Run the Numbers #16: Bitcoin Price Hits All-Time-High

Bitcoin & Data Science

2020.12.19

It happened! Earlier this week, the price of Bitcoin smashed through its previous all time high of $20,000, touched a new high of $23,770, and has since retraced to about $22,500.

Source: tradingview.com

Its been a long journey since the 2017 peak, so congrats if you held throughout it. As usual, many wrote Bitcoin off as dead over the past four years but yet here we are again. Like clockwork, we have new price discovery months after the supply halving event. As the saying goes, past performance is not indicative of future results… but yet, it is playing out just as so many Bitcoin bulls have laid out. How could this be?

For one, the halving event that occurs once every four year literally cuts the newly minted supply of Bitcoin in half, until it will eventually fall to 0 new coins in about the year 2140. Since Bitcoin’s inception, this supply shock has caused one major price rally every four years. Secondly, as discussed in Run the Numbers #08: Bitcoin Stock-to-Flow, PlanB’s Stock-to-Flow model has gained wide attention and has many proponents. Sometimes, markets can almost create a self fulfilling prophecy, with everyone participating in the same trade based on the same predictive model. I suspect there is a little of that phenomenon happening here.

Predicting the price of Bitcoin is not my expertise, I prefer to just buy on regular intervals over time, smoothing out my average cost. But I can’t say I’m not excited to see the new all time high and where this run will take us.