600 with the key support level to hold being around $3500.

*tradingview.com

Long Term Indicators

A full description of the below terms and significance can be found here in the original CoinDesk article in which the Author published them.

Network Transactions to Active Addresses (TAAR)

The current TAAR value is $2290 and developing a slight uptrend. Ultimately, price reverts to TAAR, and should be tightly distributed (black box — from 2016–17) in “equilibrium”, so keeping a strong eye on this indicator will be key in Q1.

*data from coinmetrics.io

A likely “bottom” will be when price falls beneath TAAR (price has bounced off TAAR twice in 2018 {black boxes}), stabilizes in a tight distribution, and both begin consistently trending upward.

*data from coinmetrics.io

Over the coming weeks, we will see whether TAAR begins to plateau, continues uptrend, or relapses downward. The preferred outcome for HODLers being price stabilization (plateau) and TAAR gradually moving upward to met it.

Market Value (cap) to Realized Value (MVRV)

The current MVRV metric is 0.79 and has stabilized moderately. The historical low is 0.56 back in January 15, 2015. From there, MVRV consistently trended upward, attempted to breach 1.0 twice (stars), and eventually succeeded on October 25, 2015 (black square); starting a new bull cycle. Currently, MVRV’s increase from prior lows of 0.69 seem like a bounce from oversold conditions, which may fail to breach 1.0 and float lower in Q1.

*data from coinmetrics.io

The coming weeks will reveal if MVRV appears to be forming a new trend upward towards 1.0 as its predecessor did back in 2015. A sustained uptrend would likely limit further downside loses to the price of bitcoin and “prime the pump” for the anticipated new bull cycle initiation in late Q4 (November to December) 2019.

Disclaimer: this article is for educational purposes only and should not be considered investment or trading advice.

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