- Bitcoin registers daily high so far at USD 9,784
- Stock-to-flow price prediction model creator says Bitcoiners can’t afford to ignore dollar cost averaging that brings 70% returns in three years
- Analysts in Bloomberg believe the current USD 20,000 all-time high of Bitcoin will be visited this year
Bitcoin markets looked to have gathered back its mojo today, climbing ever so higher to record a high so far of USD 9,784 (CoinDesk) in midday trading North American time.
And on the ack of this, PlanB, the Twitter influencer who created the very popular Bitcoin price prediction model of stock-to-flow (S2F), has said that if a person buys Bitcoin regularly at fixed periods, the price fluctuations in between does not matter, since long term, profit has historically been achieved.
This method of buying Bitcoin at whatever price it is on a fixed interval is known as dollar cost averaging. Whatever you think of PlanB’s S2F, he does show that even short-term dollar cost averaging reaps the rewards, with an example of a three-year process giving a 70% net profits.
Starting on a sliding scale of increasing investment through 2017, before pausing in 2018, and then applying the opposite process through 2019, resulted in a 70% yield, something he said investors would do well to take heed of.
IMO investors cannot ignore this. If you dollar cost average into #bitcoin for 12 months, then wait 12 months, and then DCA out 12 months, this chart shows your return (investment=1). So DCA in 2017, wait 2018, DCA out 2019 yields 1.7 or +70% return.
68% >2 pic.twitter.com/ammCATAaVp
— PlanB 🔴 (@100trillionUSD) June 3, 2020
And it’s never too late apparently, as he said that overall historical profitability for Bitcoin didn’t affect the odds for profit. He explained:
“It doesn’t really matter much because the (historical) odds are 9 to 1 that you earn a positive return.”
The goal of this investment strategy is to avoid exposing investors to market swings, and in Bitcoin such volatility is common. This year alone saw Bitcoin hit its highest month of volatility in March, levels not seen since January 2014. Bitcoin’s attractiveness lies in its long term appreciation of dollar value, with quarterly returns for Bitcoin in Q2 already 50% this year, dwarfing that of gold (7.2%) and the S&P 500’s (20.8%). Today, year-on-year, Bitcoin is still giving over 35% returns even after the slip from yesterday.
Traditional analysts are also hot and heavy for Bitcoin.
This time, several analysts from Bloomberg have eagerly joined the throng of bullish commentators, in saying that the current all-time high of Bitcoin of USD 20,000 is about to be touched again this year.
Basing this prediction on the price action over the past two and a half years, they say that Bitcoin’s move now looks very similar to a similar timeframe that took place before its December 2013 run up which also saw the digital asset break a new price record. Bloomberg Crypto wrote:
“After 2014’s 60% decline, by the end of 2016 the crypto matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018. Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”
When looking at the Bloomberg Galaxy Crypto Index (BGCI), its own basket of crypto holdings, the report notes that 2020 has been a year of increasingly favorable technical and fundamental indicators for the world’s largest digital asset by market capitalization, but that full-on sentiment is less pronounced for the rest of the crypto market.
It does remind that Bitcoin ended last year at just about USD 7,000, which they believe was near its range bottom, suggesting a shift upwards, especially since the year’s high was at USD 14,000. This year, if rotating within the recent band, could see the same forces that have been propping up gold now turn to support Bitcoin. It summarizes:
“Adoption, by default, is the primary Bitcoin metric, and our indicators remain positive. The March swoon was a key test, which Bitcoin easily passed. At about the same level as the Nasdaq since 2017, Bitcoin at about $10,000 is gaining the advantage, with the lowest relative volatility ever.”
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