The total market cap of the crypto market is usually tried to be explained through the Bitcoin price chart. Many models have become established in this field. The most famous of these models, the stock-to-flow model, predicts the price of Bitcoin based on the halving dates of Bitcoin emission. You can access the main models explaining the historical prices of Bitcoin via the link https://www.lookintobitcoin.com/charts/. Below is the model that I like the most.
In this model, where the Bitcoin price is shown on a logarithmic chart, it is seen that the Bitcoin price increase has slowed down since 2012. Another striking point is that since 2018, prices have generally remained below the middle line.
The Bitcoin model I produced, on the other hand, better explains the year after 2018. The areas above and below the red line are more evenly distributed. The r square value of the model is 0.83.
According to this model, Bitcoin's actual "fair" price should be 50k. The model indicates that the price of Bitcoin is increasing 1.96 times every year. Therefore, an average increase of 8% per month may be reasonable considering historical data. According to the model, the year-end Bitcoin price expectation is 86k.
The charts above show that the Bitcoin Price is not too difficult to predict. Bitcoin price has moved in line with a certain trend, at least until now.
Making long-term predictions about other crypto assets is more difficult. Many have a history of only a few years. Moreover, since the transaction volumes are low compared to Bitcoin, the price volatility is much higher. We can still try modeling Ethereum's price chart.
According to our Ethereum model, the "fair" price of Ethereum is currently around 4000 USD. At the end of the year, we can expect the Ethereum price to be 9k USD. The r square value of the Ethereum price model is 0.81. The Ethereum model is based on a shorter time frame compared to Bitcoin. Moreover, we are not sure that Ethereum, the most successful altcoin, will continue this success in the same way.
Below is the chart showing the total crypto market cap on a logarithmic scale. In the graph, we see that the increase in value slowed down after 2018. Therefore, perhaps we should not expect an increase at a rate similar to the years before 2018.
The logarithmic scale chart below, showing after 2015, indicates that prices are still reasonable in the crypto market.
The trend line seen in the chart indicates an annual average increase in the market value of 90%. However, this rate was 130% in the models that were built on all the data since 2013 and did not take into account that the rate of increase has slowed down over the years.
If we accept that the annual increase in the crypto market has decreased to 90%, we need to bring the annual increase of Bitcoin to the range of 60%-65%. Because we know that the share of Bitcoin is decreasing over the years. In this case, we can think that a reasonable altcoin basket will show an annual increase of around 120%. A modest increase compared to 3x Ethereum price increase expectation per year!
Thank you for reading.
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