Bitcoin’s current bullish trend is often compared to previous cryptocurrency growth cycles. At the moment, many market players are concerned about one thought – will BTC be able to demonstrate confident growth to a new historical maximum, and what exactly will it be?
According to Charles Edwards, CEO of investment firm Capriole, 2021 for Bitcoin is very similar to 2013, when the main cryptocurrency hit two highs on the chart at once during the year. Let’s talk about the situation in more detail.
Recall that the events with Bitcoin in 2013 are usually called the double top. The reason for this is that the market race then took place in two large-scale stages, each of which ended in the achievement of a new price maximum. And this is the opposite of 2017, when BTC set a new record and corrected noticeably.
The market looks good today. In particular, even the news of user verification on the Binance cryptocurrency exchange, which will now be mandatory, did not prevent Bitcoin. However, some experts consider the event positive, since from now on there will be significantly fewer obstacles for the development of the cryptocurrency niche.
Here is an hourly chart of the Bitcoin rate, which clearly shows the growth of the asset over the last day.
Bitcoin price hourly chart
How much will Bitcoin be worth this year?
Almost eight years ago, Bitcoin hit an all-time high of $ 255 in April 2013. This event was followed by a sharp drop in the price of the cryptocurrency, but after eight months it began to grow steadily again, reaching the $ 1,150 line in December of the same year.
On the cryptocurrency chart, these movements look like this.
Bitcoin price dynamics in 2013
Edwards expects something like the same scenario this year, citing an unrealized profit and loss model as evidence. On the chart below, relative to the BTC price, there is a diagram of the ratio of the volume of coins that their owners can immediately sell at market prices in plus. Now this coefficient is higher than 0.5 – almost the same value was just recorded in 2013.
The parameter of unrealized profit and loss on the Bitcoin chart
Conversely, during the previous bull cycle in 2017, this ratio fell significantly after Bitcoin reached its all-time high at that time. That is, then the cryptocurrency could not go to a new round of the upward rally. Here’s a quote from Edwards on the subject, posted on Cointelegraph.
During the high of the previous cycle, the rebound was unable to keep the unrealized gains and losses above the 0.5 odds. Only the 2013 bubble and the current trend have these characteristics.
This means that the expert believes that what is happening in 2021 is seriously different from the events in 2017. This time, investors essentially decided not to get rid of the coins completely, but to fix the income and sit out in stablecoins – that is, coins pegged to the value of the dollar. This is one of the reasons why the huge «sale» of coins in mid-May could not stop the development of the niche. This means that the market may give out one more stage of growth before the so-called crypto winter comes.
The expert’s conclusion is consonant with the popular stock-to-flow model formulated by crypto enthusiast PlanB. According to her, the price of Bitcoin should rise to at least $ 100 thousand by the end of this year. Recall that stock-to-flow is the ratio of asset stocks to capital inflows. Since Bitcoin reserves are limited, and the inflow of investments into the crypto market does not have a maximum, the price of BTC should simply rise in the long term. At least that’s what some analysts suggest.
The growth of the main cryptocurrency in the next few months may be facilitated not only by technical, but also by fundamental factors. Among them is the launch of the Japanese branch of the crypto exchange Coinbase as part of the company’s global expansion strategy. It is being conducted in partnership with Mitsubishi UFJ Financial Group (MUFG), one of Japan’s leading financial institutions with 40 million clients .
The partnership will allow Coinbase’s Japanese customers to deposit funds into their accounts through MUFG’s quick deposit service, with the platform aiming to be “the easiest to use and most trusted exchange in Japan and is fully compliant with local regulations.”
We believe that predicting what is happening in such a volatile and young market is quite risky. Still, anything can happen here – and at any moment. However, in fairness it should be noted that history loves to repeat itself. This means that the analyst’s assumption may indeed be correct. Although to check this version, in any case, you will have to wait until the end of the year.
