My Bitcoin 5-Year Price Model (Containment Regime)
BTC is managed into a rising, volatility-capped channel: paperized SoV, MoE throttled, squeezes sold, crashes patched.
My Bitcoin 5-Year Price Model (Containment Regime)
Bitcoin is managed into a rising, volatility-capped channel: paperized SoV (Store of Value), MoE (Medium of Exchange) throttled, squeezes sold, crashes patched — never cheap enough to trigger a self-custody revolt, never euphoric enough to create escape velocity.
A) Why the channel exists (operational drivers)
Policy rails
Paperization floor: ETFs/custodians/futures absorb net inflows; keys adoption grows slowly.
Medium-of-Exchange friction: KYC-by-default wallets, micro-tax enforcement, merchants steered to stables/tokenized deposits.
Perimeter levers: app stores, banks, clouds, and pools enforce Acceptable Use Policies without new laws.
Market microstructure
Volatility clamp: inventory warehousing + covered-call supply + basis harvest cap blow-offs.
Weekend hunts: thin books enable orderly leverage flushes.
Floor defense: creations/redemptions & basis tightening prevent sub-floor drift (avoid custody insurgency).
Narrative cadence
“Clarity waves” (ETF/pension access/CBDC pilots) re-anchor higher, then fade.
B) Price corridor (EOY targets & “operational ranges”)
Year: 1
Modal EOY: $120k
Range: $95k–$150k
Realized Volatility: 45–55%
Notes: −25–35% flushes; spikes faded (low-liq windows)
Year: 2
Modal EOY: $145k
Range: $110k–$185k
Realized Volatility: 40–50%
Notes: Two “clarity squeezes”; basis/arbs sell tops
Year: 3
Modal EOY: $165k
Range: $120k–$210k
Realized Volatility: 35–45%
Notes: MoE cools; stables win merchant share
Year: 4
Modal EOY: $175k
Range: $115k–$230k
Realized Volatility: 30–40%
Notes: One −35% shock patched; channel intact
Year: 5
Modal EOY: $190k
Range: $130k–$260k
Realized Volatility: 28–38%
Notes: Pensions/401k wrappers grind; blow-offs capped
Cycle stats: Up years +15–35% (median ~+22%) • Down years −15–30% (~1 in 4–5) • Peak drawdowns −30–40% (vs −70–85% pre-ETF).
C) Master dials (watch these, not tweets)
1) Paperization Ratio (PR) — the master dial
Definition: (ETF + custodian + listed futures exposure) ÷ circulating supply.
Read: PR↑ → parabolic risk ↓ / vol ↓; PR↓ abruptly (custody scare/Proof-of-Reserves meme) → vol ↑; bias to keys sleeve.
2) Net Liquidity (US)
Rule: Δ(NetLiq 4w) ≥ +$100B = tailwind; ≤ −$100B = headwind.
Blend with issuance: Bill-heavy = easier; coupon-heavy = tighter.
3) Vol & USD
MOVE > 120 or VIX > 24 with DXY ripping = corridor floor tests.
4) On-chain custody mix
Exchange outflows + mempool fee spikes + non-KYC wallet growth = custody insurgency risk.
5) Perimeter tightness
App-store/bank/cloud Acceptable Use Policy diffs; pool filtering/templates; travel-rule expansions → Medium-of-Exchange throttled.
D) Trading the corridor (spot-first, derivatives tactical)
Buy fear / Sell clarity
Buy when ≥2 fire:
• Weekend cascade −25–35% from local highs
• “ETF outflows / PR FUD” cycle
• NetLiq −$100–150B/4w + coupon-heavy calendar
• MOVE > 120 / VIX > 24 spikeSell/overwrite into:
• “Regulatory clarity / institutional access” PR waves
• Index/retirement wrappers PR
• Multi-month resistance retest with basis richening
Respect weekend structure
Place stink bids 5–12% below Fri close; fade Mon reversion if no perimeter change.
Avoid decay
No multi-week holding of levered BTC ETFs in a capped corridor (decay + call overwrites).
Rebalance to Paperization Ratio (PR)
PR↑ steadily → harvest more aggressively (peak amplitudes compress).
PR↓ abruptly → allow upper-corridor overshoots; keep dry powder.
E) Red-flag regime breaks (pause model; trade flows)
Sustained custody insurgency: exchange balances plunge, fee market spikes, ETF discounts persist.
Hard perimeter tighten: non-KYC wallet delistings at scale; pools adopt policy clients; OS-level blocks.
Custodian incident: sanction/hack/convertibility doubt at a top wrapper. (Breaks either way: keys migration or rush to bigger wrappers.)
Macro shock: MOVE > 150 + NetLiq −$150B/4w → corridor can gap −35–45% before patch.
If any 2 persist ≥ 4 weeks → suspend corridor assumptions.
F) What to ignore
Medium-of-Exchange euphoria (“mass adoption tomorrow”) — flows steered to stables/CBDC/deposits.
“$1M in two years” under current constraints — implausible.
Holding levered wrappers across months — containment + vol-crush = bleed.
G) What flips the regime bullish-convex (fast)
Sustained merchant Medium-of-Exchange + falling PR (real usage + weaker wrapper control)
OS-level hardware-wallet defaults (keys as default UX)
Tax amnesty for small Medium-of-Exchange payments
ETF Proof-of-Reserves with on-chain attestations (reflexivity returns)
(Or the inverse choke: OS-level wallet bans + mandated pool policy clients → true suppression)
H) Down-shift map (how trend slips 20–30% yet looks “managed”)
Paperization overshoot: ETFs/notes/treasuries + futures grow to, say, 35–45% of circulating supply; basis and options overwrite become the profit center for the largest intermediaries. So tops are sold harder and floors defended less because wrapper sponsors maximize carry, not price.
Legal chill without bans (duty-of-care for nodes/wallet devs/miners).
Stablecoin yield renaissance (3–5% realish yield on T-bill rails).
Energy/ASIC squeeze (forced miner sells at lows).
Custodian wobble without keys migration.
FX/real-rate squeeze (DXY↑, 10y real↑, NetLiq↓).
AI admissibility trade soaks institutional risk budget (PLTR/MSFT > BTC).
Tells: persistent ETF discounts; perp funding flat on rallies; covered-call products proliferate; stables share of activity ↑; PR > 35–40% and rising.
I) Probabilities (next 24–36 months)
Base: Managed up-channel — 50% → $120k→$190k modal path; drawdowns 30–40%
Down-shifted channel — 30% → band 20–30% lower; vol ↓; underperforms QQQ/Gold
Shock down → patch — 15% → −40–50% gap then repair to lower band
Escape-velocity up — 5% → keys surge + Medium-of-Exchange relief + Proof-of-Reserves norms
J) Positioning (portfolio rules)
Keep a clean self-custody sleeve (shock convexity).
Harvest carry on paper BTC when IV is rich; use call spreads into clarity ramps.
Overweight policy-grade software (PLTR > MSFT > PANW) as core risk sleeve.
Fade clarity spikes harder if PR↑ and NetLiq stalls; buy dips smaller in a down-shift tell.
Respect macro drains (coupon-heavy + NetLiq −$100B/4w): hold cash, deploy only into exhaustion prints.
Appendix — The Dashboard (weekly)
1) PR (Paperization Ratio)
<25% rising: allow bigger tops.
30–35%: tighten sells; expect calmer vol.
35–40% rising: down-shift risk; bias to carry harvest.
2) Net Liquidity (4w Δ)
≥ +$100B: tailwind, scale longs.
≤ −$100B: headwind, trim/hedge; wait for exhaustion day.
3) MOVE / VIX / DXY
MOVE >120 or VIX >24 + DXY↑: corridor floor tests.
4) ETF mechanics
Discounts > 3 sessions + creations slow = stress.
Covered-call ETF AUM rising = vol supply ↑.
5) On-chain signals
Exchange balances ↓↓ + non-KYC wallets ↑↑ + fee spikes → keys insurgency brewing (watch for regime flip).
6) Perimeter diffs
App-store/wallet delistings, bank Acceptable Use Policy changes, pool policy clients — log each; 2–3 in a fortnight = Medium-of-Exchange choke tightening.
Bottom line
Treat Bitcoin as a managed Store-of-Value rail: buy fear, sell clarity, keep a sovereign sliver of keys, and run your book off PR, NetLiq, MOVE/VIX/DXY, ETF discounts, and perimeter diffs. Floors defended to prevent a keys revolt; ceilings supplied to prevent escape velocity — until the red flags say the regime slipped.
The Paperization Ratio (PR) is the master dial. Track it and you’ll anticipate the vol regime better than 99% of models.
None of this should be considered investment advice.
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