Is Bitcoin still on its Path to Break 100K before the end of 2021?
Let’s start by imaging that we’re on a planet where someone (Let’s call them Xi) governs the quantity of all the natural resources available. Now, on a random morning, Xi wakes up and decides to limit the supply of gold and also reduce the quantity by half every 4 years. What do you think is going to happen next?
- Gold is going to be scarce,
- It would be hard to acquire,
- The cost of mining more of it would increase,
- And, therefore, its value over time will also increase.
Now coming back to our world, do we already have something that fits exactly in the above hypothesis; Bitcoin?
- Its total supply is limited to 21 million; there can’t be anymore,
- It is digital and hence can be carried and stored easily,
- Nobody can take it away from you (unlike gold/ Fiat),
- After every 210,000 blocks are mined, the mining rewards are halved,
- Therefore, a digital scarcity leads to an increase in its value.
To understand whether its price is going to hit $100,000, we must first look at why it increases in the first place.
The Bitcoin Halving
As most of us have a basic idea that bitcoin follows a 4-year cycle or after every 210,000 blocks are mined, the mining rewards are halved. The last time this happened in 2017, Bitcoin’s price saw a then all-time high of $19,800 which is approximately 16x than its previous high. Hmm, so what can we conclude from this?
- First halving: Nov. 28, 2012
ATH: June 06, 2011: $18.72
Price rallies to $953.14 on November 25, 2013
~50x from previous ATH
- Second Halving: July 09, 2016
ATH: Nov. 25, 2013: $953.14
Price rallies to $19,179 on December 11, 2017
~20x from previous ATH
- Most recent halving: May 11, 2020
ATH: Dec. 11, 2017: $19,179
Price rallies to $64,507 on April 14, 2021
~3.3x from previous ATH
Since we can see from the above data that the high of April went only 3x than the previous high, if we look upon data from other bitcoin cycles, we can observe that bitcoin’s price can easily rally to up 10x, 20x, or even 30x. Hence, I believe this is not the end of the bull run, and we are going to see a stronger second rally soon.
When are we going to see bitcoin break 100k?
In the crypto world, prices of digital assets move at lightning speed. Things can go from good to excellent within a day and from excellent to f*cked up within a few hours.
However, there’s this one thing I’ve been observing, whenever a big entity/ market analyst/ crypto analysis firm makes a price prediction for the market, it is achieved sooner than expected.
For example, by the end of 2016, a then most accurate price predictor Vinny Lingham, said that BTC could reach up to 3k dollars in 12 months. Interestingly, this target was achieved on June 05, 2017. Furthermore, BTC continued going up and reached an ATH of 19k dollars by Dec 2017, which is approximately 6x his prediction.
Looking at a similar incident, in a 2020 article by Bloomberg, it has been predicted that Bitcoin will rise to 100k by 2025. Hence, following the history of any market prediction, we can see 100k quite sooner than the prediction (maybe this year itself).
Where have we headed after all?
Apart from many other reasons, the Elon and China FUD were successful in fueling the major correction we saw in May 2021, led to bitcoin’s price fall by approximately 50%.
Even after all the FUD we’ve seen this year, it is highly likely that the bull run’s second leg could kick in soon enough, and the history can repeat itself.
How would I know about the ATH?
There’s one way I can tell you is by observing the mining data available at the glass node. As, as long as miners receive sufficient rewards the volatility can be lower. However, as the mining rewards are cut in half, the scarcity increases and so does, eventually bitcoin’s value. The below chart from Glassnode shows the correlation between total block size and BTC price in USD.
Before concluding let me take you through one more incident. Charlie Lee, the creator of LTC sold all of LTC HODLings just at the end of the 2017 bull run. He said and I quote,
If it doubles within a 24-hour period, then for sure that’s the peak,
Many people usually feel so excited and positive about the rising prices that they forget to sell. Therefore, before they realize all of it turns upside down real quick, and they get stuck in the crypto winter.
So, what exactly is going to happen?
To be honest, nobody knows, it can hit the 100k mark in a week, month, two months, or even next year. But one thing is sure this is not the end of the bull run and nor is it the end of your trading journey. So invest patiently and put in only what you can afford to lose.
Enjoyed this article? Try giving a read to How I started investing in crypto as a college undergrad.
Disclaimer: Nothing in this article is financial advice, and all of the writings are my personal beliefs. Hence, always do your own research, and invest accordingly.
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