All-time high: straight shot or slow grind?
TL;DR Past performance is useful, but this time it will likely be different. Will it be a ‘fast grind’?
With the first major correction of the bull market apparently behind us, all eyes are on $14k for the next leg up — after which, a new all-time high looks like a distinct possibility. Sentiment for new highs is strengthening among major analysts.
BitMex CEO Arthur Hayes claims we’ll be ‘two-steppin’ straight to $20k’, though you have to take that with a pinch of salt. Meanwhile prominent crypto analyst Josh Rager states:
This current structure reminds me of 2015/2016 when Bitcoin did a 2.5x from the bottom followed by 6 months of sideways
Then out of nowhere an almost 2x in price as Bitcoin slowly trended up to new highs
One thing is for sure, I don’t want to see that $9k support break
Using 2015–16 as a model isn’t necessarily a good idea. As @filbfilb says, ‘The biggest difference in the new Bitcoin cycle is that the market is going to be more efficient at pricing Bitcoin. Copy paste charts of 2016–17 aren’t going to work; Things are going to continue happening faster than last time.’
All the same, we do note the action from 2016 and the comparison is helpful — not so much for timing as the overall shape of the market. So what might we expect this time? A sudden jump back above the all-time high, or a more steady move up?
The first thing we have to note is that we’re starting from a different place. BTC has settled above $10k, and doubling in price isn’t such a big ask — especially with the hype about institutional money finally becoming a reality. The 2x alone that Rager notes would take us to $20k, without the subsequent slow trend up. It might be more accurate to put the current comparison point after that 2x, so around August 2016, when BTC had settled around $600. After that it was a fairly steady road back to the ATH of around $1,200, though with a couple of significant dips around the crucial level. (No great surprise there.)
Let’s take a step back from bitcoin, though, and look at another market that should be roughly comparable: gold. It’s not a perfect comparison, since gold’s market cycles are slower than bitcoin’s, and you have to take inflation into account for a proper comparison (a new ATH in the price of gold would not necessarily mean a new ATH in real purchasing power).
Gold put in its ATH in 2011, at a price of $1,920. (In real terms, the high was back in 1980, when it was worth the equivalent of more than $2,200 per ounce in today’s money.) But the long-term chart is informative.
Gold spiked in a major bubble in 1980, before correcting in a pattern that looks a lot like bitcoin’s 2018 bear market (including that final devastating plunge below support). But after it double-bottomed, finishing that move in the mild recession of 2001, it made steady progress up to the new high. By bitcoin’s standards, it was smooth sailing.
The key area of the chart is what happens when gold clears resistance and consolidates — when the market makes up its mind, which is what bitcoin has now done. After that, returning to the ATH took less than a year. Then as it closed in on the last high, there was a pullback, and then a tripling in price over the next four years.
Think of that. Gold’s peak-to-peak market cycle lasted 30 years, but once it had cleared resistance it took just a year to reach the last all-time high, and then just four years to triple again.
The route from breakout to a new ATH wasn’t a spike, or a slow grind. It was a steady, fast move. Perhaps we can expect the same for BTC.
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