Summary Past Halving Cycles suggest that the "100x"-type return is behind us, where the bull market upside diminishes with each cycle. Bitcoin is expected to remain between the $40,000-$50,000 price level until the Halving Event in April 2024. Bitcoin is expected to rally to about $90,000 by April 2025. Technicals and Fundamentals both lack the support for upside surprises past $100,000 per Bitcoin. However, outsized returns are still made possible by following a certain strategy. Introduction Predicting the Bitcoin price movement may be difficult for some. However, after going through this article, you should be able to grasp the general price movement depicted by the decade-old Bitcoin Halving cycle. We have not only shown that this cyclical behavior has successfully predicted nearly all major Bitcoin price movements but was also accepted in an academic scientific publication . This should give you sufficient conviction in our thesis presented in this article. It has been a while since we updated our thesis, so we think that the time is ripe for us to update it amidst the historic approval of the spot Bitcoin ETF. This event coincides with a new Halving Cycle that is expected to take place in only about 3 months out (May 2024). Therefore, we expect the availability of the spot Bitcoin ETF to act as the main fundamental catalyst to drive Bitcoin to $100,000 and beyond in the long run, just maybe not before 2025. We hope this gets you as excited as we are. What The Bitcoin Halving Cycle Entails For The Rest of 2024 We think that the Bitcoin Halving Cycle is the driving force of Bitcoin's cyclical price movement. During the May 2021 Bitcoin bear market, this cyclical price movement helped us identify 5 sequences of events to follow as below: Reversal pattern [✓] 50% decline from peak - $30,000 [✓] Rebound back to 20% from peak - $54,000 [✓] Another decline to 70% from peak - $ 21,000 [✓] Bottom out at 85% from peak $10,500 [X: Bottomed out at $15,000] Figure 1: Bitcoin Halving Cycle Projecting 2024 Bitcoin Price Expectations (TradingView, Author) By referring to Figure, we can also see that this cyclical price movement managed to identify the start of the current recovery phase that is expected to span to April 2024. We expected Bitcoin to be between $40,000 and $50,000 for the remainder of the recovery period. This expectation is founded on the observation that Bitcoin did not manage to reclaim its ATHs during the previous 2 Bitcoin Halving Cycles and had settled at about 50% between the bull market highs and the bear market lows within the same cycle. Consider the following: During the Bitcoin recovery phase (between Jan 2015 and July 2016) of the 2012 Cycle, Bitcoin kicked off its bull market at about $680, the middle between the bull market high of $1,200 and the bear market low of 160. During the Bitcoin recovery phase (between Dec 2018 and May 2020) of the 2016 Cycle, Bitcoin kicked off its bull market at about $10,000, also the middle between the bull market high of $19,000 and bear market low of 3,100. Given that the current bull market high is about $70,000 and the bear market low is about $15,000, we expect the bull market to kick off at about $42,500. Shortly after, we expect the next Halving event to occur. Consequently, we expect Bitcoin to reach its $70,000 all-time high ("ATH") at about 3 months after the 2024 Halving Event before reaching a conservative new ATH at about $80,000 to $90,000 by April 2025. This price target isn't as glamorous as one would think, and it certainly isn't the "100x Return" Thesis that can get everyone excited. We think that the 100x Bull Market is behind us. Here are the Technical and Fundamental justifications. Technical Justifications By referring to Figure 1: The 100x bull run was found only during Bitcoin's very first Halving Cycle bull market in 2012 where the price rose from $12 to about $1,200. The following Bull Market in 2016 Bitcoin rose 32x (from about $600 to about $19,000), down from 100x. During the following Bull Market in 2020, Bitcoin only rose 8x, down from 32x. Therefore, there is a clear trend that the upside potential during each bull run diminishes after each cycle. If we conservatively extrapolate this, We only expect Bitcoin to rise about 2x-3x (down from 8x) from the current price. Based on this assumption, a 2x bull run will take Bitcoin from $42,500 to $85,000. This is very close to the $90,000 resistance level imposed by the Bitcoin Halving Cycle depicted in Figure 1. This is a rather underwhelming return in crypto land. Fundamental Justifications Technicals aside, we also need to look for actual fundamental drivers to support the technical projections. The thesis that Bitcoin can break $100,000 is built on the assumption of institutional demand. The approval of Spot Bitcoin ETFs enables this exact feature, hence the extremely bullish sentiment for Bitcoin. However, when we guesstimate the level of demand, what we found was that the approval of Bitcoin ETF is ill-timed for Bitcoin upside surprises because of several potential economic weaknesses. These economic weaknesses include: The overall M2 money supply has shrunk for the first time in decades. The elevated interest rates, compared to the pre-COVID-19 era, make it difficult for businesses to raise fresh funds or refinance maturing bonds. The unrest in the Middle East could also spark a broader conflict which could trigger inflation and higher-for-longer interest rates. Another wave of layoffs has surfaced recently. This indicates that businesses are expecting a slower 2024 and that businesses, institutions, and individuals are expected to have less liquidity to support Bitcoin demand. Therefore, it looks more difficult for Bitcoin to break the $90,000 psychological level (the decade-old resistance) on the back of such potential economic weakness. This is because these weaknesses could translate into weaknesses in institutional, business, and retail demand for Bitcoin. Verdict Just to be clear, we're bullish on Bitcoin. Just that we're not expecting any upside surprises past $100,000 despite the bullishness from the historic spot Bitcoin ETF approval. In summary, here is what the Bitcoin Halving Cycle could entail for 2024: We project Bitcoin to remain between the $40,000-$50,000 price level until the Halving Event in April 2024. We expect Bitcoin to rally to about $80,000-$90,000 by April 2025. Technicals and weaknesses in fundamentals suggest less probability of a Bitcoin upside surprise beyond $100,000. That being said, it is still possible for the upcoming bull run to take Bitcoin into post-$90,000 uncharted territory. Should that happen, as credible as this Bitcoin Halving Cycle could get, this cycle could be its last as this thesis can only project up to $90,000. It is also certainly to our benefit that Bitcoin breaks to the upside. In the meantime, investors are still able to earn outsized returns with this modest and conservative expectation through our strategy. We detailed a method where investors can double potential returns and halve potential losses. So far it has worked very well for us. We made a slight adjustment where we exited our June 2024 maturity BITO call options (which were targeted to capture the Recovery Period) and entered the $15-strike June 2025 call options in June 2023 to cover the entirety of the upcoming 1-year bull market. Our cost basis for each contract is $3. Hence, our breakeven price is $18 (=$15 strike + $3 premium) per BITO. As of the time of writing, BITO is trading at $22 per share. This provides us with a $4 profit or 120% return on investment if we were to exercise our rights. The BITO $15-strike June 2025 call options are also trading at about $8.00 per contract, which also yields a similar return. Hence, we maintain our trading strategy to capture more upsides.
