The host of CNBC’s Crypto Trader show, Ran NeuNer, has a chat with the experienced commodities broker, Peter Brandt, who became best known as being one of the first who accurately predicted the end of the bull run in December 2017.
The 71-year-old veteran trader, Peter Brandt, predicted that the December 2017 speculation bubble around Bitcoins price was too large and would soon burst, causing the asset to lose more than 80% of its value.
When the bull run was at its all-time-high Peter Brandt tweeted this to his almost 250K twitter followers:
‘General TA rule — a violation of parabolic advance leads to 80%+ decline in value. If general rule is followed, BTC should retrace to <$4,000. Note: This Tweet does not make me a hater’
‘I’ve seen that sort of thing take place so many times in the past and they always end the same, prices always fall 80% to 90%’, he said.
Brandt turned out to be spot on with his predictions, both at the end of January and ever since.
Not only did he call the bear market for Bitcoin, he was as well correct in calling Ethereum to $120, while everyone else thought this was impossible.
NeuNer asks Peter Brandt how he feels about the TA crypto charts that appear all over social media.
Well, he says, it is mainly fairydust, it is not real technical analysis, it is ‘make-believe’.
‘What I see are a bunch of charts that are posted that in no way reflect the old, tried and true principles of TA. People are reinventing TA, just to fit their own personalities and their own bets and pre-assumptions’
‘They frankly look like maps to an outer galaxy. They look like Star Wars maps’
Brandt says that technical analysis historically deals with what the market is telling us right now, relative to what happens next. These charts on social media are not based on anything Brandt would consider to be classical charting principles.
‘I look at these charts and ask myself, where do these people get this stuff? It is based on people’s hopes and dreams and that’s about it’
Read more: Peter Brandt on Bitcoin: ‘I know for a fact strong hands are buying’
NeuNer goes on to ask Brandt how come he had such a series of correct predictions on crypto Twitter last year, and what he is doing that others aren’t.
Brandt replies by saying that he thinks he is standing in the ‘here and now’.
‘You don’t do technical analysis based on presuppositions. You do it based on what the market is offering you as facts.’
‘Where is the bloodtrail leading you? You follow the bloodtrail in the snow.’
Brandt claims he tries to stay in the present and stay grounded in what the market is telling him now.
Read more: Will Bitcoin replace fiat money?
He further explains that predicting the end of the bull run in December 2017 was an easy one.
‘I look at Bitcoin, and Bitcoin has been through a series of historical phases. The last one being of course the parabolic advance that we had in 2016-2017.’
Brandt says that it is rare for a market to have a parabolic advance.
‘So when that parabolic advance was broken, it was an easy call to say Bitcoin is going down 80%.
In December 2018 Brandt predicted that there will be another massive drop. This new low will be a major test both for the industry.
Mr. Brandt expects this drop to stabilize at around the 1200 price range, undoubtedly testing the resolve of even the most committed of crypto fans.
‘Crypto won’t have any friends at that point. Even the crypto die-hards might start to think they are done with it’, he said.
Crypto Money Managers Unleash Social Media Algos to Predict Bitcoin Volatility
Money managers are hungry for yield. Crypto continues to outperform just about any other asset class making this nascent market a hot-bed for alternative prediction solutions. And social media algos are front and centre of that speculation.
Cryptocurrency prices, like foreign exchange, are largely decentralized providing plenty of opportunities for smart programmers to profit from the difference. But can those same programmers hone their craft to take advantage of a new form of opportunity, social media sentiment analysis? Some seem to think so.
Funds Head-Hunting Algo Programmers At Alarming Rates
Sentiment analysis is not particularly new, but crypto is. And retail investors don’t hang out in private meeting rooms and exclusive restaurants. They hang out on Twitter and a whole host of other digital mediums. Good-quality programmers who can tap this diamond mine are in high demand.
One report revealed that the number of blockchain job postings has soared to 4,086%since 2019. The large majority of those likely data-driven roles. According to PricewaterhouseCoopers, quantitative crypto funds significantly outperform their peers’ thanks to the analysis of online crypto chatter.
Coders with machine learning skills are particularly highly sought after. One Taiwan-based expert even used crowdsourcing to build an analysis algorithm. Mark Howard explains:
“It’s pretty hot right now, any fund that’s worth their salt, they are devoting some of their resources and allocation for sentiment analysis.”
Fake News and Paid Views
If you were thinking about jumping on the bandwagon, realize that sentiment analysis is not the holy grail of all crypto predictive analysis. At least not yet. Platforms like Twitter, Facebook, and Reddit are still plagued with bag-holders and marketers looking for every chance to punt their own coins.
BitSpread, a blockchain asset management advisory in London has built its own social media algo but warns of the dangers. In an interview with Reuters, CEO Cedric Jeanson explained:
“The sentiment itself, what we see on Twitter, can be really geared toward fake news. We are always very cautious about what we’re reading in the news because, most of the time, we’ve seen that there’s a bias.”
Scraping the most relevant data is no easy task. Indeed, getting an accurate picture of what people are trading compared to what they are saying is tricky. Part of Bitspread’s algorithm focuses on cryptocurrency exchange posts that highlight trading positions. Similar to this:
Retail Interest Not Catching up in This Crypto Bull Run
The jury is still out on how successful this approach will be. Despite Facebook’s Libra recently surpassing Bitcoin on crypto Twitter, the latest Google Trends data is not very encouraging.
While Google search interest for Bitcoin was at its highest 2019 level in June, it’s still well off the 2017 highs. Meanwhile, the price has rallied to $14 000, not far from its all-time highs. The data suggests that retail investors may not be driving this bull run as in previous years.
That could ultimately put a spanner in the works for crypto social media algos considering that institutional investors are highly unlikely to post their trades via social media. Either way, it’s early days and the volatility afforded by Bitcoin still offers potential lucrative gains.
Bitcoin Correction to $9,500 Could Be Followed by 20% Drop: Analyst
Bitcoin (BTC) has been absolutely slammed over the past week. Since passing above $13,000 for the second time this year last Wednesday, the crypto has been on a clearly downward-sloping trend.
In fact, as of the time of writing this article, Bitcoin has lost 25% in the past week, falling to as low as $9,300.
Despite the fact that optimists are expecting for bulls to experience some form of short-term reprieve, historical trends and other key indicators predict a further unwinding of the cryptocurrency bull market.
Bitcoin Poised to Hit $7,500
Conceptualized by Trace Mayer, an early Bitcoin investor and funder of Kraken, the Mayer Multiple is a way of determining if BTC is either overbought, fairly valued, or oversold. It is calculated by putting the asset’s current price over its 200-day moving average.
Per an analysis of this indicator (currently sits at 1.6) by CryptoKea, a little-known analyst that accurately called the recent drop to at least $9,700 earlier this month, if you consider the Multiple, the ongoing correction looks much like the first “major correction” of 2017’s bull run.
He notes that if history repeats itself and Bitcoin reverses out of its current short-term bearish trend like it did in 2012 and 2017, it could find support anywhere from $7,148 to $8,700. This corresponds to 1.20 times to 1.46 times of the 200-day moving average, which currently sits at $5,957.
Most likely, however, Kea notes that the “most probable target” as per the use of the Mayer Multiple will be $7,505 — another 20% drop from the current Bitcoin price of $9,600.
This somewhat lines up with the target of $8,000 that other analysts hold. Per previous reports from NewsBTC, Timothy Peterson, a prominent American crypto fund manager, notes that Bitcoin’s current active account figure suggests that BTC is overvalued.
According to Peterson’s model, which takes a 30-day median (as of July 13th) of the number of active accounts on the Bitcoin blockchain, BTC currently has a fair valuation of just above $8,000.
In a tweet issued on Saturday, Josh Rager, a prominent technical analyst and cryptocurrency commentator, looked to this same level. View image on Twitter
Rager notes that a “confluence” of chart data and on-chain data suggests that a pullback “would likely bottom out at $8,000”. As he explained in the chart above, $8,000 acted as a key horizontal support and resistance level in the recent rally and 2018’s crash.
What’s more, there is also a CME Bitcoin futures gap around $8,500, which is one of the last gaps waiting to be filled.
And as Alfonso Esparza, senior market analyst at Oanda Corp, recently told Bloomberg: “[Bitcoin] continues to trade lower as comments from President Trump put downward pressure on the cryptocurrency. It could fall further to $8,000, giving back all the gains made in June.”
Drop Might be Over?
Despite this, one analyst believes that the drop is most likely over. In fact, he drew attention to almost five signs why this may very well be the case, even if it sounds crazy.
Firstly, the one-day Relative Strength Index (RSI) and the Stochastic iteration of this indicator are at their lowest levels since at least February, entering the “oversold” range. The one-day Moving Average Convergence Divergence (MACD) has tapped the zero level, despite the fact that Bitcoin is in a raging bull market according to most analysis.
Also, the Elder’s Forse Index, an indicator meant to exhibit the strength of moves, is at its lowest since November 2018; and historical volatility is almost at 100%, implying a move to the upside to return volatility to levels deemed normal.
Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April
Bitcoin’s average transaction volume is topping $3 billion per day, data from crypto analytics site Coinmetrics.io reveals as of July 16.
Bitcoin’s Uptrend in Daily Transaction Value Eclipsing Altcoins’
The data — which has been adjusted to remove noise and certain artifacts, per Coinmetrics — shows an impressive uptrend in the USD value for the volume of the coin’s transactions and transfers over the past 90 days.
On April 17, the average daily value was at $1.04 billion as compared with $3.22 billion on July 16, an almost 210% increase.
The top coin has seen a significantly higher spike in volume as compared with ether (ETH), which saw a 77% increase over the same time period — from a daily average of $370 million to $657 million. XRP has seen a still milder uptrend, at 61% — with the value of daily transactions climbing from $152.5 million in mid-April to $245.6 in mid-July.
3-month chart for BTC transactions, transfers, value, adjusted, in USD. Source: Coinmetrics.io
Bitcoin broke the $3 billion daily average mark on July 11, Coinmetrics’ data shows, when the coin was circling the $11,500 price point. Despite trading roughly $2,000 lower as of today — having taken a steep 11.4% hit on the day and over 24% on the week — average daily transaction value has continued to climb.
Commentators have today argued that the coin’s short-term downtrend was triggered by an antagonistic response from the United States government to Facebook’s Libra coin, which has extended to the cryptocurrency space more broadly.
Veteran trader Peter Brandt anticipates that total market cap could now correct by as much as 80% — yet argues that most of the damage will be shouldered by altcoins, not Bitcoin.
On July 7, Cointelegraph reported that Bitcoin’s hash rate had hit a new all-time high of 65.87 EH/s. Nevertheless, despite the week’s price fluctuations, this figure has continued to soar north, reaching almost 73 EH/s to press time.