Crypto Valley Live (ID: cryptovalley)

Crypto Valley Live (ID: cryptovalley)

Altcoin cycles are a different cycle in the cryptocurrency market that are often used to earn incredible income for professional traders. Typically, market movements follow Bitcoin cycles to Altcoin cycles.

However, it is difficult for beginners to gain the intricacies needed to recognize when to buy and sell altcoins.

In this context, we developed a model based on linear combinations to predict the Altcoin cycle (2020-2023) through the R statistical platform using the market capitalization of the three most important Altcoins and subsequent data processing.

Altcoin Wave Data Processing

There are many early altcoins, there is only one wave altcoin that I have no interest in. At some point, I thought about giving up, but my wife told me not to give up. To be honest, this cycle is more uncertain than the Bitcoin wave cycle. But let's try.

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Figure 1. The top three Altcoin market capitalization - the first wave

Data prices extracted from Coin Metrics, 2016-2021. Considering only the first wave, the largest Altcoin market capitalization day occurred 546±12 days after the Bitcoin halving (2016-7-09), with a 95% confidence level. The 2nd Altcoin wave (2020-2021) is used to test the model.

Altcoin Wave Model

The Altcoin wave model provides an opportunity to study such an important topic in the Altcoin market, because many people buy Altcoins and wait to take off, but the market actually happens in waves. According to the Bitcoin wave hypothesis, the next wave can be predicted by approximating the future wave to the linear combination of the previous wave, so the Altcoin wave model was established.

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Figure 2. The 1st Altcoin wave. ETH (green), ADA (blue) and BNB (orange)

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Figure 3. Altcoin wave model (blue) and real data for 2021 forecast (red). Altcoin wave model (blue) and real data for 2021 forecast (red).

Figure 4. All Altcoins Market Cap vs 2nd Derivative Scaling (Auto Scaling)

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The first important message from Figure 4 is that at the best selling moment, the 2nd derivative is very negative. In other words, according to the model predictions, the best time to sell Altcoins after the May 2020 halving will be a day between 2021-06-08 and 2021-07-07 (possible profit: between +450% and +1400%), but it depends on the Bitcoin wave pattern matching the Bitcoin maximum price date. Again, this is not financial advice, this is a simple model and an opportunity to test the assumptions of this hypothesis.