Cryptocurrency News

Is Bitcoin Bound Long Term With Diminishing Returns?


after a Bitcoin’s worst decline in its history, many people wonder if crypto market has reached the top. The market was hit by FUD after FUD, and it negatively impacted some holders. Many retail investors panicked and sold their coins. The January 2018 flashback began and suddenly there was talk of the beginning of a new Bear Market.

For Months, The Crypto Space Has Been Around Bitcoin Bullish narratives of institutional adoption dominated, BTC as a repository of value for stealing gold. “Only up” became more than a meme, it was a firm belief until the time when prices broke below every important support.

Despite its apparent sudden execution, BTC’s price crash was predicted by many experts who were able to read signals and indicators that go beyond fiction. The anonymous analyst “John Nash” has been studying this phenomenon for some time and has come up with an interesting theory.

“Nash” reviewed BTC’s previous cycle of combating “moonlightism”, a situation perpetuated by those investors with a permanent “only up” sentiment. As the chart below shows, each BTC since 2021 shared a feature: they are taller than their predecessor and offer a lower return on investment (ROI).

Source: Josh Nash (@johnNas67967558)

The first cycle of bitcoin began in 2011 with a period of 8 months. During this period, the price of BTC decreased from $ 1 to about $ 10. The second cycle started somewhere in 2013 and lasted about 7 months with 2 distinct peaks at the end of that year and in 2014.

The third cycle of bitcoin has been the longest cycle ever, with a duration of 35 months. Current cycle extended for 28 months, analyst said:

The cycle becomes markedly longer, the ROI markedly decreases (law of diminishing returns). One who still believes in 4 year cycle and constant ROI is clearly in denial/delusion.

Beware of Bitcoin price figures

From the chart presented by the analyst, he presents 3 possible scenarios. The peak of the current cycle by summer 2022, an extension of the cycle until October 2022, if it follows the same length as the previous cycle.

Finally, the least likely scenario and most optimistic is the peak of the cycle by December 2021. Based on the previous argument it can be assumed that the shorter the cycle, the more explosive the ROI. So, if this scenario comes up BTC could see huge gains.

a different Post, Analysts warn investors about the narrative, it can be powerful to drive new users, but it is equally dangerous if followed blindly. Based on Metcalf’s rule used to describe the curve of adopting new technology, “Nash” concluded the following:

Over the past decade, bitcoin adoption has been more or less consistent with the curve/Metcalf’s law, albeit with a peculiar asset. Since bitcoin’s network growth is directly expressed in monetary value, it is prone to speculative episodes, i.e. bubbles.

It is possible to determine the actual bottom and top of the BTC using the logarithmic growth curve (LGC), the moment when the curve will begin to level and fewer users enter the network. This would be for the BTC price with more maturity (time) and less volatility.

Analysts dismiss models that predict that the price of BTC appreciates to infinity, believing that no bitcoin cycle outperforms its previous overexpression.

In other words, if the increase expressed in percentage is higher than in 2017, the chances of BTC reaching an all-time high value are slim. At that time, BTC went from $1,000 to $20,000 with an increase of 1,900%. Again, a move from $10,000 to $100,000 in this cycle would represent an increase of 900% for the cryptocurrency. An appreciable price according to this principle.

BTC trades at $ 36,112 with losses in all timeframes. At the time of writing, the monthly chart has been the most affected, with a loss of 37.3%.

bitcoin btc btcusd
BTC with small losses in daily chart. Source: BTCUSD Tradingview





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