1) I spot an opportunity in $COIN utilizing Mandelbrot's fractal theory. 🧵
2) Behind the veil of apparent complexity, Mandelbrot saw many of the seemingly disordered patterns of nature are highly ordered, following simple rules.
3) He coined the term “fractals” in 1975 to describe a geometric shape that can be separated into parts, each of which is a reduced-scale version of the whole.
Ex: the veins in leaves look like branches; branches look like tiny trees; and rocks look like miniature mountains.
Ex: the veins in leaves look like branches; branches look like tiny trees; and rocks look like miniature mountains.
4) “The very heart of finance is fractal,” he said.
The patterns seen on the intra-day charts of minutes or hourly intervals are very similar to the patterns seen on the daily, weekly, monthly or even quarterly charts.
The patterns seen on the intra-day charts of minutes or hourly intervals are very similar to the patterns seen on the daily, weekly, monthly or even quarterly charts.
5) Fractals follow the mathematical principle of self-similarity.
This means they are replicated at different scales and innumerable times, allowing for predictions about how the structure will behave in the future.
This means they are replicated at different scales and innumerable times, allowing for predictions about how the structure will behave in the future.
6) Consider this chart: Glencore is at the top, while Coinbase is at the bottom.
Do you see what I see?
Do you see what I see?
7) Similar to how Glencore’s IPO in May 2011 signaled the end of the commodities super cycle, Coinbase’s public listing in April 2021, when Bitcoin was worth more than $63,000, marked the top in digital assets.
8) Glencore’s shares peaked at 559 pence on its market debut before dropping by 88 percent to as low as 66 pence during the 2015 commodity crash.
9) “If enthusiasm surrounding its public offering coincided with the top in commodities,” I wrote at the time, “shouldn’t comparisons with Lehman and revulsion from a credit downgrade suggest that we are close to a bottom.”
10) In six months, Glencore’s stock price doubled. It was trading at 378 pence two years later. Glencore has finally regained its IPO price this year.
11) Coinbase’s stock opened at $381, reached a high of $429 on the first trading day, and then dropped by 90 percent to just above $40 on May 8.
What do you suppose will happen next after looking at the chart?
What do you suppose will happen next after looking at the chart?
12) I wrote about Mandelbrot's wisdom and the bull case for Coinbase here.
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