No one knows for sure where the price of bitcoin will peak at the end of this bull market, none of us can see the future so we can only give our opinions and make educated guesses. But my feeling is that it will be substantially higher than it is today (March 30th 2021 @ $58,800).
One thing that cannot be disputed is that the investor demographics are much different this bull market versus previous bull markets. How this will affect this current bull market remains to be seen. Will we still see a blow-off top like in 2017? Will we still see the 85% plus bear markets like we have gone through in the past or will the bear markets be much shallower? Will bitcoin continue to run in 4-year cycles or will they be shorter now? If retail investors start selling as bitcoin nears the peak will institutional investors join them or will they be the ones buying? These are all questions that no one knows the answers to, all we can do is watch as it unfolds.
There are also events that could possibly derail this bull market keeping it from running its natural course and limiting the price peak. Some events I can think of would be: The U.S. government banning cryptocurrency use by U.S. citizens, over regulation by U.S. regulators, a U.S. stock market crash, or possibly it could be a black swan event that no one sees coming. I want to stress however that I believe the risk of one of these events happening is very low.
Just for fun I looked back at previous bull markets to see if I could find any type of pattern which I could then use to calculate a possible peak for this bull market. One thing I noticed is that the vast majority of the gains come within the last month of the bull market. Also, the last two peaks came near the beginning of December. This bull market has already been pretty crazy so I can’t even imagine how much crazier it will be if it lasts until December.
After looking back at the previous cycles, I decided to create a chart showing how the cycles compare to one another and to also try to visually show a possible peak for this cycle (just for fun). So, since I was creating the chart on March 10th, I decided to looked back to the same date (March 10th) of each cycle to see what the price multiple was from March 10th of each cycle to the bull market peak. What I found was that the price multiple was 35.4x in the 2011 bull market. It was 23.6x in the 2013 bull market, and it was 15x in the 2017 bull market.
Looking at this data we can see that there is a reduction in the price multiple with each successive bull market. I then calculated percentage wise how much the multiple was dropping from one bull market to the next. What I found was that from 2011 to 2013 there was a drop of about 67%, and from 2013 to 2017 there was a drop of about 64%. I think it is kind of interesting that the percentage drop was pretty similar from 2011 to 2013 as it was from 2013 to 2017.
I figured that since it dropped from 67% to 64% last cycle that maybe it would be around 61% this cycle, which would put the multiple for this cycle at about 9.2x.
On March 10th when I was making my calculation the price of bitcoin was at approximately $56,000 so I simply multiplied that price times 9.2 and got a peak price of $515,200. I know, pretty crazy but like I said I did it just for fun. I think it will also be fun to see how far off this price is from the actual peak.
In closing I want to just say that I remain very bullish medium to long term on bitcoin and the rest of the crypto market. Short term it is kind of hard to say which direction bitcoin is heading. After setting a new all-time high of $61,788 on March 13th bitcoin pulled back to just over $50K on March 25th but then over the last five days has recovered to just under $60k. Where bitcoin goes from here is hard to say, I feel that bitcoin may struggle a little getting back over $60k but will eventually get over it and set another new all-time high. One thing that I am pretty certain of is that bitcoin will have quite a few corrections before this cycle is completed, some could be fairly deep.
Anything is possible and for all we know bitcoin could have already peaked but I would say the chances of that being the case are pretty low. Like I said above my feeling is that the actual peak will be substantially higher than where it is today. I can’t say exactly where that will be, and it is possible the peak on my chart may be way too high but it wouldn’t surprise me at all for bitcoin to top $100k.
I appreciate you taking the time to read this! Take care!