As I described in InvestBasics#3 Narrative it is important to follow the narrative of any investment. Bitcoin is especially interesting in that aspect.
Update: I can recommend checking out this S2F Model with live data for Bitcoin: Digitalik
Bitcoin Cycles
Until now halvings of the block rewards to the miners have been a great leading indicator for 12-18 months of a new bitcoin bull market.
To illustrate, on the day of the first halving in November 2012, the price of one Bitcoin was about $11.50. Over the next 12 months, the price of Bitcoin rose to $270 in late April 2013.
Mitchell Koulouris via Medium
Read a more detailed and great post on bitcoin cycles here by Mitchell Koulouris.
Bitcoins Narrative Change
BTC narratives seem very continuous in the chart. However, if we combine the narratives with financial milestones they look very much like phases with more abrupt transitions:
- “Proof of concept” -> after Bitcoin white paper [5]
- “Payments” -> after USD parity (1BTC = $1)
- “E-Gold” -> after 1st halving, almost gold parity (1BTC = 1 ounce of gold)
- “Financial asset” -> after 2nd halving ($1B transactions per day milestone, legal clarity in Japan and Australia, futures markets at CME and Bakkt)
Read a more detailed and great post on that topic here by Nic Carter.
Also, Robert J. Shiller reviews Bitcoins narrative in a historic perspective of other narratives: “Economic Narratives”. Which I can highly recommend.
