THE BITCOIN HALVENING CYCLE - MACRO TREND ANALYSIS
by Sebastian Soik
CONTENTS:
0 Introduction
1 Market Data
2 Technical Analysis
2.1 Disclaimer and Dimensioning of the underlying price function
2.2 Approximation of unknown halving trend line
2.3 Graphical verification with fibonacci
2.4 Approximation of unknown trend channel height
2.5 Finding Timing dependencies
2.6 Synthesis
2.7 Interpretation
3 Fundamental Analysis
3.1 Marginal cost theory (micro economics)
3.2 Quantitative equation (macro economics)
3.3 ROI Statistics (financial economics)
4 Financial Strategies
5 Conclusion
6 Bibliography
7 Declaration of Authorship
8 Attachments
7.1
7.2
7.3
0 Introduction
1 Market Data
Halving dates
- genesis block: T0 = 01-03-2009
- 1. halving: T1 = 11-28-2012 (t1 = 1425 days)
- 2. halving: T2 = 07-11-2016 (t2 = 1319 days)
- 3. halving: T3 = 05-11-2020 (t3 = 1401 days)
- 4. halving: T4 = 05-13-2024 (t4 = 1463 days)
Halving prices
- genesis block: p0 = $0
- 1. halving: p1 = $12
- 2. halving: p2 = $658
- 3. halving: p3 = $8,572
- 4. halving: p4
Period extreme points
- 1. period: p1low = $0 - p1high = $32
- 2. period: p2low = $12 - p2high = $1,163
- 3. period: p3low = $483 - p3high = $19,892
Halving block height
- genesis block: h0 = 0
- 1. halving: h1 = h = 210,000
- 2. halving: h2 = 420,000
- 3. halving: h3 = 630,000
- 4. halving: h4 = 840,000
Halving block reward
- genesis block: b0 = 50
- 1. halving: b1 = 25
- 2. halving: b2 = 12.5
- 3. halving: b3 = 6.25
- 4. halving: b4 = 3.125
Halving circulation
- genesis block: c0 = = 0
- 1. halving: c1 = h * b1 = 10,500,000
- 2. halving: c2 = c1 + h * b2 = 15,750,000
- 3. halving: c3 = c1 + c2 + h * b3 = 18,375,000
- 4. halving: c4 = c1 + c2 + c3 + h * b4 = 19,687,500
Chart
Available data: 07-10-2010 - 05-19-2020
Resolution: 1D
Symbol: BLX (BraveNewCoin Liquid Index for Bitcoin)
Database
07-18-2010 - 05-19-2020 (Source: www.investing.com/cr...coin/historical-data)
2 Technical Analysis
2.1 Disclaimer and Dimensioning of the underlying price function
This analysis does not provide exact mathematical dependencies. Instead it tries to find a projection of it by using simple linear functions for each layer of the real price function. This method is far from being stable but it might deliver a good enough idea of the upcoming price actions on the macro picture.
2.2 Approximation of unknown halving trend line
m ... slope of a line
x ... halving price increment
y ... duration of a period
y = m*x -> m = x/y
1. period: m0 = (p1 - p0) / t0 = $12 / 1425 days = 0.008421053 $/day
2. period: m1 = (p2 - p1) / t1 = $644 / 1319 days = 0.488 $/day
3. period: m2 = (p3 - p2) / t2 = $7,914 / 1401 days = 5.6488 $/day
m1 / m0 = 57.949997465
m2 / m1 = 11.570713375
(m1 / m0) / (m2 / m1) = 5,008334023
linear continuation:
-> m3 / m2 = (m2 / m1) / = 2,31029187
-> m3 = m2 * (m3 / m2) = 5,6488 $/day * 2,31029187 = 13,050376715 $/day
p4 = m3 * t4 + p3 = 13,050376715 $/day * 1464 days + 8572 $ = $27,664.70
comment:
For this first step I calculated a possible slope of the new halving trend line by taking the ratio between former halving trend line slopes. The ratio itself is not constant but gets smaller by a factor of 5,008334023 every halving. That makes sense because the higher the price gets the more money inflow is needed to affect the slope. The price does not follow a linear function, because of the macro economic (see 3.2) and thechnical (see 4.1) system behind it. Difficulty adjustments that lack behind 2 weeks in worst case are ignored in this model, which also increases the blur factor. With that said, I found a linear function that gives me at least an idea of the base trend in period 4.
Unfortunatelly this does not work flawlessly. Linear dependencies get blurry over time so I need to verify, that the calculated values are at least reliable over 2 periods.
2.3 Graphical verification with fibonacci
I drew parallel lines of each halving trend line through the period highs and made them as long as two periods and applied fibonacci channels to it. First I need to verify that the halving prices itselves have an impact on the pricing structure. So the fibonacci lines should line up in the first period with the price.
p2
p3
It does in deed look like it. So in order to verify that this system is stable enough over 2 periods, we have to look at the 2nd period. The fibonacci lines of the 1st period should also line up before the price breaks it to the upside.
As expected the picture gets blurry over time, but we can still see that the price follows the lines. To lower the blur we go to 1W chart and have a look at the candle closes.
2.4 Approximation of unknown trend channel height
To get an idea of the last channel height we use the same technnique as in 2.2 and use the ralation between former channel heights, and set the ralation itself as a linear function.
height(p1) = $24.36
height(p2) = $988
height(p2) / height(p1) = 40.56
height(p3) = $16,150
height(p3) / height(p4) = 16.35
((height(p3) / height(p4)) / (height(p2) / height(p1)) = 2.48
height(p4) = (16,35 / 2,48) * $16,150 = $106,396.55
2.5 Finding Timing dependencies
So after calculating the height of the channel, we have to think about possible timing. To do this we look at timing dependencies in formes periods. This is the part that really surprised me
3.3.
3. Fundamental Analysis
3.1. marginal cost theory (micro economics)
MC = MR
MC = dc / dq
3.2. quantitative equation (macro economics)
M * V = P * T
dm * dv = dp * dt
4 Financial Strategies
5 Conclusion
6 Bibliography
7 Declaration of Authorship
I, Sebastian Soik, confirm that the work for the this term paper with the title:
THE BITCOIN HALVENING CYCLE - MACRO TREND ANALYSIS
was solely undertaken by myself and that no help was provided from other sources as those allowed. All sections of the paper that use quotes or describe an argument or concept developed by another author have been referenced, including all secondary literature used, to show that this material has been adopted to support my thesis.
8 Attachments
4. charts
figure 2.1.1
figure 2.1.2
figure 2.1.3
figure 3
by Sebastian Soik
CONTENTS:
0 Introduction
1 Market Data
2 Technical Analysis
2.1 Disclaimer and Dimensioning of the underlying price function
2.2 Approximation of unknown halving trend line
2.3 Graphical verification with fibonacci
2.4 Approximation of unknown trend channel height
2.5 Finding Timing dependencies
2.6 Synthesis
2.7 Interpretation
3 Fundamental Analysis
3.1 Marginal cost theory (micro economics)
3.2 Quantitative equation (macro economics)
3.3 ROI Statistics (financial economics)
4 Financial Strategies
5 Conclusion
6 Bibliography
7 Declaration of Authorship
8 Attachments
7.1
7.2
7.3
0 Introduction
1 Market Data
Halving dates
- genesis block: T0 = 01-03-2009
- 1. halving: T1 = 11-28-2012 (t1 = 1425 days)
- 2. halving: T2 = 07-11-2016 (t2 = 1319 days)
- 3. halving: T3 = 05-11-2020 (t3 = 1401 days)
- 4. halving: T4 = 05-13-2024 (t4 = 1463 days)
Halving prices
- genesis block: p0 = $0
- 1. halving: p1 = $12
- 2. halving: p2 = $658
- 3. halving: p3 = $8,572
- 4. halving: p4
Period extreme points
- 1. period: p1low = $0 - p1high = $32
- 2. period: p2low = $12 - p2high = $1,163
- 3. period: p3low = $483 - p3high = $19,892
Halving block height
- genesis block: h0 = 0
- 1. halving: h1 = h = 210,000
- 2. halving: h2 = 420,000
- 3. halving: h3 = 630,000
- 4. halving: h4 = 840,000
Halving block reward
- genesis block: b0 = 50
- 1. halving: b1 = 25
- 2. halving: b2 = 12.5
- 3. halving: b3 = 6.25
- 4. halving: b4 = 3.125
Halving circulation
- genesis block: c0 = = 0
- 1. halving: c1 = h * b1 = 10,500,000
- 2. halving: c2 = c1 + h * b2 = 15,750,000
- 3. halving: c3 = c1 + c2 + h * b3 = 18,375,000
- 4. halving: c4 = c1 + c2 + c3 + h * b4 = 19,687,500
Chart
Available data: 07-10-2010 - 05-19-2020
Resolution: 1D
Symbol: BLX (BraveNewCoin Liquid Index for Bitcoin)
Database
07-18-2010 - 05-19-2020 (Source: www.investing.com/cr...coin/historical-data)
2 Technical Analysis
2.1 Disclaimer and Dimensioning of the underlying price function
This analysis does not provide exact mathematical dependencies. Instead it tries to find a projection of it by using simple linear functions for each layer of the real price function. This method is far from being stable but it might deliver a good enough idea of the upcoming price actions on the macro picture.
2.2 Approximation of unknown halving trend line
m ... slope of a line
x ... halving price increment
y ... duration of a period
y = m*x -> m = x/y
1. period: m0 = (p1 - p0) / t0 = $12 / 1425 days = 0.008421053 $/day
2. period: m1 = (p2 - p1) / t1 = $644 / 1319 days = 0.488 $/day
3. period: m2 = (p3 - p2) / t2 = $7,914 / 1401 days = 5.6488 $/day
m1 / m0 = 57.949997465
m2 / m1 = 11.570713375
(m1 / m0) / (m2 / m1) = 5,008334023
linear continuation:
-> m3 / m2 = (m2 / m1) / = 2,31029187
-> m3 = m2 * (m3 / m2) = 5,6488 $/day * 2,31029187 = 13,050376715 $/day
p4 = m3 * t4 + p3 = 13,050376715 $/day * 1464 days + 8572 $ = $27,664.70
comment:
For this first step I calculated a possible slope of the new halving trend line by taking the ratio between former halving trend line slopes. The ratio itself is not constant but gets smaller by a factor of 5,008334023 every halving. That makes sense because the higher the price gets the more money inflow is needed to affect the slope. The price does not follow a linear function, because of the macro economic (see 3.2) and thechnical (see 4.1) system behind it. Difficulty adjustments that lack behind 2 weeks in worst case are ignored in this model, which also increases the blur factor. With that said, I found a linear function that gives me at least an idea of the base trend in period 4.
Unfortunatelly this does not work flawlessly. Linear dependencies get blurry over time so I need to verify, that the calculated values are at least reliable over 2 periods.
2.3 Graphical verification with fibonacci
I drew parallel lines of each halving trend line through the period highs and made them as long as two periods and applied fibonacci channels to it. First I need to verify that the halving prices itselves have an impact on the pricing structure. So the fibonacci lines should line up in the first period with the price.
p2
It does in deed look like it. So in order to verify that this system is stable enough over 2 periods, we have to look at the 2nd period. The fibonacci lines of the 1st period should also line up before the price breaks it to the upside.
As expected the picture gets blurry over time, but we can still see that the price follows the lines. To lower the blur we go to 1W chart and have a look at the candle closes.
2.4 Approximation of unknown trend channel height
To get an idea of the last channel height we use the same technnique as in 2.2 and use the ralation between former channel heights, and set the ralation itself as a linear function.
height(p1) = $24.36
height(p2) = $988
height(p2) / height(p1) = 40.56
height(p3) = $16,150
height(p3) / height(p4) = 16.35
((height(p3) / height(p4)) / (height(p2) / height(p1)) = 2.48
height(p4) = (16,35 / 2,48) * $16,150 = $106,396.55
2.5 Finding Timing dependencies
So after calculating the height of the channel, we have to think about possible timing. To do this we look at timing dependencies in formes periods. This is the part that really surprised me
3.3.
3. Fundamental Analysis
3.1. marginal cost theory (micro economics)
MC = MR
MC = dc / dq
3.2. quantitative equation (macro economics)
M * V = P * T
dm * dv = dp * dt
4 Financial Strategies
5 Conclusion
6 Bibliography
7 Declaration of Authorship
I, Sebastian Soik, confirm that the work for the this term paper with the title:
THE BITCOIN HALVENING CYCLE - MACRO TREND ANALYSIS
was solely undertaken by myself and that no help was provided from other sources as those allowed. All sections of the paper that use quotes or describe an argument or concept developed by another author have been referenced, including all secondary literature used, to show that this material has been adopted to support my thesis.
8 Attachments
4. charts
figure 2.1.1
figure 2.1.2
figure 2.1.3
figure 3