What's a normal price channel ?
I define the normal price channel as a funnel where the price is considered fair or normal, nor overpriced or underpriced.
This channel shows the consolidated growth of a pair. It's a heir of the Bollinger Bands Indicator, which shows if the price is under or overpriced. With this channel we are not focused on the price movements but on the growth of value of the pair, assuming that everything traded not the markets tends to gain value in time.
The boundaries of this channel must be parallel trend lines. The width of the funnel is so constant, not exponential. The starting point of the trend lines are the last maximum or Historic Higher High before the an hyper surge of the price, this can also depends by social-economical factors. The lower band starts from the minimum, the Lowest Lower Low after the the HHH.
This is what I consider Normal Price Channel.
But, does BTC has a NPC ?
Commodities and Fiat can have a normal channel, considering the economic factor and policies adopted by Central Banks and government which lead to an increase of the prices overtime even for cyclical pairs.
Nowadays, cryptos are compared to fiat, "common money" , and commodities. The volatility and media influencing of the crypto market makes most of the tokens too fluid and active to have, for now, a normal channel.
On the other ends, the new legal developments of the past weeks, especially with the institutional approval fo ETFs on bitcoin and Ethereum, bring the consideration of the two main characters of this market, from coin to commodities. This can open a window to set the NPC.
The issue now is about the trend lines starting point. Since the funnel must show the "normal" growth of the price, these points should be set depending on fundamental milestone for the pair or commodity, financial and legal evolutions such as laws and regulations, and social dynamics. The last higher and lower which have set new parameters for the price.
Considering Bitcoin, the upper level should be set on the 2018 peak.
The lower point is the minimum after the HHH, so the crypto winter LL of 2019.
The choice of these points are strongly related with the 2016 halving. It was the last halving before the high hyper bubbles, which makes the last two halvings inapplicable. On the other hand, the 2012 halving is not in line with the period, not applicable due economic and financial dynamics of the last ten years. Setting the 2012 halving as normal price range would create a too narrow channel, useless today.
Setting the correct starting points is crucial. The motivations behind these two points are the followings
• Upper Bound : if set following the HHH so the bubbles of 2021, would be hyper priced and not useful for the analysis. If set before, so the peak in 2013, it would be underpriced and not pertinent with the economic and financial evolution of the time.
• Lower Bound: if set has a minimum before the HH, that LL would be coherent with the period and so useless for the analysis.
Right now, this theory is on draft and on backtesting. The aim is to find a channel where the price can be considered consolidated. The project are open to hear new ideas from anyone
I define the normal price channel as a funnel where the price is considered fair or normal, nor overpriced or underpriced.
This channel shows the consolidated growth of a pair. It's a heir of the Bollinger Bands Indicator, which shows if the price is under or overpriced. With this channel we are not focused on the price movements but on the growth of value of the pair, assuming that everything traded not the markets tends to gain value in time.
The boundaries of this channel must be parallel trend lines. The width of the funnel is so constant, not exponential. The starting point of the trend lines are the last maximum or Historic Higher High before the an hyper surge of the price, this can also depends by social-economical factors. The lower band starts from the minimum, the Lowest Lower Low after the the HHH.
This is what I consider Normal Price Channel.
But, does BTC has a NPC ?
Commodities and Fiat can have a normal channel, considering the economic factor and policies adopted by Central Banks and government which lead to an increase of the prices overtime even for cyclical pairs.
Nowadays, cryptos are compared to fiat, "common money" , and commodities. The volatility and media influencing of the crypto market makes most of the tokens too fluid and active to have, for now, a normal channel.
On the other ends, the new legal developments of the past weeks, especially with the institutional approval fo ETFs on bitcoin and Ethereum, bring the consideration of the two main characters of this market, from coin to commodities. This can open a window to set the NPC.
The issue now is about the trend lines starting point. Since the funnel must show the "normal" growth of the price, these points should be set depending on fundamental milestone for the pair or commodity, financial and legal evolutions such as laws and regulations, and social dynamics. The last higher and lower which have set new parameters for the price.
Considering Bitcoin, the upper level should be set on the 2018 peak.
The lower point is the minimum after the HHH, so the crypto winter LL of 2019.
The choice of these points are strongly related with the 2016 halving. It was the last halving before the high hyper bubbles, which makes the last two halvings inapplicable. On the other hand, the 2012 halving is not in line with the period, not applicable due economic and financial dynamics of the last ten years. Setting the 2012 halving as normal price range would create a too narrow channel, useless today.
Setting the correct starting points is crucial. The motivations behind these two points are the followings
• Upper Bound : if set following the HHH so the bubbles of 2021, would be hyper priced and not useful for the analysis. If set before, so the peak in 2013, it would be underpriced and not pertinent with the economic and financial evolution of the time.
• Lower Bound: if set has a minimum before the HH, that LL would be coherent with the period and so useless for the analysis.
Right now, this theory is on draft and on backtesting. The aim is to find a channel where the price can be considered consolidated. The project are open to hear new ideas from anyone