Crypto currencies have been through the dust over the past year and have been moving sideways for quite some time now. What will Bitcoin do? And, what can we expect from the rest of the crypto market?
Predicting the Bitcoin price is a hot topic on social media, but how seriously can you take these predictions? We asked crypto investor and analyst René of René Today. On his website renetoday.nl, he shares several interesting charts that take a stab at the future price of various cryptocurrencies.
René, can you briefly introduce yourself and your website?
Of course. My name is René and I have been analyzing consumer behavior for decades. In the beginning from my employment at various media companies and since 2018 as an entrepreneur. Investing in crypto currencies also piqued my interest around that year.
Although I was active with stocks before that, cryptocurrencies appealed to me because of the price-earnings driven by pure emotion. Fundamental values, such as margins and profits, as we know them in companies, play a smaller role in crypto currencies. Investor behavior and emotions are leading and I find fascinating to explore. I share my experience with crypto investing on my crypto website renetoday.nl. From the basics to some more in-depth articles on crypto expectations.
What do you think drives crypto expectations?
The biggest price drivers are the “crypto whales. These are people who own 1,000 BTC or more. According to crypto research firm Glassnode is about 45% of all Bitcoins are currently traded by this group, meaning they have a big influence on the price. These large accounts go through so-called accumulation and distribution phases, buying in phases during a prolonged decline (bear market) and selling in phases during a prolonged rise (bull market). This is the opposite of what most retail investors do.
How does emotion play a role in this?
The ironic thing is that, in my opinion, there is little emotion involved in crypto whales. After all, these go through a predetermined systematic process and rely on their strategy. Their strategy relies on pent up emotions among retail investors. Individuals sell in times of fear (when whales buy) and buy in times of euphoria (when whales sell). Their emotion can thus be seen as the fuel that keeps the crypto whales strategy running. This strategy is decades old and is also known as “The Wyckoff Method. You can Google this one.
How can we see this sentiment reflected on your website?
Investor sentiment is reflected on social media channels such as Twitter, Reddit, Stocktwits, etc. There are tools that track and classify the words in the conversations on these channels. If words such as ‘going up, bullish, time for a bounce, buy the dip,’ etc. are increasingly used, then sentiment is labeled as positive. Do words like ‘crash, dump, bearish,’ etc, become more common, then sentiment becomes negative.
I published the changes in sentiment on the Bitcoin price forecast page. In that graph you can also see if the volume of conversation is increasing or decreasing. Interestingly, sentiment often turns positive again at the bottom of a trend channel in which Bitcoin moves. This then regularly results in a short-lived rally I have noticed.
What about concrete Bitcoin price predictions?
The Internet is flooded almost daily with new price predictions and almost everyone says something slightly different. Since no one can predict the future, I thought I would instead collect as many public data sources as possible and plot them out in one graph, with the goal of trying to recognize the similarities. You can also see this graph on that Bitcoin forecast page.
I try to use at least 5 sources and overlay them in that graph. In doing so, I’ve also drawn an average line and a 5% percentage deviation so you have an idea of how far apart the forecasts are. Finally, I added a light yellow trend line to get an idea of the average consensus. Finding similarities in price expectations can be an indication of an upcoming upward or downward trend.
What are these price expectations based on?
Most short-term expectations assume a technical analysis of the Bitcoin price chart. But, not every technical analyst works the same way. Some use only trend, support and resistance lines. Others rely only on Elliott Wave patterns combined with Fibonacci lines. This creates the differences in forecasts. Elliott Wave users in particular still sometimes predict that a final “wave” will go higher or lower. That said, fundamentally there is of course a lot at play. Positive and negative news about Bitcoin can also affect the price. In my long-term chart (through 2030), you’ll notice that the main issue is the expected fundamental value of Bitcoin.
How do you see Bitcoin’s fundamental value and price?
Bitcoin stands for (revolutionary) technology and is traded as a tech stock by major investors for that reason. You can see this in how Bitcoin follows the price of the Nasdaq 100 one-on-one. In the short term, Bitcoin, like the Nasdaq 100, suffers from the world’s uncertainties (high inflation, war, etc.). But, Bitcoin as a financial asset I still see differently from the shares of (successful) companies.
The stock of a profitable publicly traded company will not fall to zero so quickly. Bitcoin, on the other hand, has not yet been recognized globally by major (Western) governments as a fundamentally valuable asset. China has even banned it. As a result, there is always a chance that the crypto currency will eventually be declared worthless by them. I’m not saying this will happen, but because of this present chance, crypto whales will always remain skeptical I think. For this reason, I think the upward push of The Wyckoff Method is no guarantee with Bitcoin until acceptance (and regulation) by governments is there.
Are there other factors that affect Bitcoin’s “success”?
Yes, one of the most important is the worldwide practical adoption of Bitcoin as a means of payment; the original purpose of Bitcoin. While people in corrupt or war-ravaged countries are happy to choose Bitcoin, this is not yet true for the major “stable” countries. The exchange rate is currently too volatile to provide security as an alternative to fiat money, and transactions are too slow. The volatility comes from the huge levers used on certain crypto exchanges.
The slow transactions come from the weak adoption of Bitcoin’s Lighting Network. The Bitcoin community is doing far too little self-promotion to market this second network layer. I also heard this concern echoed in a panel at the Bitcoin Conference Amsterdam 2022. It is time for Bitcoin maximalists to come out of their bubble and actively promote Bitcoin’s applications and goals to the general public. Only then will we get the network effect needed for Bitcoin to succeed globally. Just like people once started to see the usefulness of Facebook and Amazon and everyone started using it.
René, thank you! Where can people find out more about you?
Thank you also for this interview. People can read my articles on my website renetoday.nl. Here you can find how-to articles for beginners, as well as the comprehensive tables and charts to understand more about crypto currencies.
