The world’s largest digital currency could experience high volatility in the coming months, according to a proprietary model created by technical analyst Jack F. Cahn.
The Technical Event Model (TEM), which he developed in-house and measures sentiment extremes, is a price-based macro filter that helps algorithmic trading programs predict when market dynamics are about. what to change and what to expect.
The model, which was designed to be direction neutral, indicates whether the market is about to enter a new trend or has entered a panic buy or sell period.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Recently, Cahn wrote that the TEM “suggests an extension of the range in October / November”.
Specifically, the technical analyst said his model “suggests a monthly range extension of 20,000 for October and / or November.”
It could happen “from the opening of the month to the end of the month, maybe faster, but the risk is 20,000,” Cahn added.
“Based on the volatility model (TEM), it is configured for range extension on the monthly and weekly bar. So October open to close should be a month of range, opening near its high and closing near its low, ”he said.
Several analysts provided their assessments of this model.
“After reading the volatility report summaries from 9/27/2018 to 9/27/21, I think CT’s TEM is an interesting approach to take in explaining bear / bull behavior,” said Andrew Rossow, lawyer specializing in Internet and technology. .
“Bearing in mind that TEM is just an expression of CT’s opinion based on its own sources, I find this analysis interesting and not ‘extravagant’,” he said.
“In my opinion, this seems to be one of the most realistic explanations / analyzes that I have come across since the notion of FOMO and emotional / panic investing arose with digital currency,” Rossow said.
Collin Plume, CEO and Founder of My Digital Money, provided a different perspective.
“TEM, like many other charts used to predict the direction of the crypto market, is very responsive rather than predictive,” he said.
“It looks for models and assumes its applicability to future cryptographic developments. It’s missing the intangibles, the events that really dictate the price of crypto, ”Plume said.
“Bitcoin’s troughs and peaks have been driven by the reaction of retailers to certain events. The biggest influencers are mainstream development, ”he said.
“Jack Dorsey declared Bitcoin the future and PayPal bought Bitcoin,” which coincided with upward movements in the price.
“Bitcoin broke the $ 50,000 mark earlier this year after Tesla announced it was buying into Bitcoin, then fueled by $ 60,000 after Coinbase announced it was going public.”
Trading linked to a range
Plume added more details, predicting that without any significant development, bitcoin will trade between its 200-day moving average (MA) and its 20-day MA, which are $ 43,000 and $ 47,000 respectively.
“I think Bitcoin will stay in this range until China makes a decision on Evergrande,” he said.
“If China bail out Evergrande, it will most likely get back $ 50,000 and it will be a slow and bumpy return to $ 60,000,” Plume said.
“However, this trend will be halted if another major event occurs that could cause retail investors to panic buy or sell.”
Bull market forecast
Rossow offered a different view of the markets, predicting that bitcoin will continue to experience the type of expansion detailed by Cahn “over the next few months.”
“With the SEC calling for more resources to better understand the nature of the cryptocurrency industry in combination with institutional investors finally accepting that having a trusted and secure custodian for their digital assets is next As a step towards providing global financial accessibility, it is not strange to think that Bitcoin and crypto have the very real potential to continue this type of growth over the next two months, ”he added.
While Cahn’s model simply indicated that bitcoin would experience substantial volatility over the next few months, without specifying whether it would be up or down, Rossow was voicing his opinion that bitcoin prices would likely rise during that time.
“This is an institutional class and if regulators are prepared to have serious conversations about Bitcoin and its usefulness in each sector, we can only expect increased growth,” he said.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, also addressed TEM, saying that:
“The projection here is not surprising given Bitcoin’s historic performance in October and November.”
“If Bitcoin ends in September above the $ 40,000 to $ 42,000 range, we will likely see some bullish relief in October,” he said.
“However, the extent of this expected price action is also likely to be affected by broader macroeconomic factors, such as changes in economic policy and the like.”
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, and EOS.