A Hypothesis For A Bitcoin ‘Triple Top’ In 2021

From sovereign wealth funds jumping in, to multiple Bitcoin ETFs in the works, there is a growing sense something important is going on and that perhaps mainstream adoption is just around the corner.

There is so much to focus on out there but you only need to look at a couple of key market data points to see that bets are being placed on a big fundamental global shift to crypto.

From sky high open-interest in the derivative markets and positive perpetual swap funding rates. Both showing strong long conviction and pent up demand which is imminently likely going to continue pushing prices higher.

Pent up demand signal through higher and higher future open interest rates on all major crypto derivatives platforms.

There is also undeniable on chain evidence that massive quantities of BTC are migrating away from exchanges into deep freeze, likely never to hit the open market again. This will likely lead to a real supply shortage, hence why professional traders in the futures markets are feverishly long right now.

A growing cohort of traders are looking at the historical charts and comparing the double pump that happened in 2013 as a scenario or something like it could play out again.

2013 saw prices jump from $10 to $260 only to drop -70% like a stone. It then suddenly recovered to $1,000.

Chalk it up to love for round numbers, and/or the human inability to quantify large numbers but the double pump was significant because most people sold, believing it was the apex of bitcoin.

And for many they weren’t wrong, BTC did go back down again -80%, but the take away from the double pump cycle was that it made people speculate that even higher prices just might be sustainable.

Today, speculation on the street is that something very similar is happening now in 2021, a persistent price continuation cycle where each retracement at key psychologically ‘large’ round prices will be quickly sold, only to be bought up again, with the help of institutional investors this time.

This narrative does have merit and proof from big names like Goldmen and Blackrock are clearly signaling everyones worth their salt in finance is going to have to have a crypto strategy now. AKA BTC strategy.

Quenching this insatiable appetite for bitcoin will prove challenging, as this time the new supply as well as circulating supply is extremely limited ever since the last Bitcoin halving event in mid 2020.

For many, the last halving was the first time they ever heard of such a thing. That there was a strict rule of supply and so many begun building scenarios and models based on this fact.

If we strictly follow supply and demand models such as the stock-to-flow model which is a system that takes into account BTC in circulations vs new BTC yet to be circulated (flow) then prices of $500,000 per bitcoin are not unreasonable, this article makes the case for that price in wave 2 part of this article.

The stock-to-flow model first started making the rounds 2 year ago, made famous by anonymous dutchmen.

PlanB gathering over 50,000 votes on the likely scenarios for 2021 on twitter.

The model matters because it shows that there isn’t enough newly minted BTC coming online to fulfill global demand and so this demand will inevitably have to be reflected in cycles of higher and higher prices.

But this begs the question, where are we in the cycle?

There is strong evidence to suggest that we are indeed experiencing something similar to 2013 but since history does not repeat exactly we should expect some surprises.

Above illustrates, in yellow the last continuous bull market pattern scenario where the chart looks almost like there was no bear market due to rapid recovery in prices.

The hypothesis for 2021 is that bitcoin will continue to be bought up rapidly and will form a triple top. It will come in 3 waves with different macro market dynamics.

What will influence this and what is the anatomy of this mega triple wave? Read on for the in depth analysis.

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