While this article is no different from many bitcoin price prediction articles, this is a different one. The underlying reason for bitcoin to reach $28,000 by November 1, 2020, is based on historical data, not just an analyst’s estimate.
Bitcoin’s volatility is a well – known aspect of the asset, and the high level of this aspect is what prevents it from becoming a daily exchange/unit of account, or in simple terms-money. Arguing that bitcoin’s robustness is for another day, but what matters is this historical data that shows an average bitcoin return of 196% after a certain condition is met.
There are “pent-up pockets,” representing a 15% to 30% drop in Bitcoin volatility, according to Kraken‘s August volatility report. As seen below, the pocket extends between the red lines.
To date, bitcoin hits these pockets only 12 times, and every time bitcoin enters these pockets, it returns to the average, which is the 315-day moving average. In other words, once you get into those pockets, volatility has seen an average increase of 140%.
What is interesting is the price application of this volatility suppression and eventual expansion. Over the next 90 days, the price increased by an average of 196%.
In two separate cases – 2014 and 2018, yields were-60% and-45%, so there is an 83% chance that the price will increase by 196%. Given that the last drop in the pocket was July 24, 2020, and the increase at the time of writing was only 4.36%, there is a lot of upside for Bitcoin.
The 196% increase from July 24 should put bitcoin in the $ 28,000 to $ 30,000 range over the next 90 days and October 22, 2020. This means that Bitcoin needs to rise 4.2% each day to reach its ~ $30,000 target.
A realistic goal?
Although it is an unrelated entity, Bitcoin is affected by what is happening in the US. The BTC is inversely proportional to the dollar index and is in line with the Dow Jones. As long as this link/correlation exists, it is potentially bad for Bitcoin. Other than that, Bitcoin has no problem getting an average daily return of 4.26%.
While September’s prices have been gloomy as they are currently close to $9,000 to $12,000, it looks realistic, especially given the hype around DeFi.
