Bitcoin
Bitcoin to hit new all-time high this year if history pans out: report
The journey to the record high in March was driven largely by approval It is launch of spot bitcoin exchange-traded funds, or ETFsin the U.S. in January. They have attracted net inflows of about $14.41 billion to date, according to CCData.
ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Crypto advocates say this has helped legitimize the asset class and made it easier for larger institutional investors to get involved.
Bitcoin’s “cycle” refers to the period when the digital currency hits a new high and then drops again to enter a bear market or “crypto winter”. These cycles — three of which have already completed since bitcoin’s launch — tend to follow a similar pattern.
Which has been centered around 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 an all-time high for the cycle. This current cycle has been different. Bitcoin surged to its last pre-halving high on the back of optimism surrounding ETFs in the U.S.
With Bitcoin trading in a range after its all-time high, many are questioning whether the cryptocurrency has reached the top of its current cycle.
The report by CCData, which examined bitcoin’s historical price movements, suggests that it could reach a new high. The data and research firm said that historical trends have shown that halving events have always preceded a period of price expansion that can last anywhere from 366 days to 548 days “before producing a cycle top, with each halving experiencing a longer cycle than the previous one due to asset class maturation and reduced volatility.”
The last Bitcoin halving occurred on April 19th this year, so these historic deadlines have not yet passed.
“Furthermore, we observed a decline in trading activity on centralized exchanges for nearly two months following 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 the “influence of institutional participants in the sector” in the current cycle “has altered previous trends,” adding that low trading activity is likely in the third quarter, which could in turn suggest more sideways price action.
“However, the data and past trends are strong enough to suggest that any sideways price action is temporary, and we are likely to break above previous all-time highs once again before the end of the year,” CCData said.
The company’s report said that the upcoming launch of an Ethereum ETF in the US and other similar products around the world “is designed to bring more capital, liquidity and demand to the asset class.”
CCData highlighted another important historical data point to support its thesis, saying that bitcoin price appreciation occurs over a short period of time. For example, in the 2012 cycle, 91.4% of the overall bitcoin price expansion from the halving to the all-time high happened in the four months leading up to the cycle peak. That share of the 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.
“This parabolic expansion has not yet been done in the current cycle,” CCData said.
Other commentators highlighted how bitcoin’s historical patterns have developed.
“Historically, market cycles peak 12 to 18 months after the Bitcoin halving, which last occurred in April of this year. We also haven’t seen volatility reach previous all-time highs. Finally, previous market cycle peaks have coincided with a rapid succession of all-time highs — upwards of 10 to 20 new all-time highs set in a 30-day window,” Thomas Perfumo, head of strategy at cryptocurrency exchange Kraken, told CNBC in an email.
“We haven’t fired any of those signals yet,” Perfumo said.