According to both the chartbois and the memers on Twitter, 2021 was supposed to be a breakout year for bitcoin. 2020 to 2021 saw the run up from $7,000 up past $60,000, but we didn't quite hit that out-of-control euphoric feeling that everyone expected, so many predicted that the bull run would resume. This was a supercycle, after all.
Then we dropped back down to $29,000 in July, a price not seen since January of the same year. It seemed the bull run was over! Of course, when everyone agrees the bull run is over, that means the bull run is still going, and fresh highs were minted just four months later in November. Super cycle confirmed.
As of December, we're down back into the $40,000's. As I update in May of 2022, we're back down to $29,000. Does anybody actually know what's going on? Nope.
Nobody really knows what's going to happen in the future, and that's the main thing to keep in mind. Predictions are just guesses as to what's going to happen in the future, so if you come away with anything from this article, it's going to be to not base your purchases based on price models you see on Twitter and Reddit.
I have to admit though, even though I'm not a chart guy, I certainly won't pass on a little bit of hopium. It's kind of interesting to see what the top traders in the bitcoin space are predicting for future of bitcoin's price action. Predictions vary, but they all have one connecting thread: the price of bitcoin is going up and to the right.
6 Bitcoin Cycle Predictions
1. 4 Year Cycles
Repeating The 2017 Blow-Off Top
Many people currently holding bitcoin vividly remember the 2017 run up and how crazy things got. Bitcoin started off 2017 sub-$1,000, and then, in a period of about one month, the price of bitcoin basically doubled from $10,000 to $20,000, which ended up being the peak of that run. Afterwards, a bear market ensued for about 3 years.
Mapping the 2017 euphoric run onto 2021 charts, gives us a top somewhere between $200,000 and $500,000. However, looking at charts right now, with the dip from $69k down to $47k (and still dropping), we'd need a serious run to make the case that a 2022 bull run would be a continuation, so many people are calling for a repeat of the 2013 “double-top”.
Repeating The 2013 Double Top
Back in 2013, the price of bitcoin went from about $10 per coin to about $200, then popped. Then the price crashed. Over right? Nope. After several months of crab walking, dips, and fake-outs, the bull run resumed and topped out at over $1,000.
That's over 100x returns in a single year. Wow.
In 2021, we hit $64k, then $69k, but to many, it didn't seem far enough. Where was the euphoria? Everything seemed pretty normal. Sure, there was some celebrating going on, but none of the feelings of, “Holy shit this thing might go to a million.” seemed to appear. It was just business as usual.
So folks started drawing comparisons to the 2013 bull cycle and considering that we may see another massive run up in late 2021, going into 2022. If we repeated the 2013 double top, we'd still be in the 4-year market cycle paradigm, maybe flip-flopping between single and double tops.
I couldn't find any specific charts, but I know they're out there. A 100x run from the bottom of the bear market would put bitcoin at a price of $300,000 up to $500,000 per bitcoin.
2. Lengthening Bitcoin Cycles
Another interesting theory about bitcoin cycles is that they are lengthening over time. Some people point to calendar days to measure this, but I think it's much more interesting to point to bitcoin block time.
The reasoning behind lengthening cycles could be a result of many different things, including narrative shift, halving of bitcoin rewards, more miners causing the difficulty to increase, or more liquidity in the network.
Like all cycle predictions, it's hard to say for sure if there is actually a pattern here. Though bitcoin has been around for more than 10 years, there have only been three halvings during that time. We basically only have two data points since the third halving cycle hasn't completed yet, so it's unclear if there is any pattern at all.
A lengthening bitcoin cycle would have us top out sometime in March or April 2022 at a price somewhere around $300,000 USD per bitcoin.
3. The Supercycle
The idea of the bitcoin “supercycle” seems to have been popularized by Dan Held. What's interesting is that he doesn't make his argument with charts. Instead, he points to macroeconomic factors that could fuel a larger-than-normal bitcoin run, including unprecedented money printing by The Fed and the subsequent runaway inflation, as well as the de-risking of bitcoin investment by institutional players.
The supercycle is less about specific price targets, and more about recognizing that bitcoin has arrived. A supercycle could imply a multi-year bull market, or many smaller bull runs as part of a larger decade-long bull market, as we head into the medium of exchange phase somewhere around 2025-2030.
One variation on the “super cycle” is that we are at the beginning of a new cycle.
4. Frequent Short Term Cycles
I think the most under-discussed, and underrated model could be this one from @LylePratt, showing bitcoin's growth as a series of mini-pumps, with the 2015 extended bear market as an anomaly.
He makes the point that the Mt. Gox hack was such a catastrophic event that it shook the Bitcoin industry for longer than usual. Anecdotes from the time seem to corroborate this sentiment, with many saying that the 2015 bear market was the toughest to hodl though. Many people at the time weren't sure if bitcoin would actually come back from the dead.
Lyle doesn't attempt to explain where the pumps are coming from, but maybe it doesn't matter. Bitcoin's path from a digital novelty to a globally accepted form of money is bound to be choppy, so maybe what we can expect for the next few years will simply be more of the same: pump ➡ dump ➡ consolidate higher ➡ repeat. Maybe a few crab walks in between.
From this perspective, it seems that $69,000 was this cycle's top, and we're just waiting around for the next cycle to hit.
5. This Cycle Is Different…
Let's not also discount the idea that there is a larger pattern at play, but for some reason not obvious to us right now, this cycle is the unique one. After all, there is a global pandemic, nationwide lockdowns, unprecedented money printing around the world, supply chain issues, and other unique macroeconomic events. We are living in unique times.
Maybe this means we topped out at a measly $69k for this bull run, and we will crab walk for 3 years until the next halving. Maybe we have a triple pump, hitting $64k, then $69k, then something above that. Maybe we grind higher for a year and don't ever see a euphoric, god-tier pump like previous years. We could move into 8-year cycles, or 10-year cycles, or 1-year cycles. Literally anything is possible.
As humans, we look for patterns. This is how we are able to identify danger and opportunity. Unfortunately, this can be a logical fallacy as well, and we may see patterns where there are none.
I think a lot of bitcoiners would say that there simply are no patterns in bitcoin price action because you can't predict demand. Although bitcoin issuance is programmatic, demand for bitcoin is a real-world variable which cannot be accounted for in any model. Independent decisions of individual actors in the market are always an unknown. It doesn't matter if your chart is bearish and a country makes bitcoin legal tender – the price is going up. It doesn't matter if your chart is bulling and an eccentric billionaire tweets out some energy fud. The price is going down.
6. Hyperbitcoinization
Probably the most bullish of scenarios is the idea of hyperbitcoinization. This is the idea is that bitcoin running full steam ahead to global adoption, and once “the herd” realizes this, it's game on.
The future is here. It's just not evenly distributed.
William Gibson, The Economist 2003
No one pretends to know how bitcoin's price action plays out in a hyperbitcoinization scenario, but one of the more exciting scenarios is jokingly called Stock-2-Fomo, a play on the famous Stock-To-Flow chart from Plan B.
What this would mean for the world we live in has been talked about many times.
Does this mean that the dollar will hyperinflate to nothing while people find refuge in sats? Will bitcoin and the dollar be used side by side while all other currencies hyperinflate, with bitcoin being used as a store of value while the dollar is used as a medium of exchange?
The main question on everyone's mind is will the transition be peaceful or violent? The past few years around the world have been filled with distress, death, protests, lockdowns, and lies. We're not out of this thing yet. Everyone is on edge, and nobody knows how it ends. Will bitcoin be the pin that pops the bubble, or will it be the life raft?
In a hyperbitcoinized world, its price in dollars would likely be meaningless. After you pass about $10,000,000 per coin, using the dollar as a measuring stick for the value of a bitcoin would not make sense anymore. You'd have to price your bitcoin in something with more stable value, like real estate. For example, a million sats could buy you an average 3-bed 2-bath home in suburban America, or a hundred thousand sats would be a decent yearly wage.
This comparison of real-world goods and services, and negotiation of prices in bitcoin would mark the shift towards bitcoin being the global unit of account.
The world is being repriced in sats
Bitcoin Axiom
Regardless of how it happens, or how long it takes, when it's over, we'll be living in a different world, where Bitcoin is the dominant money.
All Models Are Wrong, But Some Are Useful
The truth is, no matter how much you trace out the past and model the future, what happens in reality is not predictable. As a matter of fact, pretty much every price model that was popularized in 2020 and 2021 has been wrong.
As the saying goes, all models are wrong, but some are useful. Basically, what that means is that there is no model which is perfectly going to predict a specific price on a specific day, but some projections can be generally correct.
With Bitcoin, I think it can be useful to take an even broader approach. If you believe the bitcoin story, then intraday or even yearly price trends don't matter that much. Long term, bitcoin go up and to the right.
Market Timing VS Stacking Sats
I don't know when bitcoin will go up, and I don't know how much it will go up. I don't know if it'll repeat the 2013 cycle or the 2017 cycle or form a new cycle unique to all others. Is this time different? Probably a little bit. I'm not sure how much though. Nobody does. If you bet the farm based on chartboi analysis on Twitter, you're gonna get rekt.
Here's a great example. The tweet below is from “genius” Twitter chart analyst who has figured out that there's a single red and a couple of green monthly candles at the end of each market cycle.
Could there possibly be some kind of fundamental, technical reason for this phenomenon? I doubt it. Most likely it's just a coincidence.
My solution is to focus on what I do know, and for me, that means waking up and choosing to own bitcoin based on its fundamental value proposition. I own bitcoin because it's better than any other asset out there. It's harder than dollars. It's faster than gold. It's more versatile than stocks. It's more liquid than real estate.
I'm not owning bitcoin temporarily because I think it's going to follow some kind of predictive model. I own bitcoin because I think it's already a great money. There's a lot of people who haven't figured that out yet, but they will.
What Is The Bitcoin Orange Pill?
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