Bitcoin has not yet reached the height of its current appreciation cycle and is prone to surpass its all-time high this 12 months, in response to a research report published by CCData on Tuesday.
Bitcoin reached an all-time high of over $73,700 in March, but has since traded in a spread of around $59,000 to $72,000.
The path to the record high in March was largely as a result of the approval and launch of spot Bitcoin ETFs (Exchange Traded Funds, or ETFs) within the US in January. They have up to now attracted net inflows of around $14.41 billion, in response to CCData, a market data provider specializing in digital assets.
ETFs allow investors to purchase a product that tracks the value 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 become involved.
The Bitcoin “cycle” refers back to the period during which the digital currency hits a brand new record high, then falls again and enters a bear market or “crypto winter.” These cycles – of which three have now been accomplished since Bitcoin's launch – are likely to follow an analogous pattern.
The focus is on an event called “halving,” during which the reward for miners is halved, thereby reducing the availability of Bitcoins available on the market.
Typically, the halving often occurs months before Bitcoin hits an all-time high for the cycle. This current cycle was different. Bitcoin rose to its last record high before halving as a result of the bull market surrounding ETFs within the US.
With the Bitcoin price in a spread following its all-time high, many are wondering if the cryptocurrency has reached the height of the present cycle.
The report from CCData, which examined Bitcoin's historical price movements, suggests that the value could hit a brand new high. The data and research firm said historical trends have shown that the halving event has at all times been preceded by a period of price appreciation that may last between 366 and 548 days “before reaching a cycle peak, with each halving having a longer cycle than the previous one due to the maturation of the asset class and lower volatility.”
The last Bitcoin halving occurred on April nineteenth of this 12 months, so these historical periods haven’t yet passed.
“In addition, we have observed a decline in trading activity on centralized exchanges for almost two months following the halving event in previous cycles, which seems to mirror this cycle. This suggests that the current cycle could extend further into 2025,” CCData said.
The analysts acknowledged that the “influence of institutional participants in the industry” in the present cycle has “changed previous trends,” adding that the third quarter is prone to see low trading activity, which in turn could indicate a more sideways price movement.
“However, the data and past trends suggest that any sideways price movement is temporary and we are likely to break the previous all-time highs again before the end of the year,” CCData said.
The company's report states that the upcoming launch of an Ethereum ETF within the US and other similar products world wide “will ensure further capital, liquidity and demand is injected into this asset class.”
CCData highlighted one other key historical data point to support its thesis: Bitcoin's price increase occurs over a brief time frame. In the 2012 cycle, for instance, 91.4% of Bitcoin's total price increase from the halving to the all-time high occurred within the 4 months before the cycle peak. This share of price increase was 78.8% and 71.5% within the 4 months before the respective all-time highs of the 2016 and 2020 cycles, respectively.
“Such a parabolic expansion is yet to occur in the current cycle,” CCData said.
Other commentators have highlighted historical patterns which have developed in Bitcoin.
“Historically, market cycles peak 12 to 18 months after a Bitcoin halving, which most recently occurred in April of this year. We also haven't seen volatility reaching previous highs. And finally, previous market cycle peaks have coincided with a rapid succession of all-time highs – over 10 to 20 new highs in a 30-day window,” Thomas Perfumo, chief strategy officer at cryptocurrency exchange Kraken, told CNBC via email.
“We have not triggered any of these signals yet,” said Perfumo.
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