Run the Numbers #10: Bitcoin Price Heating Up

Bitcoin & Data Science

2020.11.07

Next month it will have been three years since the price of Bitcoin hit an all time high of nearly $20,000. Since then we’ve seen a dramatic selloff to $3,000, a climb back to $12,000 followed by another dip to $4,000, and a steady climb back to that $12,000 level this summer. The price then remained pretty stable for several months until this time last month. Since then we’ve seen trading volume creeping up and the price rocketing up to $16,000 where we currently sit.

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Chart from TradingView.com

People who have been in Bitcoin for at least a few years have seen this before. Like clockwork, the Bitcoin price has gone through a major bull market once every four years since its inception in 2008. The chart above, shown in logarithmic view (ticks on the y-axis are in percentage change, not absolute value change), shows the previous two four-year cycles. Of course the future is not guaranteed, but many Bitcoin holders and traders believe the next bull market cycle is just getting kicked off.

If history is to repeat itself once more, analysts predict the price of Bitcoin could reach $100,000 to $250,000 by 2022. This may sound ridiculous, but remember people thought it was ridiculous when Bitcoin hit $100, $1,000, and $10,000. There will inevitably be a lot of volatility along the way — in the past we’ve seen 35% selloffs mid-bull market — but I personally would not want to be on the short side of this trade. A lot of traditional investors are still too stubborn to see that Bitcoin is valuable. Over time, as Bitcoin continues not to die year after year, more and more people will slowly come around and have to buy some. Once large institutions start buying (they already have), no one will want to the last to the party.

“The changes to humanity are set in motion and it’s unstoppable. Because Bitcoin rearranges people’s minds and reorders their consciousness, these changes are permanent. Ultimately the only thing that matters is that Bitcoin has no top because fiat money has no bottom.” — Max Keiser