It hadn’t happened for a while, but putting such a move into the context of where we are, kinda worth a moment’s consideration.
Then let’s be a bulltard, a 50% month at this point in the cycle is super unlikely, but a 20% monthly more would take us right back to $100k. Interesting times ahead.
quoting
naddr1qq…vglqBefore getting into this, I have watched a far bit of “technical analysis” YouTube, and I’ve lost count of the number of descending/ascending wedges or bull/bear flag break outs I was told would “change everything”. From my perspective, the majority of traders lose money, whenever I think I’m going to do something clever with my stocks, I end up in a worse position afterwards. From what I’ve listened to, the best traders know when to trade, but also when to wait until a set up they are confident with, moves into position. Saying that, even though I don’t trade, I do like looking at the numbers, the bitcoin price across the epocs, bear market lows, not for trading but more feeling comfortable for where we are and when things might start to change. I do the analysis for understanding, not to help me risk 0.01btc with the potential of getting 0.0125 back, that I’d then have to track to pay taxes on those gains.
And so, the reason for this piece is absolutely not to provide ideas of when to make a trade or the specific set up you might want to look out for, other than, bitcoin is not overvalued, they’re not making much more of it, but they will make massively more of which ever type of fiat you’re required to pay your taxes in. But saying that, earlier this year, after attempting to get a better understanding of inflation, the idea of the dollar hyperinflating in terms of bitcoin denomination occurred to me. As with Weimar, there will be a point when the value of fiat goes into freefall against the dollar, bitcoin’s price is not necessarily going up, it is dependent on the unit of account. The accepted definition of hyperinflation is an increase in prices of 50% in a month, or 600% in a year, drawing from Phillip Cagan’s 1927 PhD thesis. This provided an interesting lens with which to bring to the spreadsheet of bitcoin data that has recently reached over 5800 rows, dating back to mid July 2010. How many months has bitcoin price gone up by 50% or more, or put another way, how many months did the US dollar experience hyperinflation when measured in bitcoin?
Graph 1
Although these figures are simplified in terms of the price of bitcoin on the last of one month to the next with their likely being more extreme variations within specific months, this chart does at least provide a starting point. It appears that there have been 7 months where bitcoin has gone up more than 50%, but interestingly for those chart heads out there, there were also 4 months that were very close, potentially suggesting that there was some “resistance” as this level. Now based on what all those YouTube videos tried to tell me, this is not some magical physical thing stopping prices going higher, rather traders noticing this, and putting in sell orders at these levels to prevent the price going higher. A useful addition to all the trading analytics is to realise that while there may be some machines out there, price is determined by the behaviours of individuals, wanting cash rather than bitcoin at certain prices.
The graph was originally put together during the gradual recovery from the lows of 2022, seeing how many days it might be until the next all time high and how any falls rhyme with previous cycles. As a result, the previous graph only went to October 2023 and we’ve had a whole, but muted bull and (fingers crossed) bear market during the intervening months, that in theory should have added some more useful datapoints into this graph. Now, while hyperinflation is still subject de jour for me, “To save was folly” (Ferguson, 1975, p.109), I’m wondering if the data is beginning to suggest something new? Firstly, without any 50% months since Uptober 2023, the slow grind to $126k just didn’t have the fireworks of previous cycles that got the attention of retail. The suits and the level heads will say that the size of the asset means it’s more difficult to move it by large percentages, but I’m not convince, during 2023, it would have taken a similar amount to increase it by 50% as it did in 2021, and haven’t we now got “big money” involved? Yes, the excitement might be dropping, bitcoin may be maturing, but as well as the 50% resistance, might there be another trend forming. Again, to refer back to my YouTube educators, “3 points of contact is a trend” and “the trend’s your friend until the end” (face palm, can’t believe I watched this shit), but stay with me.
Graph 2
Maybe, just maybe, as the resistance at 50% in a month got stronger, the traders began to realise that if others knew this, they might start trying to front run their orders, so the “wiser” trader will have to out smart them with a slightly lower sell order, such as April or October 2022, for example. By then looking back, these same traders may start plotting their own lines and begin to see a new trend, even before it actually forms, and work out their new points to place there sell orders for the next bull run. If they also believe that bitcoin is less volatile, a downward trend of monthly increases makes sense, so after increasing a suitable amount in a month, they won’t wait until nearly 50% but happy to sell at closer to 40%, such as January 2023, October 2023, February 2024, and November 2024. Then as this new, revised graph appeared on the screen, so did a new trend line, with August 2026 finding resistance at almost exactly the level the line follows after 22 months of not getting anywhere near at just under 20%.
Graph 3
So taking only the figures of close to 50% up in a month, and since 2021 above 40 and since 2021 above 30, the line actually accounts for a lot of the variable, nearly 70%. This isn’t the “thumb in the air” of the first trend, but actually how the line follows a rather objectively selected data set (minimal cheery picking, I promise).
Now, from a bear perspective, this would suggest that if this trend holds, the months of insane price increases and retail FOMO may be over, but to refer back to my 2020-2021 sage, “CryptoZombie”, the trend could in fact end, at which point we can rethink things. I’m sure Peter Zaihan would lap this graph up and say that in another two years, the maximum increase in a month for bitcoin would be 0%. But given he was proved completely wrong with his milk-esque comment (not aging well), what this graph may in fact be showing is that within not too much longer, a “good month”, may be enough to break this trend. At which point, if the trend has been broke, while there may be a retest, that would suggest that the next time bitcoin price goes on a run in a month, while the “savvy trader” will decide where to place their shorts, they could get quite easily nuked in a plus 15% month in the not too distant future. After this, it may not quite be “open water bitcoin” in terms of new all-time highs (they are the best @odell), but it could be “open water” in terms of how much it could go up by in the month.
And so, as we reach the end of the summer of the “bear year”, 2026, on the now broken model of “green green green red”, with a healthy August, not looking like a too shabby, September. Maybe this will change, if we are going to slavishly follow previous cycles, there is a chance of a final, “shake out” low of October, but if cycles are getting broken, there is no need for this to happen, so happy to lock and load for Uptober. As I started this piece, I’m not a trader, I don’t do technical analysis, I just mess around with the number to improve my understanding. As many say, technical analysis is horoscopes for men, while others say, the great way to end up with less bitcoin is to attempt to get more through trading. I hope this is simply a new insight, and new level to look out for and maybe, it will provide a little more optimism moving forward that hyperinflation won’t simply mean we’re selling our pianos for flour, but OUR unit of account has got a bid that the dollar hasn’t. If nothing else, and this trend is actually a real thing, a plus 20% up month could represent a breaking of a trend that has been in running for the past 9 years!
Is bitcoin about to a new phase? Before getting into this, I have watched a far bit of “technical analysis” YouTube, and I’ve lost count of the number of descending/ascending wedges or bull/bear flag break outs I was told would “change everything”. From my perspective, the majority of traders lose money, whenever I think I’m going to do something clever with my stocks, I end up in a worse position afterwards. From what I’ve listened to, the best traders know when to trade, but also when to wait until a set up they are confident with, moves into position. Saying that, even though I don’t trade, I do like looking at the numbers, the bitcoin price across the epocs, bear market lows, not for trading but more feeling comfortable for where we are and when things might start to change. I do the analysis for understanding, not to help me risk 0.01btc with the potential of getting 0.0125 back, that I’d then have to track to pay taxes on those gains. And so, the reason for this piece is absolutely not to provide ideas of when to make a trade or the specific set up you might want to look out for, other than, bitcoin is not overvalued, they’re not making much more of it, but they will make massively more of which ever type of fiat you’re required to pay your taxes in. But saying that, earlier this year, after attempting to get a better understanding of inflation, the idea of the dollar hyperinflating in terms of bitcoin denomination occurred to me. As with Weimar, there will be a point when the value of fiat goes into freefall against the dollar, bitcoin’s price is not necessarily going up, it is dependent on the unit of account. The accepted definition of hyperinflation is an increase in prices of 50% in a month, or 600% in a year, drawing from Phillip Cagan’s 1927 PhD thesis. This provided an interesting lens with which to bring to the spreadsheet of bitcoin data that has recently reached over 5800 rows, dating back to mid July 2010. How many months has bitcoin price gone up by 50% or more, or put another way, how many months did the US dollar experience hyperinflation when measured in bitcoin?
Although these figures are simplified in terms of the price of bitcoin on the last of one month to the next with their likely being more extreme variations within specific months, this chart does at least provide a starting point. It appears that there have been 7 months where bitcoin has gone up more than 50%, but interestingly for those chart heads out there, there were also 4 months that were very close, potentially suggesting that there was some “resistance” as this level. Now based on what all those YouTube videos tried to tell me, this is not some magical physical thing stopping prices going higher, rather traders noticing this, and putting in sell orders at these levels to prevent the price going higher. A useful addition to all the trading analytics is to realise that while there may be some machines out there, price is determined by the behaviours of individuals, wanting cash rather than bitcoin at certain prices. The graph was originally put together during the gradual recovery from the lows of 2022, seeing how many days it might be until the next all time high and how any falls rhyme with previous cycles. As a result, the previous graph only went to October 2023 and we’ve had a whole, but muted bull and (fingers crossed) bear market during the intervening months, that in theory should have added some more useful datapoints into this graph. Now, while hyperinflation is still subject de jour for me, “To save was folly” (Ferguson, 1975, p.109), I’m wondering if the data is beginning to suggest something new? Firstly, without any 50% months since Uptober 2023, the slow grind to $126k just didn’t have the fireworks of previous cycles that got the attention of retail. The suits and the level heads will say that the size of the asset means it’s more difficult to move it by large percentages, but I’m not convince, during 2023, it would have taken a similar amount to increase it by 50% as it did in 2021, and haven’t we now got “big money” involved? Yes, the excitement might be dropping, bitcoin may be maturing, but as well as the 50% resistance, might there be another trend forming. Again, to refer back to my YouTube educators, “3 points of contact is a trend” and “the trend’s your friend until the end” (face palm, can’t believe I watched this shit), but stay with me.\ Maybe, just maybe, as the resistance at 50% in a month got stronger, the traders began to realise that if others knew this, they might start trying to front run their orders, so the “wiser” trader will have to out smart them with a slightly lower sell order, such as April or October 2022, for example. By then looking back, these same traders may start plotting their own lines and begin to see a new trend, even before it actually forms, and work out their new points to place there sell orders for the next bull run. If they also believe that bitcoin is less volatile, a downward trend of monthly increases makes sense, so after increasing a suitable amount in a month, they won’t wait until nearly 50% but happy to sell at closer to 40%, such as January 2023, October 2023, February 2024, and November 2024. Then as this new, revised graph appeared on the screen, so did a new trend line, with August 2026 finding resistance at almost exactly the level the line follows after 22 months of not getting anywhere near at just under 20%.
So taking only the figures of close to 50% up in a month, and since 2021 above 40 and since 2021 above 30, the line actually accounts for a lot of the variable, nearly 70%. This isn’t the “thumb in the air” of the first trend, but actually how the line follows a rather objectively selected data set (minimal cheery picking, I promise). Now, from a bear perspective, this would suggest that if this trend holds, the months of insane price increases and retail FOMO may be over, but to refer back to my 2020-2021 sage, “CryptoZombie”, the trend could in fact end, at which point we can rethink things. I’m sure Peter Zaihan would lap this graph up and say that in another two years, the maximum increase in a month for bitcoin would be 0%. But given he was proved completely wrong with his milk-esque comment (not aging well), what this graph may in fact be showing is that within not too much longer, a “good month”, may be enough to break this trend. At which point, if the trend has been broke, while there may be a retest, that would suggest that the next time bitcoin price goes on a run in a month, while the “savvy trader” will decide where to place their shorts, they could get quite easily nuked in a plus 15% month in the not too distant future. After this, it may not quite be “open water bitcoin” in terms of new all-time highs (they are the best @odell), but it could be “open water” in terms of how much it could go up by in the month. And so, as we reach the end of the summer of the “bear year”, 2026, on the now broken model of “green green green red”, with a healthy August, not looking like a too shabby, September. Maybe this will change, if we are going to slavishly follow previous cycles, there is a chance of a final, “shake out” low of October, but if cycles are getting broken, there is no need for this to happen, so happy to lock and load for Uptober. As I started this piece, I’m not a trader, I don’t do technical analysis, I just mess around with the number to improve my understanding. As many say, technical analysis is horoscopes for men, while others say, the great way to end up with less bitcoin is to attempt to get more through trading. I hope this is simply a new insight, and new level to look out for and maybe, it will provide a little more optimism moving forward that hyperinflation won’t simply mean we’re selling our pianos for flour, but OUR unit of account has got a bid that the dollar hasn’t. If nothing else, and this trend is actually a real thing, a plus 20% up month could represent a breaking of a trend that has been in running for the past 9 years!