The Elephant in the Room - Reducing Volatility
The elephant in the room for the bears is reducing volatility. Once they see this , they will also see that BTC has fully corrected here as compared to previous cycles, and the current price dynamic.
Reducing volatility does not refer to the current lull in price movement but to the over-all reduction in the swings from the average price . So for example, in the following chart, you see a reduction of percentage increases in each cycle. It seems to me that bears are too often fixated on the percentage decreases between cycles, and expect a parity between them. I'd suggest that if they saw the real reduction in volatility they'd not be so susceptible to this false expectation.
Here we can see the reducing volatility both in the moves up and in the moves down. The corrections are:
1] 93%
2] 85%
3] 70%
A future correction may only be 50%.
Whilst the volatility is decreasing, and so too the retracements in nominal/ price terms, the proportions of the cycles remain the same - each retraces 27% in real terms. It is this distinction between real and nominal values that is largely missing in the bear analysis. This distinction does not matter too much in the short term for the day-trader, but on long term macro charts it will lead to a very distorted analysis... where a fully corrected market may be read as only half-corrected.
Perhaps the best indictor of this reducing volatility is the log MACD. Here you clearly see the extreme swings of this momentum indicator converging toward something more stable. Of course involved in RV is the law of diminishing returns. This may help to explain the blind spot that bears and traders might have here as they have a bias or desire to see continuing high levels of volatility to both sides.
Reducing volatility does not refer to the current lull in price movement but to the over-all reduction in the swings from the average price . So for example, in the following chart, you see a reduction of percentage increases in each cycle. It seems to me that bears are too often fixated on the percentage decreases between cycles, and expect a parity between them. I'd suggest that if they saw the real reduction in volatility they'd not be so susceptible to this false expectation.
Here we can see the reducing volatility both in the moves up and in the moves down. The corrections are:
1] 93%
2] 85%
3] 70%
A future correction may only be 50%.
Whilst the volatility is decreasing, and so too the retracements in nominal/ price terms, the proportions of the cycles remain the same - each retraces 27% in real terms. It is this distinction between real and nominal values that is largely missing in the bear analysis. This distinction does not matter too much in the short term for the day-trader, but on long term macro charts it will lead to a very distorted analysis... where a fully corrected market may be read as only half-corrected.
Perhaps the best indictor of this reducing volatility is the log MACD. Here you clearly see the extreme swings of this momentum indicator converging toward something more stable. Of course involved in RV is the law of diminishing returns. This may help to explain the blind spot that bears and traders might have here as they have a bias or desire to see continuing high levels of volatility to both sides.