Market Data 
Markets
Replies to post #908 on ~ The Saloon ~ Crypto & Stocks ~
How To View The Chart
The key principle of this tool is in the ratio between market cap and Bitcoin investors taking profit.
When market cap rises much faster than profit taking we see that the market is overheating, one could say due to investor greed (red band). For the strategic investor such times have historically been favourable to take profit.
We can break down different percentages of Bitcoin Relative Unrealized Profit/Loss to determine what stage of the market we are in. This can be advantageous for the long term strategic investor.
That looks extremely different. Now it is very clear that the price of bitcoin has been on a constant rally since its inception in 2010. It was trading at $10 around May 2011, it took then 2 years to reached $100 (that’s a 1000% increase in 2 years), and later in 2013 it was trading at $1000 dollars for the first time ever.
Moreover, we can clearly see 3 waves when the price touched the upper yellow line, reaching a critical level and crashing later. For example, after the peak of $1000 in 2013, it took almost 3 years for the price to reach that level again (talk about bag holders!). Importantly, even after crashing, the price of Bitcoin was still higher than before the wave started! For all three waves this is true.
Traders of the Stock market find patterns on the price charts and use them as a guide to know when to enter or exit a trade. Some of those patterns are pretty much lines on top of the stock price charts, representing summary statistics of the data, from which traders then make up “rules”. For example: “If the price touches the 50 day moving average, but it is above the 200 day moving average AND the RSI statistic is less than 40: enter the position”. Importantly, these “rules” or strategies (aka technical analysis) do work to some extent precisely because we are all drawing the same lines, and expecting the same patterns! So when the stock price reaches our imaginary lines, we all buy the stock and the price goes up from there. Therefore, patterns on price charts work as self-fulfilling prophecies, because we make them happen.
When we put Bitcoin on perspective (using the log axis), the 2017 peak and the current rally seem to be part of a consistent pattern that goes all the way to the inception of bitcoin! The yellow lines perfectly fit the price history, and the red lines indicate when Bitcoin breakouts from the previous high. It seems that Bitcoin traders are looking at those lines, because as soon as the price hits critical levels, things happen.
