Technology
Tuesday, July 2nd, 2024 2:21 pm EDT
Key Points
- Bitcoin has not yet reached the peak of its current appreciation cycle and is expected to surpass its all-time high this year, according to CCData’s research report.
- The surge to Bitcoin’s record high in March was driven largely by the approval and launch of spot Bitcoin ETFs in the U.S., which attracted significant net inflows of around $14.41 billion.
- Historical trends analyzed by CCData indicate that Bitcoin’s halving events typically precede periods of extended price expansion, suggesting that the current cycle could continue well into 2025 despite temporary fluctuations and low trading activity expected in the third quarter.
According to a research report by CCData, Bitcoin has not yet reached the peak of its current appreciation cycle and is expected to surpass its all-time high within this year. Bitcoin hit a record high of over $73,700 in March but has since been fluctuating between approximately $59,000 and $72,000. This recent surge was primarily fueled by the approval and launch of spot Bitcoin exchange-traded funds (ETFs) in the U.S. in January, which have attracted net inflows of about $14.41 billion. ETFs provide a way for investors to track Bitcoin’s price without owning the cryptocurrency, thereby legitimizing the asset class and attracting larger institutional investors.
Bitcoin’s price movements typically follow cycles that include reaching a new record high and then entering a bear market or “crypto winter.” These cycles often coincide with halving events, where the reward for miners is halved, reducing the Bitcoin supply. Historically, Bitcoin’s price expansion tends to occur after a halving event, but the current cycle deviated from this pattern by reaching a record high before the latest halving due to optimism surrounding the ETFs.
CCData’s report, which analyzed historical Bitcoin price trends, indicates that Bitcoin can reach a new height. The firm notes that historically, the halving event has always been followed by a period of price growth lasting from 366 to 548 days before reaching a cycle top, with each cycle lengthening due to the maturation of the asset class and reduced volatility. The latest halving took place on April 19, suggesting that the current cycle has room to grow further, potentially into 2025.
The report also observed a decline in trading activity on centralized exchanges for nearly two months post-halving in previous cycles, a pattern that seems to be repeating. This decline hints that the current cycle could extend further. While institutional involvement in the market has altered previous trends, leading to lower trading activity anticipated in the third quarter, CCData believes that this sideways price action is temporary. The firm predicts that Bitcoin is likely to surpass its previous all-time high before the year ends.
The report points out that the upcoming launch of an Ethereum ETF in the U.S. and similar products worldwide are expected to bring additional capital, liquidity, and demand to the asset class. Another key historical observation is that significant price appreciation in Bitcoin typically occurs over a short period. For instance, in the 2012 cycle, 91.4% of Bitcoin’s price increase from halving to the peak occurred in the four months leading to the cycle top. This percentage was 78.8% in 2016 and 71.5% in 2020.
CCData asserts that such rapid expansion has not yet occurred in the current cycle. Other analysts, like Thomas Perfumo from cryptocurrency exchange Kraken, also note that historical patterns, including market cycle peaks occurring 12 to 18 months post-halving and a series of new highs within a short window, have not yet manifested in this cycle. Perfumo suggests that these signals, which have not been triggered yet, are indicative of Bitcoin’s potential to achieve new highs in the near future.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/02/bitcoin-to-hit-new-all-time-high-this-year-if-history-plays-out-report.html
