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Bitcoin to Hit New All-Time High This Year If History Repeats Itself: Report
The journey to the March record was largely driven by the approval AND Launch of spot bitcoin exchange-traded funds (ETFs)in the United States in January. They have attracted net inflows to date of about $14.41 billion, according to CCData.
ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Cryptocurrency advocates say this has helped legitimize the asset class and make it easier for larger institutional investors to get involved.
The bitcoin “cycle” refers to the period in which the digital currency rises to a new record high, then drops again to enter a bear market or “crypto winter”. These cycles, three of which have been completed since Bitcoin’s launch, have generally followed a similar pattern.
This was focused on a event called halvingduring which the reward for miners is cut in half, reducing the supply of bitcoin on the market.
Typically, halvings often occur months before bitcoin hits its all-time high for the cycle. This current cycle has been different. Bitcoin has risen to its last all-time high before the halving due to the rally around ETFs in the US
With bitcoin trading in a range following its all-time high, many have wondered whether the cryptocurrency has reached the peak of its current cycle.
CCData’s report, which looked at historical bitcoin price movements, suggests it may reach new heights. The data and research firm said historical trends have shown that the halving event has always preceded a period of price expansion that can last from 366 to 548 days “before producing a cycle peak, with each halving experiencing a longer cycle than the previous one, due to the asset class maturing and reduced volatility.”
The last bitcoin halving took place on April 19th of this year, so those historic times have not yet passed.
“Furthermore, we have observed a decline in trading activity on centralized exchanges for nearly two months after the halving event in previous cycles, which appears to have mirrored this cycle. This suggests that the current cycle could expand further into 2025,” CCData said.
Analysts acknowledged that “institutional influence in the sector” in the current cycle has “altered previous trends,” adding that the third quarter is likely to see low trading activity, which could in turn suggest more sideways price action.
“However, the data and previous trends are strong enough to suggest that any sideways price action is temporary and that we are likely to break out above previous all-time highs again before the end of the year,” CCData said.
The company’s report stated that Ethereum ETF launch imminent in the United States and other similar products around the world “are intended to bring additional capital, liquidity and demand to the asset class.”
CCData highlighted another key historical data point to support its thesis, stating that bitcoin price appreciation occurs over a short period of time. For example, in the 2012 cycle, 91.4% of bitcoin’s overall price expansion from halving to all-time high occurred in the four months leading up to the cycle peak. This share of price increase was 78.8% and 71.5% in the four months leading up to the respective all-time highs of the 2016 and 2020 cycles.
“A similar parabolic expansion has yet to occur in the current cycle,” CCData said.
Other commentators have highlighted how bitcoin’s historical patterns have developed.
“Historically, market cycles peak 12 to 18 months after a Bitcoin Halving, which last occurred in April of this year. Additionally, we have not seen volatility hit previous all-time highs. Finally, previous market cycle peaks have coincided with a rapid succession of all-time highs, more than 10-20 new highs established in a 30-day window,” Thomas Perfumo, head of strategy at cryptocurrency exchange Kraken, told CNBC in an email.
“We haven’t activated any of these signals yet,” Perfumo said.