Visualizing Bitcoin Returns: Investing in BTC is not that complicated | Every Saturday | The Capital | July 2021
The price of Bitcoin fell during the plunge as it continued to consolidate within a narrow range. Volatile markets are annoying, especially for short-term investors.
Here are some tips on how to reduce your frustration and improve the way you look at investing.
Before we continue, here are some things you need to be familiar with
- This is not financial advice.
- There is too little data available for Bitcoin price history, and the conclusions in this article cannot continue to work.
This article builds on the Bitcoin cycle work already completed by Benjamin Cowen and Akash Girimath of Intothecryptoverse.
Based on the Bitcoin cycle, this article Assume that the fourth BTC cycle will last approximately 1760 days from the bottom of the previous cycle in December 2018. It also approximates that the peak of this cycle will be formed in late August 2022, at $118,000 per bitcoin.
Assuming that this is true, this means that the current slowdown or decline is only a minor issue. The bull market will last for 413 days, which will push the price of BTC up by 244%.
The conclusion drawn from the above is that, like any other asset, Bitcoin is fractal and things tend to repeat. For example, BTC operates in cycles, bull markets, and bear markets, but the interesting thing is that the cycle is extending.
When moving down to a lower time frame, the fractal properties become obvious and are observed in BTC performance.
It can be concluded from the above table that Q1 is usually the worst quarter for BTC, while Q2 and Q4 have relatively high returns. From 2014 to 2020, this trend has remained unchanged.
In fact, investors can convert dollar cost average (DCA) to BTC in the first quarter and then sell in the second or fourth quarter.
However, things seem to have changed in 2021. Since 2014, the quarterly return of BTC exceeded 9% in the first quarter for the first time and hit a new high of 102.93%. Similarly, the second quarter, which usually provides good returns, showed its worst performance in the past 7 years.
One thing in common is the average performance in the third quarter.
According to the data, quarters with negative returns or near zero returns are the best time to invest in BTC. Quarters with higher returns are where market participants should book profits to maximize returns.
Since it takes more than a year for the fourth cycle to reach a record high, investors can use DCA BTC in a quarter with negative returns and sell it at or near the peak. Although the quarterly returns are not obvious, the recent decline is a good time to buy on dips.
Looking ahead, the third quarter with an average return of 3.26% seems to be a good quarter to invest in BTC. More convincingly, the monthly returns in July, August, and September (third quarter) were less than 8%.
The highest average monthly rate of return in the past ten years occurred in November and is currently hovering around 55%. Short-term investors should consider accounting here, long-term investors can use the above logic to realize some of the profits and reinvest in the next few months.
This Long-term game plan Assuming that the price of Bitcoin will reach $118,000, this will provide investors with an opportunity to accumulate BTC in the red quarter/month and sell it in the green.
This Short-term game plan Is BTC retesting the high of 40,000 USD or 41,322 USD, and explained in detail here Twitter topic.