Bitcoin

Bitcoin’s ‘Never Look Back’ Price Promises Steady Long-Term Gains

Emilio Janus | Oct 09, 2019 | 08:00

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Amongst the wide range of charts, models and tools to map and predict bitcoin price moves is one barely-noticed metric. But Timothy Peterson, of Cane Island Alternative Advisors, has just published an article championing Bitcoin’s ‘never look back’ price.

Bitcoin Passes A Point Of No Return

The concept of the ‘never look back’ (NLB) price is simple. For each given date of Bitcoin’s existence, plot the lowest price between that point and today.

So for instance, taking 19 July 2010 as a start date, the lowest recorded price since then has been $0.05, occurring on 25 July 2010. All dates from 19-25 July 2010 would be recorded as having an NLB price of $0.05, dates after 25 July would register as having a higher NLB price.

Clearly, this chart can only go in one direction, as by definition, the price ‘never looks back’ from an NLB price. However, the interesting thing is how uniform this chart is over the ten years of Bitcoin’s existence. In the following diagram, price is plotted on a logarithmic scale, and time is plotted as a square root. (This means that 10 on the horizontal scale actually refers to day 100, 20 to day 400, and 70 to day 4900 or 18 Dec 2023)

A Strong Trend But Not A Prediction

So this chart essentially flattens out any bullish action or artificially inflated bubbles of price, leaving us with an underlying lowest level price over time. It is similar to charting the yearly low price (instead of yearly highs), but doesn’t get reset each year so can’t go back down.

In many ways it is charting the increasing numbers of HODLers of last resort, those who will not sell bitcoin at any price. These include buy-and-hold investors, accumulators, and those who intend to transact in bitcoin over the longer-term. As Bitcoin adopters, this group provides a floor value to BTC price.

Of course, this is not a model per se, and cannot be used to make any kind of prediction as to the future price of bitcoin. NLB price cannot be extrapolated in advice, after all.

Any drop in bitcoin price will alter the historic chart; how far back depending on the level of the drop.

If the price drops below a former NLB price from five years ago, then the chart will be redrawn with a flat section for the last five years, and will not show such a uniform and strong trend.

But if growth in users, hash rate, and network strength continues to be strong, then this may continue to propel the NLB price ever higher with time.

What do you make of this new Bitcoin indicator? Add your thoughts below!

Images via Shutterstock, NLB chart by Cane Island Alternative Advisors