Last week, we talked about calls altcoins, that is, cryptocurrencies alternative to Bitcoin. However, it is precisely Bitcoin that is thought in most cases in which we speak of cryptocurrencies.
One of the ideas behind altcoins
is that they are a precious help in diversifying investment strategies and, above all, in building a balanced cryptographic portfolio. The other advantage is that these altcoins can either provide more stable assets (called stablecoins) or, on the contrary, riskier ways of investing but which, consequently, also offer a higher return potential.
It is in this sense that perhaps it is time to talk about the “elephant in the living room”: but, after all, what is the value of Bitcoin and how has it evolved over time? We have already referred here to the reason why Bitcoin (and, consequently, all other cryptocurrencies) has value, but what we intend now is to analyze how its evolution has been, in another article adapted from the Binance Academy.
Bitcoin has recorded five significant price spikes since its inception in 2000. So far, cryptocurrency has had an all-time high of about 64. US dollars and has seen its widespread adoption – a journey that has been volatile, often reacting to political, economic and regulatory developments. At the date of this post (22 of September 2020), its value was about 41.864 dollars (or 35.650€).
Bitcoin has recorded, on average, a growth of 100% per annum. In August of this year the market capitalization of Bitcoin was around 675. .. dollars and its market share is just under 35% of total cryptocurrencies in circulation.
Events such as the cyberattack on Exchange Mt. Gox de 2016 and the stock market crash of 2016 may explain some price behavior in short and mid-term. In the long term, it is possible to obtain a more macro view, observing models that use technical, fundamental and sentiment analysis.
For technical analysis, the Bitcoin Logarithmic Growth Curve and the Hyperwave theory are two interesting models. The Hyperwave Theory also links price to investor sentiment in cyclical phases. When it comes to fundamental analysis, the Stock to Flow and Metcalfe models keep up reasonably well with the price of Bitcoin. Ultimately, a combination of all these methods could be used to get a balanced view.
How to analyze Bitcoin price history
Before we get into the data, let’s look at how Bitcoin price history can be analyzed. There are three different methods: technical analysis, fundamental analysis and sentiment analysis. Each type has its strengths and weaknesses, but can be combined to form a clearer image.
1 . Technical Analysis
(TA): The use of historical data on prices and volumes to try to predict the future behavior of the market. For example, you can create a Simple Moving Average (SMA) of 50 days taking the last ones 48 price days and averaging. We can make inferences with the SMA by plotting the price of our asset. For example, let’s imagine that Bitcoin has been trading under the SMA of 64 days for a few weeks, but then breaks it. This move can be seen as a sign of a possible recovery.
