As the market seems to be booming at the moment, I’ve decided to take some time to look into how Bitcoin’s price has evolved since its inception. I’ll be looking at major trends and discussing a couple of future scenarios I’ve devised.
As always, it’s important to remember that this is not financial advisement, and past history does not predict future price movements. Still, history tends to rhyme, and that is why quality technical analysts tend to beat the market in the long haul.
An outlook of price action
The above chart, taken from TradingView, shows the price action of Bitcoin (BTC) since 2011 on Bitstamp, the exchange with the longest Bitcoin history at the time of writing. I’ve used a logarithmic chart so that I could fit the entire history into one plot.
First I would like to state the obvious: the long-term trend is super bullish. If you draw an imaginary line connecting the lowest point in late 2011 to where we currently are, that represents a compound 1233x return for someone who bought before 2012.
And that’s not all. If I divide the above chart into two blocks of four years, so from 2011-2015 and 2015-2019, what we see is the following: BTC increased about 12x during the first period, where price went from about $2.30 to $140, making a 60x return. During the second period, between 2015-2019, Bitcoin increased from $140 to about $3,700, making a 26x return.
What we quickly see is that although price continues to skyrocket, returns have halved, much like the Bitcoin block reward.
What can we expect for the next four years? If I make the assumption price will continue to rise but returns diminish, this is how I think the cryptocurrency panorama will look by the beginning of 2023:
- Bitcoin price will be near a bottom
- Price should at least be 10x higher than what it currently is
- The new all-time high will happen between the end of 2021 and early 2022
In essence, I personally believe price should hover in-between $33,000 and $37,000 in early 2023, and that the new all-time high could take Bitcoin to levels between $96,000 and $160,000.
Of course, what really makes me wonder is how BTC will behave after that, up until 2030. I argue this is when Bitcoin reaches $1 million per coin.
But what about in the short term? What kind of price movements can we expect?
Medium-term trend looking bullish as well
To understand where Bitcoin’s price is at the moment, I’ve plotted Fibonnaci retracement lines on the chart above from the lowest point in 2015 (after the 2011-13 bull run) to the peak in late 2017.
What the current price immediately shows us is that BTC is already bouncing back from the lowest 0.786 retracement line (light blue) and is now moving past the 0.618 (light green) fib level – where price must sit above $7,460. The next level of resistance should be at the 0.5 and 0.382 fib levels, so around $9,718 and $11,976 respectively. Because this time it took almost no effort to break past the $6,000 and $7,000 resistance levels, I can’t really be sure about a time-frame.
I’m still expecting a correction back towards the 0.618 level at least, if not lower.
We shouldn’t forget that every time there’s a pull to the upside, what usually follows is the exact opposite, even if it’s only for a short period of time.
I would advise traders to keep some cash ready to make new entries between $4,300 and $7,400.
Don’t forget: the investment strategy I’ve personally found most successful is to make monthly entries near resistance and support levels.