According to data from cryptocurrency research firm K33, Bitcoin has been fluctuating since it broke the $100,000 milestone earlier this month. However, history indicates that it could reach a new historical peak around mid-January next year.
Bitcoin reached an all-time high of $108,309 on December 17 but plummeted last week alongside the stock market after the Fed hinted that the rate cuts in 2025 would be lower than previously expected by policymakers.
According to data from K33 research director Vetle Lunde, based on Bitcoin's data from the past three cycles, the average duration from the first to the last historical peak in each cycle is 318 days. With Bitcoin reaching its first historical peak on March 5 of the current cycle, if the average duration of previous cycles repeats, investors might see this cryptocurrency reach a new peak in this cycle on January 17, 2025.
Cryptocurrency analysts typically divide Bitcoin's price performance into a four-year cycle, each of which goes through four phases: breakout, hype, correction, and consolidation. This division of cycles is primarily based on the Bitcoin halving schedule, a mechanism that controls the supply of the cryptocurrency. Halving refers to the reduction of the rewards for Bitcoin mining by half, occurring approximately every four years, with the most recent one happening in April this year.
If Bitcoin really reaches its cyclical peak around mid-January next year, it will be close to Trump's inauguration as President of the United States on January 20.
"Trump's victory has always been the catalyst behind Bitcoin's strong rebound in the fourth quarter, and given that the political process may take time to unfold, Trump's inauguration will mark a natural end to this momentum," Lunde wrote in a recent report.
Lunde pointed out that, based on estimates of previous cyclical peak prices, Bitcoin could peak at $146,000 in this cycle. He added that when using previous market capitalizations as a reference, Bitcoin could reach a peak of $212,500 in this cycle.
It is certain that Bitcoin's history as an asset is relatively short, having only launched in 2009. Due to such a small sample size, its historical price data may not be meaningful enough, and past performance does not always predict future performance. In fact, Lunde points out that as the effects of halving diminish, Bitcoin's cycle has become less pronounced.
Analysts at cryptocurrency trading firm QCP Capital noted in a report on Tuesday that currently, as 2024 approaches its end, enthusiasm in the cryptocurrency market seems to be waning. As of Monday, spot Bitcoin exchange-traded funds (ETFs) have seen outflows for three consecutive days.
Additionally, MicroStrategy announced on Monday that it spent $561 million to purchase 5,262 Bitcoins at an average price of about $106,662, increasing the software company's total Bitcoin holdings on its balance sheet to 444,262. However, QCP analysts noted that "this is the smallest purchase it has made in recent weeks, raising questions about its appetite for buying Bitcoin at current levels."
While stock market bulls are hoping to enter the new year with a 'Santa Claus rally', this phenomenon does not necessarily apply to Bitcoin.
According to Dow Jones Market Data, since 1950, the S&P 500 has been up 77% of the time during the Santa Claus trading window. But Bitcoin's situation is different; since 2010, during the Santa Claus trading window period, Bitcoin has only been up half the time. However, it is certain that unlike stocks, Bitcoin is traded every day, so the year-end trading windows for these two assets are slightly different.
In addition, Tyler Richey, a technical analyst and co-editor at Sevens Report Research, wrote in an email comment to MarketWatch that since Bitcoin rose above $100,000 earlier this month, its trading volume has been steadily declining, indicating that bullish sentiment has been fading.
Nevertheless, from a technical perspective, if Bitcoin rebounds to $100,000, "this would be a natural rebound following its sudden weakness after the Fed's interest rate cut last week," Richey pointed out.
He wrote in a comment: "If Bitcoin breaks through the congestion resistance between $100,000 and $101,500 on the daily chart, then retesting the current closing record and intraday record between $106,000 and $108,000 will be very likely."
"From there, failing to break new highs would be a bearish signal, and the support level at the low of $90,000 would again become the focus, while new highs would reignite bullish technical signals for Bitcoin, targeting $118,000," he added.#BTC☀