The cryptocurrency world is witnessing a resurgence reminiscent of its early 2019 boom, as Bitcoin (BTC) has made a remarkable recovery, more than tripling in value during the first half of the year. This growth represents a significant bounce back after a year-long bear market that had previously plagued the digital asset.
Predicting a $45,000 Peak for Bitcoin
Vetle Lunde, a senior analyst at K33 Research, suggests that Bitcoin’s current surge closely mirrors its early 2019 trajectory, potentially leading to a peak valuation of around $45,000 in the coming month. As the largest cryptocurrency by market capitalization, Bitcoin has experienced an 80% rally this year, outperforming traditional risk assets such as the tech-heavy Nasdaq index.
This impressive rally follows a 12-month decline during which Bitcoin’s price plunged by 76% before finally bottoming out in November 2022. According to Lunde, the pattern of decline and recovery shares striking similarities with the 2018-19 bear market in terms of duration and trajectory.
Analyzing the Patterns of Bitcoin’s Market Cycles
Lunde highlights that the duration of the bottoms in both cycles lasted approximately 370 days, and that the peak-to-trough return after 510 days of both cycles reached 60%. In his recent note to clients, Lunde stated, “In 2018, the bear market rally topped 556 days after the 2017 peak, on June 29, 2019, with a 34% drawdown from the peak.”
History may not repeat itself exactly. However, Lunde suggests that if the current fractal pattern continues, Bitcoin could reach its peak valuation of $45,000 around May 20th.
A Look Back at Bitcoin’s Previous Market Trends
In 2018, Bitcoin experienced an 84% decline, with its prices reaching a low point of nearly $3,100 in December. However, the trend shifted in the subsequent months, as Bitcoin’s value increased to $3,700 by the beginning of 2019 and later soared as high as $13,800 by the end of June.
The crypto community on Twitter has widely referred to Bitcoin’s year-to-date rise as a “hated bullish move,” given that numerous prominent traders had anticipated a continued sell-off in the first quarter. A “hated” bull market typically emerges during periods of peak pessimism, gaining momentum when investors who reduced risk in expectation of a prolonged downturn start feeling underexposed and rejoin the bullish trend.
Lunde observed, “The hated rally of 2019 ended with a significant blow-off top before BTC resumed trading at a 40-60% drawdown from its 2017 all-time high (ATH). The early 2023 rally has all the hallmarks of a hated rally.”
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