The recent dip in Bitcoin price has sparked fear that we've hit the top, and it's all downhill from here. But do we have any metrics to support that conclusion, or is it actually exactly the opposite? Let's find out.
1. Does Bitcoin's peak in May resemble a cycle top?
Not quite. Historically, Bitcoin deviates from its fair value by more than 73% to signal a top. In May, we were only 13% above fair value, indicating we are far from cycle top. Now, we're actually undervalued about 20% (fair value at ~$71K).
2. How long after halving does Bitcoin tend to reach an all-time high?
Bitcoin's history shows it typically reaches a new all-time high within 12-18 months after a halving event. 🕰️
- 1st halving: 12 months to new ATH
- 2nd halving: 17 months
- 3rd halving: 18 months
On average, 15.7 months post-halving. ⏳
3. Does the total cryptocurrency market capitalisation's peak in May resemble a cycle top?
The total cryptocurrency market capitalisation (TMC) also adheres to a power law growth model. Current deviations from fair value are significantly less pronounced than those observed in prior cycles. Values above 71% deviation signal a potential top, and we only touched the TMC in May. Currently, we are heavily undervalued.
4. Are we expecting a quantitative easing that will boost global liquidity?
Although the start of rate cuts leads to a short-term drop in “risky assets,” the end of the rate cuts skyrockets the valuation of these assets. For example, if we assume that BTC will see an all-time high only 12 months after its halving, and that it will only touch its +2 standard deviation line (green line), that brings Bitcoin cycle top value close to $169K.
5. Bitcoin adoption by institutions, countries, and high-net-worth individuals is gaining momentum
Following the approval of the US spot BTC ETF, a new standard in ETF history will be set. As billionaires like Michael S. Dell mention BTC amid mounting US debt, it solidifies its role as the premier 'hard' asset in portfolios. ETF approval will inject capital into crypto markets, indirectly benefiting altcoins. The exponential rise in US debt underscores the urgency for institutions and high-net-worth individuals to hedge risks with BTC (even a small percentage), potentially driving it to seven-figure valuations in the coming years.
6. US elections and Blackrock's influence on the crypto market
The US elections have turned into 'crypto elections' as candidates vie for the 16% of Americans invested in crypto. Meanwhile, Blackrock's influence, highlighted by Larry Fink's endorsement of Bitcoin and blockchain innovation, has shifted SEC policy. A pro-crypto president could accelerate legislative approvals, boosting market prospects post-election.
Instead of panicking during Bitcoin's dips, consider whether this is an opportunity or not.
When you are in doubt, monitor these metrics and ask yourself the following questions:
1. Do I foresee Bitcoin and the crypto market growing in 2025?
2. Can I envision institutional investors, countries, and high-net-worth individuals allocating a portion of their portfolios to BTC by 2025?
3. Do you anticipate global central banks lowering rates and boosting liquidity in 2025?
If your answer is yes, consider Dollar Cost Averaging (DCA) when opportunities arise, aligning with your risk tolerance. Embrace the immense potential of the year ahead.
