Analyzing Bitcoin’s Past Highs for Clues on Current Price Movements
Analyzing Bitcoin's Price Action at Previous ATHs | Credit: Hameem Sarwar
Key Takeaways
- The Bitcoin (BTC) price reached a new all-time high on Nov. 13.
- On-chain indicators suggest Bitcoin has more room to grow.
- How similar are the current readings to the two previous BTC cycles?
The Bitcoin price increase has accelerated in the past two weeks, leading to a new all-time high price of $93,482 on Nov. 13. Interestingly, the BTC price has suffered almost no pullbacks since breaking out.
Let’s analyze the profit-taking behavior and price action at the two previous all-time highs and see if it can help determine when it will top this time.
Bitcoin’s All-Time High
Since Bitcoin is at an all-time high, all of the circulating supply is in profit. The chart below shows the percentage of supply held in profit. It is interesting to look at the consecutive days this indicator stood above 90% to determine how long the current increase will last.
In the 2020-2021 bull cycle, the on-chain indicator stood above 90% for five months, between November 2020 – April 2021, with only one major correction (red) in between (black circle).
The 2017-2018 cycle was different, since the indicator was above 90% for a year but had four corrections (black). The phases without a major correction lasted for a maximum of three months.
So, the analysis of previous cycles does not help determine how long the phase lasts, since the two previous times BTC broke out from its all-time high it behaved differently.
However, it suggests that the price can trade for a maximum of three months before suffering a major correction.
A similar outlook is given when looking at the profit taking since the all-time high. In the 2016-2017 bull market, monthly profit-taking (green) crossed $30 billion. In the 2020-2021 BTC bull market and in March 2024, the indicator crossed $50 billion.
On the other hand, the indicator is still at $20 billion in the current bull market. Since it would make sense for profit-taking to be even higher in the current cycle because of the higher Bitcoin price, the metrics suggest that the price has not topped yet.
Bitcoin’s Cost Basis Bands
Since the Bitcoin price is at an all-time high, there is no resistance above to determine targets for the next high. However, there are some models that can be used to determine the next areas of resistance.
One such model uses the short-term cost basis and adds standard deviations above and below to determine tops and bottoms.
In the 2016-2017 BTC cycle, the price crossed the upper band (red) three times before finally reaching a high. It did the same in the 2020-2021 market cycle (black)
In the 2024 movement, the Bitcoin price has not moved above its upper band once. It reached it in March 2024 before falling. It is currently extremely close to the upper band, which is at $98,000. If the previous history is followed, BTC will cross it three times before reaching the top.
Another model , the PI Market cycle top, has not yet made a bearish cross, perfectly predicting the previous Bitcoin market cycle highs.
So, the analysis of on-chain data suggests the Bitcoin price has much more room to grow.
Another Bullish Quarter
While the Bitcoin price has reached a new all-time high, previous history shows that the price has traded without a major correction for roughly two months. Also, an analysis of the cost basis of short-term holders suggests there is more room to grow. The Bitcoin price may increase for the entire first quarter of 2025 before entering the period for a possible top.
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