Bitcoin Market Price Drop like 2015

The bitcoin price today has reached the same relative rate of decline as it did during the last major cycle almost four years ago. The decline has also taken almost exactly the same if just a few weeks early.

I’m posting this because I think its a rare event and I’m keeping an eye on the market for a correction and buying in.

The thirty day rate of change over time graph is showing that the current drop is so sharp that less than one half of a percent (13 days out of 8 years) of all past history exceeds it.

The drop from high cycle graph (red) shows the relative drop is now the same as it was in January of 2015. The time value (black) indicates that it has occurred slightly earlier than last time.

The average down from high data from this level to an all time high is 463 days, projecting forward that lands on March 14, 2020.

 

 

 

What was that sound? Astral Projection

For many years I had a strong interest and spent a significant amount of time exploring practices to achieve astral projection. I read many books on the subject, tried exercises over a few years and had some interesting experiences as a result but definitely not as amazing as others. It took a lot of effort and as a result of some roadblocks I put the whole thing on hold for many years. Recently my interest has started to return and I have started exploring again these other worldly experiences.

This morning when I woke up I found myself laying in my bed in this state that I recognize must be as others have described, mind awake body asleep. I knew my body was sleeping in bed and I could tell it was there and I know how to wake it up when I want to. I could hear from the hallway a repeating popping sound. It was super loud and I was aware that it was not coming from the waking world.

The best thing that I could compare the sound to is a kids ball popping toy that pops as it is rolled. Only the sound did not include balls bouncing around just the clicking. I thought it was so loud that if it was from the waking world I would expect a noise complaint as a building council member.

The sound didn’t appear to be moving, it wasn’t someone walking down the hallway. It seemed to be about fifteen feet away. I could feel the sound resonance of it in the space.

I have had this scenario happen before but not in the condo I live now. In the past I have heard things like footsteps on the roof above my room but the only thing I have ever seen with my eyes are an astral version of my dog and bed and room. I haven’t ever seen any person or creature that doesn’t belong. It’s usually very peaceful and quiet.

During this experience I was struck with an unbelievable sense of amazement that there is another world right here and that we can touch it if we really want to.

For anyone that hasn’t experienced this before, I have to say these are not dreams. The sensory input while in this state is far more clear and vibrant than waking life. Dreams are foggy and transient or constantly changing. Waking life has ha heavier, physically more limited feeling. There is a familiar sense of recognition and comfort in this space. There is no physical discomfort from the body, vision is exceptionally clear as with sounds.

The experience this morning only lasted about ten seconds and I felt myself fade out back to my physical body and the natural pain from a twisted neck from sleeping badly. I tried to hold on as long as I can. Some literature describes getting up and walking around to explore. When I try this it just breaks the connection and I wake up. The only way, so far, that I have been able to walk around is to find myself already out of body.

I wonder what the sound was. Maybe tomorrow I can go find out.

 

Bitcoin report projects the date of the next all time high

At AlgoMega.com I have a report the plots the relative ratio of the price as it compares with the last all time high. This is intended to show that the price cycles between periods of troughs and peaks.

The red line shows this ratio where 0 is an all time high and the higher the level reflects a drop. 1 would be a drop to a price of 0. Maybe I made this more complicated than it needs to be by inverting the trends.

I thought it would be interesting to project a possible date for the next all time high using an average of the past data where the ratio matches.

The process looks at the current DFH value and it’s trajectory noting if the price trend is down (bear market) or up (bull market). Then I collect all of the past dates having the same DFH value with the same trend.

The trend direction is important because the same DFH values have different times to the next ATH depending if they are heading down or up as a drop has to bottom out and return the other direction.

All of the DFH values are scanned forward to find the number of days to the ATH and the average of those days are taken.

So based on this method, when is the next all time high? It’s in 544 days on May 27, 2020.

 

 

Here is a markup image on how the calculations are made.

 

Update:

One hour later and the date is May 05, 2020. It is just an average so the value will jump around.

My thoughts on this result are of encouragement for the future of the market. I have read a lot of negative articles and posts on the web because of the recent price drop but over the long term these cycles repeat over and over. If you can wait a year and a half I am guessing that the price will in fact return to a new all time high or at least something interesting.

Anther very interesting date coming up in May of 2020 is the next mining halving from 12.5 btc per block to 6.25. This will reduce the production of currency into the next work going forward from that time.

 

Update Next Day:

Someone mentioned that they don’t like the implication there will be another all time high. So I think it’s more reasonable to use this projection as a possible future multi year high date.

Because the previous metric was inverted I decided to add a sin wave style graph oscillating a zero plane. This way you can see the cycles alternate between over and under valued. The light green line shows the drop from past high and the dark green line shows the same DFH value multiplied by the log value of the number of days since that peak.

 

Bitcoin Market Update

Since the BTC market is trading down about 35% in the past few days I thought I would write a quick blurb about my thoughts and personal trades.

I am buying small amounts at these prices and also anticipating the price will go down more from here. I made a withdrawal from an exchange in June of this year for a decent amount of dollars but it never came through. I asked to have the withdrawal canceled so I have the ability to buy right away. In Canada at least it can be difficult to move dollars to and from exchanges. I always keep a balance of cash in my bank account and stock brokerage accounts so that in the case where they go bankrupt I will have enough to pay taxes and live until I can move other assets around.

My thought is that BTC is a good thing to have as a long term investment. I think the chance of it becoming much more valuable in the next few years is higher than the chance it won’t.

The market tends to cycle through extreme peaks and valleys. Looking back you can see this between $0.30 – $30, $10 – $1000, $250 – 20,000.00. Being in a downtrend now I wanted to see how the current price relative to the last peak compares historically so I put a new report together.

The red line chart shows the relative level from the last peak. When the value is 0 that is an all time high. You can see that of all past data that I have collected only 8.7% of it has been been at a price level lower relative to the peak than is it currently. You can also see several trend reversals below our current level.

I think it’s reasonable for the price to go down lower so that it matches the same past levels but then hopefully it will continue in another uptrend.

Here is another chart I like to look at. It plots the relative rate of change. Currently the rate of decline in price is so fast that only 1.31% of the past data has exceeded it. I use this chart to sell when the rate of price rise approaches the previous maximums. When the rate of decline is low like it is now I buy small amounts regularly.

These charts are available at http://algomega.com. I plan on implementing email notifications of significant market opportunities as a service later on if there is any interest.

 

Update: Down From Peak with Time

Part of my interest in making charts to visualize relationships of price metrics over time is to find possible indicators that somewhat accurately measure the scenarios that correspond with with beginning of a bull run in order to buy and conversely the end of a run in order to sell.

In this case I have a drop from peak by time chart for use as a possible buy signal. The hypothesis is that the market runs up until it’s overvalued and people jump in and drive the price into a peak then it corrects and sags for a long period until everyone is convinced that the price has bottomed before people slowly start to reinvest. So I have added the time from the last peak as a multiplayer to the ‘down from peak’ value. This is because if the market is cyclical between under and overvalues states, the longer the market remains in a valley state the less likely it is to remain there. I suspect that people look at the price charts and recognize the undervalued state to buy in.

This report does accurately show the bottom price in 2015 as the black line is very high. The chart isn’t scaled very well in that it doesn’t show a consistent result between different cycles so I will keep thinking about this.

 

I don’t have much data for Ethereum, Litecoin and Dash but the charts are pretty interesting as well.

 

Update 2 – Nov 25, 2018

Just noting that after another day the price has dropped again and the rate of decline over thirty days is so fast that only 0.42% of past history or 11 days have been faster than this and only 2.92% of past history (76 days) has ever been lower from the last peak down from 9% two days ago.

Financial Independence One Year On.

It’s been one year since I was let go of my job as a software developer. A lot has changed over the last year and I thought I would share some of my experience and thoughts.

To me financial independence meant that I had to accumulate enough money and invested assets that I could draw on them an amount up to 4% of the total each year with an additional margin and have that cover all of my living expenses.

It took me about ten years to achieve this when it was the primary focus meaning all other financial decisions come second to investing only for independence. And most of the gains happened in the last year thanks to gains in Bitcoin.

After not working a job it took more than six months for my stress level from work to wind down. It’s hard to describe how stress manifested for me, it was like a pressure on my chest.

Over the year a big perspective change comes about from a change in habits. Most days I stay up late working on my car company because I love it. Each day it free to socialize or walk my dogs. I inherently feel like I can afford anything I want and need. My dog needed surgery that cost $10,000.00 and the only reaction was of gratitude that my dogs need was effortlessly met. Social gatherings are pure enjoyment regardless of the cost. I feel like everything is free for me, strata fees, bills, groceries, wine for gifts when I go to other peoples houses etc.

Passion for projects and people has become the primary topic of my awareness which is motivating and incredibly satisfying.

The primary source of suffering has gone from the need for dedicating 8-12 hours a day to the job to more fundamental and evolving issues around personal growth. I think the core issue is that at a job you can only work on a few issues at a time because the time is dedicated to production where as personal freedom allows us to address specific issues head on and move on when we are done.

One question I had while working as an employee was about the nature of happiness and reward. I have always wanted freedom over my time to do and think about the things I want and not what I have to in order to pay the bills. I wondered that when I didn’t have to work would the satisfaction of achievement of that goal diminish over time. Well it hasn’t. Personal freedom for me has been a new horizon. It is a paradigm shift and my consciousness feels more alive in a way I could only envision for brief moments in the past.

My current plan is to build my car company, http://armaautomotive.com so that the very few people who really want a supercar can have one. The price is high but not necessarily money. Additionally I have a few other business project lined up but the large focus for me is in building a more connected social network and meet new people to learn and enjoy fun and service based explorations.

 

A Riddle on Money

Here is a fun riddle for the next social gathering you find yourself at. Before I get into it I will say that it is a fair riddle in that it is not a trick question. Anyone who knows how the dollar / monetary system works will be able to figure it out just by thinking about it. The answer is common sense but also sounds nonsensical at the same time.

The question is: How many dollars are there in total for the whole country. This works for both Canada and the USA. This includes all of the money that everyone in and outside of the country own for, Citizens, government, foreigners, including Cash, coins, bank deposits, etc. The answer is correct if within 100% of the actual number. So if the answer was hypothetically one trillion dollars a two trillion dollar answer is close enough to be correct.

The only rules are that you have to subtract all of the debts from the total. I.e. A dollar can’t be used even if you have it in your wallet or bank account if you also owe another dollar to someone. This is because you don’t really own that dollar, you are effectively just borrowing it.

The answer? The grand total of all dollars in the country? It is $0.00. There are no dollars when settled on a balance sheet.

I know this isn’t really fun riddle I promised at the start. The paradox is that we think of dollars as an asset even though they are a debt instrument. The reason for this is that all dollars are created as debt from banks with interest attached. But the interest currency is not created so there will always be more debt then currency.

I used to have a website that tracked the amount owed by each Canadian citizen for the interest on debts owed by the government. I haven’t updated it in years so I will pull down some new data and update that soon. I think it’s around $18K per person.

 

Mind over healthy mater.

Fairly frequently I will watch youtube videos about bitcoin on market and trend analysis. A recent video I watched made the observation that the cable news segments on Bitcoin prices always frame changes in price in terms of being caused by some recent event but that they are always wrong about the reason.  It’s often the case that the same news channel will contradict themselves on the same price movement.
The reason for news worthy price movements is usually always because of the trend or in other words because people believe that the future will play out a certain way. i.e the price makes big gains because people see that the price has been going up or down faster than any other market and they want in/out or there is a major trend reversal.
This is where I segway from other people thinking irrelevant causes are the result of actions to myself realizing the same thing about my self.
I have been sick and injured a lot in the past few years. I thought that as soon as I stopped working 9-5 that my health would improve and that the effects were probably work stress related. But after starting to live and work on my own schedule I got worse. I have not been able to do the same level of activity from one year ago.
I was watching another youtube video with Dr. Jordon Peterson talking to Joe Rogan about the carnivore diet and how it gave him remarkable health benefits.  As I was watching I was thinking about pieces or ideas that I could incorporate into my diet to fix some chronic recurring issues I’m having with joint problems and lack of energy.
I have been vegan for about 5 years and the idea of starting to eat meat is a tall order. But another idea about the matter of my diet and health came to mind.
I believe that what we think about becomes our experience and I live this every day. This idea is perfectly congruent with my current financial independence that I planned, imagined and fully embraced. But it just occurred to me watching this video that maybe I’m sick and injured not because I have a particular deficiency in vitamins, nutrients, proteins or routine but because I view diet and health as something that I have to fix or operate just in a certain way in order to function correctly. And because I subconsciously believe that health needs to be fixed it then manifests as a problem for me. Maybe if I view health the same way I view financial independence I will become healthy wealthy…
This makes me think of stories I have read about people who supposedly don’t eat. Breatharians or the budda boy. Most people ignore these accounts as fraud but it makes me think that in some ways we can achieve physical energy and function by mind.
Part of the video Dr. Peterson talked about the effect on depression and that strikes me as something that affects your mental state which should in theory affect your heath and dietary absorption theoretically. The complexity of factors both dietary and mental make navigating healthy living complicated and time consuming to sort out.
My plan. Follow the same formula I use financially for diet and physical activity. That is believe that I will be healthy naturally in the same way the body will naturally heal after injury, imagine the conditions of enjoying health and mobility and then allowing it to happen and enjoy it. The other thing I will have to be careful of is to weed out a lot of negative thoughts about being sick or current injuries because they have persisted for a few years.

Bitcoin Price Patterns to Predict Future Trends

I am putting together a report by overlaying recent Bitcoin price movements against the best matching past occurrences to see if there is any predicable continuation.

Currently there are no graphs or back testing to see how the different parameters affect accuracy.

I have some preliminary numbers based on comparing a dataset of 6 months, 8 months and 12 months then looking at the average outcome when looking forward from those matches out to four months.

6 Months  1        2        3        4      
 Upside  115  117  118  118 118  118  118  118 118  118  118  118  118  118  118  118
 Average  94  100  101  102  102  101  100  99  98  97  96  94  93  92  90  89
 Downside  105  96  95  93  88  86  85  81  78  75  73  72  69  67  62  58
8 Months                                
 Upside  115  118  121  126  133  149  160  165  166 166  166  167  171  175  178  183
 Average  94  103  105  108  111  114  118  121  123  124  126  126  127  127  127  127
 Downside  105  102  101  101  100  100  99  99  98  97  97  97  97  97  97  97
 12 Months                                
 Upside  117  128  134  159  195  251  297  323  333  341  350  352  353  362  368  374
 Average  95  106  113  122  132  146  163  178  188  194  199  205  211  216  221  226
 Downside  105  105  105  105  105  105  105  105  105  105  105  105  105  105  105  105

The columns are weeks projected into the future and the numbers are percentages. So when comparing 6 months of data to find the most similar past pattern the best outcome after one week is a return of 115%, the second week is 117% etc. All of these numbers are based on the price data pattern as of July 10, 2018.

A big disclaimer; this is not a prediction, just because the past data set closely matches does not guarantee that the trend will continue.

These are just a small sample of results with random parameters. When using a larger pattern to compare with past data can result in more specific matches but at some point reduce the amount of range to search through.

A big issue with this approach when comparing patterns on historical data is tuning the parameters to the dataset rather than fundamental patterns. This comes through in the fact that the 6 month pattern predicts a decline in price and the 8 and 12 month data set predict an increase in price.

I will have to experiment with back testing different parameters to get a good sense of accuracy if any on historical data and the future prediction. That will come later.

Update July 11, 2018

Here are a small sample of back testing results. The data samples are collected in days back from 180 all the way back to 1275 three and half years ago. The data sets were run using 6, 8 and 12 months of data respectively and the results are shown as projected average divided by the actual percentage change ninety days later.

 Days Back  1275  1095  910  730  545  365 180 
 Date 2014-10-02 2015-04-05

2015-10-07

2016-04-03

2016-10-25 2017-05-26 2018-01-10
 Price  $373  $254  $243  $418  $657  $2177  $14000
 6 Month Set  89/85  105/100  102/177  130/156  120/176  188/199  260/48
 8 Month Set  46/85  93/100  121/177  110/156  116/176  216/199  199/48
 12 Month Set  214/85  113/100  123/177  129/156  148/176  265/199  141/48

Overall the results were kind of interesting. There are some correlation but also some significant misses. More resolution and adjusted parameters may make this a more useful report.

Bitcoin Criticism – Broken Window Fallacy

I like to follow the wider crypto currency news and industry developments. I often come across wild exuberance and extreme criticism. Over time I have noticed that a lot of points against digital currencies that while valid at the time quickly change with the adoption of new people and technology.

Early on the most common criticism of Bitcoin was that it wasn’t worth anything. People were mining 50 BTC in blocks with hardware on there desktop. Anyone could accumulate hundreds of BTC if they wanted to unfortunately no one could have guessed that they would become as valuable as they are now. In hindsight it seems funny to criticize the absence of price when it is often the most significant characteristic to newcomers.

After the value criticism was that no one accepted it for payment. Only a handful of stores accepted bitcoin. While most businesses still don’t accept bitcoin there are a significant number now and new integration services that make it easy for new stores to start. Also now that the value Bitcoin is widely known more people are now willing to accept it in place of dollars.

The next criticism was that Bitcoin has no intrinsic value. It was common to compare it with the Dollar but in comparison there is no intrinsic value of the dollar. People also compared it with gold because you can hold it and that is true but it doesn’t mean that an electronic currency can’t provide value on it’s own.

Lately the criticism of Bitcoin is that the network doesn’t have the capacity to handle enough transaction volume to support a larger economy. While the core network is limited to about seven transactions per second there are many groups working on solutions that will allow significantly more in the next few years.

I’m not saying that criticism can’t point out valid issues with Bitcoin but in the context of changes already in motion it makes sense to make a hedged guess and use the opportunity as an investment.

One of the most bizarre criticisms that I disagree with is that Bitcoin, or others like it, can never be used in a functioning economy because the deflationary nature of currency issuance will cause people to save instead of spend. As a result businesses in their economy will not have enough customer demand to survive and the economy will collapse.

I believe that most people who make this criticism are viewing this as a variant of the broken window fallacy. The broken window fallacy says that destruction of a local town shop window is good for the economy because it necessitates the services of a local window repair person, thus earning them money to support their family. Of course this is a fallacy because the net result is a loss as the cost to the shop owner is more than the gain to the window repair man. The shop owner also would have used the same money paid the repair person to spend in the economy.

In this example the breaking of windows is analogous to inflation of the currency.

Most people have lived in a financial system that inflates savings for their entire life and simply can’t comprehend anything different.

In an economy with a different monetary policy people will still need to buy things in order to live. Currently with dollars there are incentives to spend because the value of dollars are eaten away as time passes. In a Bitcoin based economy the incentive might be to hold rather than spend if they are on the fence of a purchase. But people would still buy the things they need.

The key point is that people have to work in a dollar economy to replace the value that is eaten from holding dollars. Does this necessitate the creation of unnecessary work? Is the current expansion of production and consumption of natural resources unsustainable? I think so.

People right now need to work because in a fractional reserve based economy any assets are quickly eaten away with a small amount of deflation. Most people need full employment to just get buy.

I’m not suggesting that Bitcoin will become a predominant currency but rather than the hypothetical outcome isn’t necessarily worse than the current system.

Update:

As a counter point to the broken window fallacy comparison the argument has be made that the key point of the effect of deflation is reflected in the use of effective resources rather than the observation that some things are broken. In other words it is more desirable irrespective of currency system to make optional use of all available resources, human labour and capital as it provides opportunity for growth and leaning. Additionally people don’t hold dollars because of inflation and as a result don’t significantly suffer as a result. All interesting ideas.

Financial Planner

I met with an old school friend that is a financial planner to discuss some available investment options. Currently I manage my own investments across different asset classes and re-allocate based on market trends and imbalances. I look to sell overvalued assets and reinvest in undervalued yet fundamental alternatives.

My primary hesitation with using an advisor is the commission structure and limited available asset options. I would be happy to pay an advisor a high fee for their time and advice on as regular basis but not on a commission of total invested assets. Commissions based on invested assets causes several issues, one being because the available investible assets are a subset of what I am interested in they are disincentivized to help allocate towards assets they don’t sell. Secondly the commission fees are disproportionately high when investing a retirement level of assets.

In my case I plan is to grow my assets and place one million dollars in index stock and bond funds and use the expected four percent yearly return as backup income to cover my cost of living. My current living expenses are around twenty something thousand dollars per year making my monthly draw about two thousand dollars. If I was to have a financial advisor invest one million with a 1.5% commission that works out to be $1250.00 a month. With a drawdown of $2000.00 a month to live that is a high percentage considering that the alternative is a $25.00 fee for managing my own investments through an online broker. Note that each of the stock index funds have a commission fee attached that applies weather they are self directed or managed through an advisor.

Ultimately I want to make my own decisions for where to invest and have the responsibility to research opportunities and learn from the experience.