Bitcoin has been wobbling since breaking the $100,000 milestone earlier this month, but history suggests it could hit a new all-time high by around mid-January, according to cryptocurrency research firm K33.
Bitcoin hit an all-time high of $108,309 on Dec. 17 but tumbled along with stocks last week after the Federal Reserve signaled a smaller rate cut in 2025 than policymakers had previously expected.
According to K33 research director Vetle Lunde, based on data from Bitcoin's past three cycles, the average duration from the first to the last all-time high in each cycle was 318 days. With Bitcoin hitting its first all-time high on March 5 of the current cycle, if the average duration of previous cycles repeats, investors could see the cryptocurrency reach a new peak for this cycle on January 17, 2025.
Cryptocurrency analysts typically divide Bitcoin's price performance into a four-year cycle, with each cycle going through four stages: breakout, hype, correction, and accumulation. This division is primarily based on the timeline of Bitcoin halving, a mechanism that controls the supply of the cryptocurrency. Halving refers to the reduction of Bitcoin mining rewards by half, occurring approximately every four years, with the most recent one happening in April this year.
If Bitcoin really reaches its cycle peak in mid-January next year, it will be close to Donald Trump's presidential inauguration, which is 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 the natural end of this momentum," Lunde wrote in a recent report.
Lunde pointed out that based on estimates from previous cycle peak prices, Bitcoin could reach a peak of $146,000 in this cycle. He added that when using previous market capitalization as a reference, Bitcoin could potentially touch a peak of $212,500 in this cycle.
It is certain that Bitcoin's history as an asset is relatively short, having only been 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 pointed out that as the impact of halving diminishes, Bitcoin's cyclicality has become less pronounced.
Analysts from cryptocurrency trading firm QCP Capital noted in a report on Tuesday that currently, as 2024 approaches its end, the 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.
Furthermore, MicroStrategy announced on Monday that it spent $561 million to purchase 5,262 Bitcoin at an average price of about $106,662, raising the total Bitcoin holdings on the software company's balance sheet to 444,262. However, QCP analysts pointed out, "this is the smallest purchase it has made in recent weeks, raising questions about its appetite for buying Bitcoin at current levels."
Although stock market bulls look forward to entering 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 index has risen 77% of the time during the Santa Claus trading window. However, this is not the case for Bitcoin, which has only risen half the time in the Santa Claus trading window since 2010. However, it is certain that unlike stocks, Bitcoin is traded every day, so the year-end trading window for the two assets is slightly different.
Additionally, Tyler Richey, a technical analyst and co-editor at Sevens Report Research, wrote in an email comment to MarketWatch that since Bitcoin surged above $100,000 earlier this month, its trading volume has been steadily declining, indicating that bullish sentiment has been fading.
Nonetheless, from a technical perspective, if Bitcoin rebounds to $100,000, "this will be a natural rebound following its sudden weakness after the Federal Reserve's interest rate cut last week," Richey pointed out.
He wrote in his comments: "If Bitcoin breaks 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 highly likely."
"From there, failing to break new highs will be a bearish signal, and the support level at the low of $90,000 will come back into focus, while new highs will restart Bitcoin's bullish technical signals, targeting $118,000," he added.
