Bitcoin: Price, ROI, and Bull Run Patterns

DISCLAIMER: This is not financial advice; the article is for educational purposes only. These observations, takeaways, and predictions are based on my direct experiences with Blockchain and Cryptocurrencies for 10 years and have seen it evolve, crash, morph and grow. I am not a qualified financial advisor, please consult a professional for investment advice. I am also not advocating investing decisions based on any specific analysis mentioned in this article.

There is a lot of euphoria in the market nowadays with Bitcoin bulls and bears tearing the sentiments to extremes. Having seen all these cycles closely and been through all the FUD, FOMO, and HODL games, I have some observations.

Normally, I refrain from price predictions, ignore naysayers, and never fall for the euphoria created by self-proclaimed crypto gurus on YouTube but do my own analysis based on data, facts, and trends. There have been several times I have gone wrong, or my calculations have been off, but such is life in the crypto world, and I have learned to embrace these things.

Personally, I do not see Bitcoin hitting $300-400K in 2021

There are many observations and trends I wanted to share, hopefully, this is valuable for many people to put things in perspective.

There are many people rooting for a $300,000 to $400,000 Bitcoin by September, personally, I see a very slim chance of this happening based on my own analysis. Let us analyze all four cycles and look at the key takeaways below.

• The current bull cycle arrived a couple of months early when compared to prior cycles when you plot time from the prior halving events or time from historic lows making this cycle a tad different.
• All the three prior bull runs have gone through the same motion i.e., exponential highs, correction, accumulation, recovery-continuation, and then finally retracement to lows.
• The ROI from one cycle to the other diminishes significantly and the time from cycle bottom to cycle top keeps getting longer, which makes bull runs last longer.
• Bitcoin cycle 1 delivered 67,000% return over 46 weeks, cycle 2 was 58,000% return over 106 weeks; time from bottom to top of cycle doubled between these two cycles. Cycle 3 was 10,000% return delivered over 152 weeks; each cycle gets longer by approximately one year.
• If you consider Dec 2018 as the very bottom we have added 126 weeks in the current cycle and hence have not peaked. Extrapolating from prior data, this cycle should go to ~200 weeks, putting us in Q4 of 2022.
• Many people are calculating a 152-week bull run (mirroring cycle 3) and hence concluding the end of the bull market in Q4 of 2021, hence I am wary of the claims leading to the $300-400K numbers in 2021 at least.
• We will have a cool-off phase and then we go to a cycle top, and we will continue to get diminishing returns in this cycle.
• The volatility reduces exponentially with every passing cycle. Although newcomers feel it is volatile, for those of us who have been in this for as long- it is at its materially less volatile than what was experienced in prior cycles.
• The FUD (fear, uncertainty, doubt) factors also diminish with each cycle. The FUD created by Mt.Gox, Silk Road, Jamie Dimon statements, Warren Buffet sentiments, Chinese government bans threw prices downward materially by 30 to 60%. We do not see markets tanking on threats from India or Turkish governments threatening to ban it and fluctuations are relatively minor on things like Tesla decisions. Every cycle is more resilient to FUD.

The above measurements are “bottom to top”, so cycles can be more accurately sized and analyzed. There are two other ways to analyze things, but in my own experience they have been less accurate, but I wanted to give the full picture. I will personally go with the bottom-to-top cycle measurement.

• Bottom to bottom analysis reveals cycle 1 was 128 weeks, cycle 2 was 160 weeks, cycle 3 was 212 weeks. We could assume this cycle would run 275 to 300 weeks, putting us at the complete bottom in the summer of 2023.
• Top to top analysis shows cycle 1 was 69 weeks, cycle 2 was 166 weeks and cycle 3 was 206 weeks. If the current cycles go to 300 weeks, then the bottom ends up in March 2024.

The bull run cycle duration and prices go up while ROI, volatility and FUD factors keep reducing each cycle

If we assume, the rate of diminishing post-halving returns to be constant across these cycles, then Bitcoin could rally closer to $96,000 and in an overextended rally if it breaks $100,000 without being rejected at that psychological barrier, then there is nearly a 25% upside taking it to $125,000 in the current cycle when it ends.

Yes, this cycle is different and there are institutional investors and real use cases and all that stuff. But these are my predictions, what are yours?