Hedge fund founder Robert Breedlove believes that the Bitcoin slump may soon be over. Thanks to some retrospective analysis of previous booms and busts, the CEO of Parallax Digital concludes that the world may be on the cusp of entering a “super-cycle”.
The flagship cryptocurrency rallied aggressively on Wednesday, though, if you zoom out, the larger trend still remains quite muted. According to Breedlove, Bitcoin’s fall from grace in December 2013 registered a scary (but customary) drop of 85% from a peak of $1,184. It plummeted to just $166 a year later.
After almost touching a mind-blowing $20,000 a coin in December 2017, a similar drop took place last year. The move from $19,290 down to $3,320 is almost exactly the same in percentage terms coming in at 83%.
If we zoom out a little, the last two years have been pretty average. Let’s be honest, sideways markets are no fun for Lambo-lusting investors. But they do provide plenty of opportunities to stack sats in anticipation of the next parabolic rocket.
Breedlove uses Bitcoin’s bullish 50-day moving average (MA) crossover of its 200-day counterpart to signal the transition into the next upward run. Here’s an example from 2015:
He goes on to explain:
Around this cycle transition point, a parabolic price advance carried Bitcoin upward at an average of 19% per week for 11 weeks from a low of $161 to $504 for a total price advance of 213%.
Now compare this with 2019’s run:
Around this most recent cycle transition point, a parabolic price advance carried Bitcoin upward at an average of 12% per week for 27 weeks from a low of $3,231 to $13,788 for a total price advance of 327%.
Based on this evidence he speculates that Bitcoin will hit $20,000 by December of 2020 and will ultimately skyrocket to $240,000 by December of 2023.
Admittedly, since October this year, Bitcoin’s 50-day MA has crossed back down below its 200 MA which leaves this thesis somewhat questionable.
Nevertheless, the previous bear market did take three years before it reclaimed its former glory in 2013. If history is anything to go, there’s still plenty of time for Breedlove’s lofty prediction to come true.
As statistical Bitcoin analyst Thomas Lee points out, though, good luck trying to time this market with pinpoint accuracy:
Perhaps the most conclusive evidence that trading is a fool’s game. Just another reason they say keep calm and hodl on.
Last modified: August 10, 2020 4:39 PM UTC