Not an actual badger ;-) Dedicated to helping people learn about the world of crypto.
After Bitcoin’s pretty spectacular and seemingly almost unstoppable run from late 2020 until April 2021, followed by the almost equally spectacular crash in May 2021, everyone’s question is: what’s next for Bitcoin and the rest of the crypto market?
After all, most (if not all) prominent crypto YouTubers were proclaiming anything between 100k and 300k for Bitcoin before the end of this year, or as soon as this summer. Even now, you can still find people on YouTube and Twitter claiming that £100k Bitcoin is coming before the end of the year.
Well, in short, no.
Sure, no one can predict with 100% accuracy what the market will or will not do, but the chances of Bitcoin hitting 100k or more before the end of this year are pretty much zero. In fact, it’s beyond me how anyone can claim that it's still possible. Now, don’t get me wrong – I’m very bullish on Bitcoin overall. Around 50% of my portfolio is in Bitcoin and I have no doubts that it will reach 100k + in this market cycle. I just don’t think it will be as quickly as some people expect.
To put it simply, it’s the amount of money that would have to be poured into Bitcoin for the price to go up. At the current price (circa 40k at the time of writing), Bitcoin’s market cap is just under 750 billion USD.
To reach around 100k per coin, we need the price to increase x2.5, which would take the market cap to almost 2 trillion USD. That’s an extra 1.2 trillion USD that has to come from somewhere.
Such a large amount of money requires either a significant institutional investment or a HUGE amount of retail investment. (Remember when Tesla bought 2.5 billion worth of Bitcoin? That’s only 2% of the required amount.)
Such influx of money is of course possible, but at present, there are really no indicators of this happening anytime soon.
However you draw a trend line for Bitcoin, you'll see the price kept going down from mid-May until a few days ago when it finally broke the downtrend.
The initial sharp drop in mid-May from almost 60k down to 32k was followed by Bitcoin becoming range-bound between 30k and 40k, with an overall slow but consistent downtrend.
Whether we look at daily RSIs or various moving averages (20 week SMA, 21 week EMA, 20 day SMA, 50 day SMA, etc.) or various buy and sell order levels, it is pretty clear that a sudden and significant move up is extremely unlikely, as the indicators are either going down or Bitcoin is struggling to break above these resistance bands.
Yes, I appreciate that in the last few days Bitcoin broke out of the continuing daily RSI downtrend and it's above 20-day SMA, and 50-day SMA. We've also just touched the 21-week EMA and we're getting closer to the 20-week SMA.
All of these are very optimistic signs as Bitcoin has been struggling to have a clear break out above 20-day SMA since mid-June and it hasn’t been above 50-day SMA since mid-May (red and blue lines respectively on the chart below).
Nevertheless, the question remains whether Bitcoin will be able to continue this movement (more on that later on).
It’s important to remember that the price is largely dictated by the market’s sentiment. We’ve been moving sideways now for around 2 months. A lot of people lost a lot of money, especially those who overinvested in small-cap altcoins and meme coins.
Many of them either withdrew from the market or are waiting on the sidelines and being cautious. We’re now in a very precarious position where the chances of Bitcoin going down to 20k or below are similar to the likelihood of it going for a run towards the new all-time high. So for now, everyone is sitting and waiting to see which way it will go.
The recent uptrend movement is a positive sign but we won’t have another bull run until Bitcoin can break above, and more importantly, stay above the 20 week SMA (currently just shy of 45k and slowly coming down).
This has been historically the key support/resistance line for the Bitcoin bull market. We’ve dipped below it on the 15th of May and the market sentiment is unlikely to change until we can break out above it.
For what it’s worth, I’m expecting at least another 1-2 months of sideways movements. If the price continues to go up, I’m hoping we'll be on the way up in the next 4-6 weeks. However, if there's another dip below 30k, it may take us a little bit longer.
Once Bitcoin establishes itself once again firmly above the 20 week SMA, let’s say in the 45-50k range, that’s when market sentiment is likely to change and we can start expecting a new ATH in the following weeks.
The fuchsia/purple line on the above chart shows the 20 week SMA.
Looking at the previous market cycles (2013, 2017), we can see that the cycles are getting longer and the returns on investment are diminishing. Sure, the numbers are getting much bigger but if we look at percentages (either calculated from the cycle bottom or from the halving), the ROI is lower in every cycle.
Based on this information, I would expect Bitcoin to reach the top of this market cycle in late spring or summer 2022 and a price of around 120k. The longer the cycle, the higher price it's likely to achieve, but in any case, I expect this market cycle to finish in late 2023 (before the next halving, which is likely to happen in late March 2024). If the cycle is indeed this long, I would expect the price of Bitcoin to reach around 150k.
To summarise, yes, I expect Bitcoin to reach and exceed 100k, I just don't see this happening before the end of this year.
What the market will do is of course anyone’s guess, but for now, my trades are based on the assumptions above. I will revisit this article before the end of this year and again around spring-summer 2022 to see how close (or not!) I was with my predictions ;-)
Feel free to check out my new YouTube channel. I'll be posting tutorials about the basics of crypto and my thoughts about the market.
The content covered in this article is NOT to be considered as investment advice.
I’m NOT a financial adviser. These are only my own speculative opinions, ideas, and theories.
Do NOT trade or invest based purely upon the information presented in this article.
Always do your own research and due diligence before investing or trading. I’ll never tell you what to do with your capital, trades, or investments. I’ll also never recommend for you to buy, sell, long, or short any asset, commodity, security, derivative, or cryptocurrency-related instrument as it's extremely HIGH RISK!
You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency-related product.
Create your free account to unlock your custom reading experience.