Bitcoin Market Bottom Prediction Using Crypto-ML Market Index
The Crypto-ML Market Index aggregates technical, social, and other sentiment data to help identify extreme conditions that lead to long-term trend reversals. The Market Index currently sits at -80 (rounded). We can use this reading and its context to give us insight into when the Bitcoin market may reverse and start moving back up.
The -80 indicates fairly extreme fear, but it also indicates the drop may not yet be over. We’re not yet to despair.
Based on past examples of the Market Index first crossing above +80 (extreme market exuberance) and then dropping down to -80 (our current level), we can estimate the following:
- The Market Index may quickly dip below -100 while Bitcoin stays above $20,000.
- In this case, Bitcoin may bottom between $22,931 and $26,701 before reversing back up.
- Bitcoin moves convincingly and more slowly below $22,000 but the Market Index does not cross below -100.
- This may signal a longer drawdown period lasting another 6 to 8 months until the Market Index fully drops below -100.
- In this case, Bitcoin may bottom out at around $13,822.
Important: Since there have only been a few large-market reversals in the past, it’s impossible to predict these events with certainty. The Market Index processes data that is commonly used to identify reversals across many asset classes. But these events are rare and unique, so stringent statistical analysis is limited.
March 29, 2018
This first drop is seen as Bitcoin descended from the highs of late 2017.
- March 29, 2018: Market Index crosses under -75 at BTC $7,219.
- April 10, 2018: Market Index of -91 at BTC $6,806 for a 6% drop before rebounding.
- Breakeven 2 days later on April 12, 2018. Market Index of -69 at BTC $7,883.
While the Market Index crossed below -80, it didn’t complete the cycle by going below -100. This led to a minor recovery followed by another drop.
November 21, 2018
This second drop signaled the true bottom of the 2018 cycle, with the Market Index dropping through -80 again and then extending beyond -100.
- November 20, 2018: Market Index crosses under -76 at BTC $4,359.
- December 15, 2018: Market Index of -129 at BTC $3,183 for a 27% drop before rebounding.
- Breakeven 4.5 months later on April 2, 2019. Market Index of +24 at BTC $4,829.
March 12, 2020
The third time the Market Index dropped past -80 was during the COVID crash. Here, the Market Index did push through -100 as well.
- March 12, 2020: Market Index crosses under -75 at BTC $5,798.
- March 16, 2020: Market Index of -108 at BTC $4,936 for a 15% drop before rebounding.
- Breakeven just 7 days later on April 19, 2020. Market Index of -71 at BTC $6,300.
June 21, 2021
Finally, we reach our current point.
- June 21, 2021: Market Index crosses under -79 at BTC $31,413.
- Resolution is to-be-determined.
Visualized, these drops look like this:
- If the Market Index crosses below -100, you may consider accumulating Bitcoin.
- If the Market Index moves back up but stays negative, we may be in for a longer-term bear market. Consider Dollar-Cost-Averaging while the Market Index is negative.
- Bitcoin may be in dangerous and choppy territory until the Market Index moves back positive.
- Consider reducing trade amounts to limit risk.