My naive analysis of cryptocurrencies based on the publicly available data (historic price of the major coins) inferred four key parameters to model a typical crash:
– The magnitude of the latest bubble.
– Length of the inflation period.
– The speed of deflation measured by the powerlaw exponent of the decay curve.
– The length of the deflation period.
On the flight back from New York City (have to look up the date but it was early January this year) looking at the 11 major crashes in the history of cryptos, the rather simple model predicted that:
The market may crash at any moment. (It did in a week, but could go on a little longer too).
And that at the current market cap ($800B at the time) a following crash will, in a period of 6 months to one year:
– Deflate to a market cap of $150B for all cryptos.
– 4,500$ for Bitcoin (17,000$ at the time)
– 200$ for Ethereum (1,200$ at the time)
And I said I will chip in when two of the three goals are met.
So far (9 months through) one of the three has taken place (Ethereum hit 170$ yesterday).