The Future Philanthropist Guide To Profiting From Bitcoin by Wyand A.A
Author:Wyand, A.A. [Wyand, A.A.]
Language: eng
Format: epub
Publisher: Avuncular LLC
Published: 2019-09-28T16:00:00+00:00
In a hyper leveraged world we might see a 10x overshoot that crashes (from the point of view of the peak buyers) to undershoot and then revert to the mean. There is still an underlying, long-term “S” curve, but it has an exponential hump called “mania” and “blow off ” as explained by Dr. Rodrigue’s chart.25
The early overshoot might be more like a final market-cap being applied too soon as new supply dilutes it back down. This essentially happened to internet stocks. Collectively they were valued 10x above the crash value, but the survivors took a decade to recover this. Some were stocks that were not traded at the time; others were older stocks that made the most of new technologies. To include these factors in the model would show a 10x early, followed by a 90 percent crash, followed by an S curve.
In most cases the future will likely be as chaotic as the past until some equilibrium level is found. You can look at gold as a model. It shot up, then went down, and now seems to be finding equilibrium.
So what do I mean by chaos? Lebanese-American statistician Nassim Taleb validated Polish mathematician Benoit Mandelbrot’s evaluation that stock markets can be characterized as “wild randomness,” which is a pareto distribution with alpha of 1.5 (for anyone interested in the statistics of these things). My theory is that as bitcoin adoption becomes broader there will be more forces that will shift it to resemble the type of randomness that matches its new scale.
There are an infinite number of possible peak values, milestones along the way, and durations between peaks. Between major peaks there are an infinite number of intermediate values and smaller peaks and valleys. Many people will act as if each of the peaks and valleys are important. All that is really important is the price you pay to enter, and how much you make with every sale.
It’s impossible to consider all of them and difficult to consider very many in detail. For now, let’s focus on eight extreme cases that might happen that includes maxing out and then either crashing to zero or leveling out.
The worst-case scenario would be if the past peak is already the irrational exuberance peak and the long-term value will be one-tenth of that. A best case would be if the irrational peak will be near the maximum possible. Those two cases are 1000x apart from each other. We can also consider two intermediate cases with 10x increases each to make a total of four cases in steps of 10x. Another simplification would be to assume the value will either converge on a relatively stable amount for the foreseeable future, or go to zero and never recover.
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