In this episode of NewsBTC’s daily technical analysis video, we examine major bitcoin price troughs with the Hearst Cycle Theory and cyclical tools to consider whether a bottom could be headed and if another bubble is coming.
Take a look at the video below:
Video: Bitcoin Price Analysis (BTCUSD): November 7, 2022
Bitcoin Cyclic Behavior Analyzed
To aid in visual analysis, each bitcoin halving is included. Halting has been a widely discussed driver of internal supply and demand mechanics. We know that bitcoin goes down blindly before each halving. The log growth curve has also been included for visual aid.
The next step is to turn on the spectrogram. a spectrogram A visual heatmap of the spectrum of a signal’s frequencies as it varies over time. The more green the heat, the more intense the intensity. Conversely, the higher the violet heat on the map, the greater the intensity of the recession, and this is where we look for a cyclic plane. Within each purple region we will find our cyclic trough for the major cycle phasing.
Is a new Bitcoin cycle about to begin? | Source: BTCUSD on TradingView.com
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Why this bear market felt so extreme
The next step would be to confirm the major cycle by eliminating any harmonics. According to Hearst Cycle Theory, in cycles the harmonics come in two and three. Essentially, from each major trough to trough, there should be one to two mid-cycle dips.
Not only does defining mid-cycle harmonics help confirm major cycle phasing, but it also helps prove Hurst cycle theory accurate. Note that cyclical troughs occur in tandem to the downside, while the sum theory explains why the recent selloff felt so long and extreme – it was the sum of a large overall wave and a smaller harmonic wave.
Why BTC is ready for another bubble cycle
The final step is completing the phasing. For additional confirmation, the Fisher Transform is used, which helps to pinpoint exact turning points in the markets as well as the Stochastic RSI. In this system, the Fischer Transform highlights a potential turning point, while the Stoch RSI is rising from oversold levels, confirming a new bull run.