The KS Model: Predicting Bitcoin at $486,000 by May 25th, 2022

The KS Model analyzes Bitcoin price action. It assesses past halving cycles to determine where halving events occurred, market peaks, market bottoms, and the differences between cycles.

Please feel free to contact me directly — I can be reached on Twitter, or YouTube

The KS Model was initially designed for my use as a full-time crypto trader. As a former lecturer in 1st and 2nd-year statistics, I started sharing the KS Model because many in the media misrepresented crypto graphs and placed people under enormous stress. I started a YouTube channel to present statistical and mathematical analysis based on years of practical trading experience. The KS Model was pivotal in comparing different parts of the cycle without violating the law of mathematical consistency (comparing apples to apples). The KS Model also helps de-FUD (contextualize Fear Uncertainty and Doubt) and de-FOMO (contextualize the Fear of Missing Out). I also share my trading tips, trading rules to assist the YouTube community to be more of a financial blessing to themselves and those they love.

Disclaimer: Any information found on this page is not to be considered as financial advice. You should do your own research before making any decisions.

The KS Model

Institutional vs. Retail Psychology

1. Time frames: Institutions (fund managers, pension funds, banks, and whales) have long time horizons from which they view price action (years and decades). Retail investors view price action on a low time frame (minutes, hours, or days).

2. Objectivity: Retail investors experience rapid shifts between optimism and pessimism due to current price action and stories reflected through media outlets. It can be a bull market one day and a bear market another day to a retail investor. Institutional investors are not emotional; they assess market industry growth rates, total addressable market size, adoption, network growth, revenue analysis — to forecast profitability over years and decades. Once a conclusion is drawn from an institutional investor, it is held until underlying financial situations change.

3. Economic Power: Retail investors typically have limited funds to pursue investments, and therefore often leverage investments that result in total liquidation. Leveraged investments have limited upside and unlimited potential losses. Because of this, retail investors (who do not buy at spot) can easily be shaken out of trades and can have their accounts liquidated.

There is a reason why 90%+ of retail traders lose money.

Institutions use low economic power plus a focus on fear to sway retail investors to buy/sell according to their plans. Institutional investors have access to billions of dollars worth of funds and have teams of quantitative/statistical experts who guide automated trading algorithms.

4. Influence: Institutional investors have deep pockets and can influence industry-wide sentiment through the press (news, social media, and interviews). Institutions influence the news that retail investors consume. Institutions are well known for their ability to advertise higher prices for retail traders to “buy at the top” to avoid FOMO (Fear of Missing Out). They are also well known for causing immense market fear (FUD — Fear Uncertainty and Doubt) to incentivize retail traders to “sell at the bottom.”

5. Behavior: Institutions actively participate in futures, options, and derivatives markets. They both actively benefit from short-term cycles in price behavior as well as longer-term accumulation strategies. Retail investors tend to have short time horizons. Institutions are sophisticated, financially strong, and expertly resourced. Institutions make money from attracting retail investors into the market (via FOMO) and then liquidating their positions (via FUD) to gain. In a market, one person’s loss is another’s gain.

Institutional Psychological Price Action

  1. Bull market phase (psychological sunshine),
  2. Bear market phase (psychological darkness), and
  3. Consolidation phase (psychological dawn — the emergence of tentative optimism after capitulation).

Psychological sunshine: The Bull Market Phase

A blow-off top hammers in the bull market top.

Retail investors are attracted to the market, where institutions seek to liquidate those positions through a series of rallies and retracements. Such retracements can be brutal to retail investors but highly lucrative to short positions.

A blow-off top is an exponential rise in prices that is followed by very sharp drop in prices that occurs within 5% of the end time period of the bull market. Exponential price blow-offs before the end of the period are corrections.

I developed the term “short fueling” to describe a period when shorts have excessive psychological safety that “they cannot lose.” This mindset is manufactured by institutional investors who use the covering of shorts to drive prices up.

In the KS Model below, points 1, 2, and 3 signify Bull markets in crypto:

Psychological darkness: The Bear Market Phase

Capitulation hammers in the bear market low.

During capitulation, hope dissolves, and disbelief evolves into painful losses for retail investors. Traders become “forced” investors until they finally surrender at the “capitulation,” or the “blow-off bottom.” While this is happening, small rallies are making higher lows follow. Bear markets can be excellent to trade and have good upside potential.

Psychological dawn: The Consolidation Phase

Immediately after the capitulation, prices begin to rise due to the absence of sellers. Capitulation is, therefore, an exceptionally profitable trading strategy for an entry either from a trading or investing standpoint.

Points 1 and 2 define the previous consolidation phases.

Free training video: KS Model Foundations

KS Model 101: Free training video

I also suggest you look at the video on BTCALT Gearing; this will give you a powerful insight into how the engine of the crypto market;

Understanding the KS Model

The KS Model analyzes Bitcoin price action via institutional, psychological impact on price. Each YouTube update, I share one or more trading rules that I have acquired over many decades. These rules assist investors and traders in better understanding the institutional direction of the crypto market. These rules also save time, reduce losses, and increase profitability when understood and applied correctly.

Each rule created has taken years to develop and is evidenced by the “tuition fee of the market” — losses. I hope sharing these rules is of benefit to you.

It assesses past halving cycles to determine where halving events occurred, market peaks, market bottoms, and the differences between cycles. I put updates out on this and other crypto analysis each day through my Twitter account at https://twitter.com/StandfieldKen.

Halving Events in the KS Model

Bitcoin halving's create a supply shock forcing prices to increase rapidly.

In the KS Model, the halving’s dates and times are given below:

Cycle Peaks

Bull market peaks

Bear market lows

Bull Market Cycle Lengths

Point 1: The 1st bull market lasted 367 days,

Point 2: The 2nd bull market lasted 526 days (43.32% more),

Point 3: An increase of 43.32% is reasonable to assume for the current bull market. This would last 754 days from the halving. I am conservatively estimating a peak of 744 days from the halving around the 25th of May 2022.

Bear Market Durations

The 2016 cycle bear market lasted 361 days, 50 days less than the 2012 cycle (0r 12.165% less)

If we assume the 2020 cycle bear market will last 12.165% less as the 2016 cycle did, the bear market duration would be estimated at 317 days to capitulation.

Consolidation cycle phases

The 2016 consolidation phase lasted 513 days (Point 2), 28 days less than the 2012 cycle (around 5.176% less).

From this, we can estimate the 2020 consolidation phase lasting around 486 days (Point 3), being 94.82% of the previous consolidation phase.

The Next Halving Date

Tracking to the next halving

The variance between the estimates derived from past behavior and the estimated halving date is 327 days. I have left the variances and not sought to normalize them, as other halving calculators give different dates in line with the estimates I have provided below.

Arriving at the $486,000 price

Previous models have estimated price targets ranging between $100k, $288k, and some estimates go as high as $500k. From my study of the data, I believe $486k is reasonable.

Adoption Stages

Consider this short story … if a pond lily has just started growing across a pond and a pond scientist has calculated that the lily growth is doubling each day and will cover 100% of the pond in 30 days, what day does it cover 50% of the pond?

The answer is on the 29th day as it is doubling each period. It moves from 50% growth of the pond to 100% as it doubles. It is interesting to note that the 28th day covers just 25% of the pond, and the 27th day covers 12.5%. That is why exponential growth is difficult to understand.

Bitcoin & Cryptos Exponential Growth

More information coming

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A call to the community

Tops and bottoms are always based on probabilities. The KS Model is a probabilistic model.

If anyone can help improve the KS Model, please reach out and discuss it with me. I welcome all contributions, feedback, and input. Please DM me on Twitter or LinkedIn.

Trading Bitcoin is challenging; best of luck to everyone out there. I hope this article gives benefit.

About the author

He is the former Chairman of the International Intangible Management Standards Institute. He is the author of Intangible Management: Tools for Solving the Accounting and Management Crisis (Academic Press, 2002), Intangible Finance Standards: Advances in Fundamental and Technical Analysis (Academic Press, 2005), Leveraging Knowledge, Time and Technology (IIMSI Press, 1998). He was a pioneer in Time Valuation, Knowledge Management, Intellectual Capital Management, and Intangible Management. He has been a keynote speaker at more than 300 events internationally. Ken commenced lecturing statistics at 18 years of age and is an actuarial scholarship holder.

He can be contacted on LinkedIn, Twitter, or YouTube.

New to Medium. Crypto technical analyst. Statistician. Researcher. Futurist. 3x Author. Keynote speaker. Specialist in intangibles/time valuation.