Can Cyclical Tools Predict The Bottom?

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In this episode of NewsBTC’s daily technical analysis videos, we examine important Bitcoin price troughs with Hurst Cycle Theory and cyclical tools to consider if the bottom could be in and if another bubble is coming.

Watch the video below:

VIDEO: Bitcoin Price Analysis (BTCUSD): November 7, 2022

Bitcoin cyclical behavior analyzed

To aid in visual analysis, each Bitcoin halving is included. The halving is a much-discussed driver of the internal supply and demand mechanisms. We know that Bitcoin visually bottoms out prior to each halving. The log growth curve is also included for visual support.

The next step is to turn on a spectrogram. A spectrogram is a visual heat map of the frequency spectrum of a signal as it varies over time. The more green heat, the stronger the bullish intensity. By contrast, the more purple heat on the chart, the stronger the bearish intensity and that is where we would look for a cyclical bottom. Within each purple zone, we would find our cyclical low for dominant cycle phasing.

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Is a new Bitcoin cycle about to begin? | Source: BTCUSD on TradingView.com

Related reading: Litecoin Recovery to End the Lingering Crypto Darkness? LTCUSD November 2, 2022

Why this bear market felt so extreme

The next step would be to confirm the dominant cycle by phasing out any harmonics. According to Hurst Cycle Theory, harmonics in cycles come in twos and threes. Essentially, from any major trough to trough, there should be one to two mid-cycle dips.

Defining the harmonics in the middle of the cycle not only helps confirm the dominant cycle phasing, but it also helps prove the Hurst cycle theory. Note that cyclical dips tend to decline simultaneously, while the principle of summation explains why the recent sell-off felt so long and extreme – it was the sum of a larger compound wave and a smaller harmonic wave combined.

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Why BTC Is Gearing Up For Another Bubble Cycle

The last step is to complete the phasing. For additional confirmation, the Fisher Transform is used, which helps pinpoint precise turning points in markets, as well as the Stochastic RSI. In this system, the Fisher Transform highlights the potential turning point, while the Stoch RSI rising from oversold levels confirms the new bull run.

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