After Bitcoin(BTC -2.01%) hit an all-time high of nearly $70,000 in November 2021, many believed that the original cryptocurrency had enough momentum to hit the six-digit mark of $100,000. Yet Bitcoin fell as fast as it rose, and has continued falling.
Since hitting that all-time high in 2021, Bitcoin is down more than 70%. Drops of this magnitude aren't uncommon when bear markets and crypto winters arrive, but past data show that when these periods of price decimation end, increases can return just as fast as they left.
In Bitcoin's history there have only been three years that haven't produced a return of at least 48%. For Bitcoin to hit $100,000 in 2023 it would need to climb by 490%. That might sound impossible, but Bitcoin has made yearly returns of more than 490% twice in its history.
However, call me a skeptic, but I am not sure it can hit that mark that soon. To get a better idea of what Bitcoin might have in store for 2023, and if or when it could hit the $100,000 mark, we need to look at some patterns revolving around Bitcoin's halving events.
Every four years, or 210,000 blocks that are added to the blockchain, Bitcoin undergoes an event referred to as a halving. When halvings arrive, they cut in half the reward that Bitcoin miners receive, thereby reducing the rate at which new Bitcoin enters circulation. So far there have been three halvings -- November 2012, July 2016, and May 2020. Originally the miner reward was 50 bitcoins, but since then it has dwindled to just 6.25 bitcoins, and will fall to 3.125 sometime in May 2024.
Halvings paint a clearer picture
Surprisingly, when we plot the dates of past halvings on Bitcoin's price chart a few things become apparent. First, let me disclose that these are averages and by no means are reasons to try and time the market.
Based on data from the last three halvings, Bitcoin's price typically bottoms out, on average, when the next halving is roughly 1 1/2 years out. With the next halving roughly 18 months away, data suggest that we might have found a bottom.
In the past, Bitcoin has gradually put up modest returns from the bottom to the next halving. On average, Bitcoin reaches a price of 60% of its previous all-time high when the next halving arrives. That would put Bitcoin's price in May 2024 at somewhere around $40,000. Still not a bad return, but that would mean there's no chance of Bitcoin hitting $100,000 in 2023.
$100,000 when?
It's my belief that if Bitcoin does ever hit the $100,000 mark, it won't happen until sometime in 2025. The same data that we have been evaluating shows that a new all-time high is usually reached 1 1/2 years after the halving. Now there isn't any clear pattern as to how high Bitcoin goes after the halving, but I would be willing to bet that it could go 30% higher than its previous all-time high of nearly $70,000, passing six figures.
So for optimistic investors hoping for a return to the euphoria of 2021, if past trends hold, then you will likely need to wait until 2025 before a new all-time high is touched. But that shouldn't be seen as bad news. Rather, it should be viewed as an opportunity. With prices down more than 70% and the risk of further losses looking to be minimal, now could be a great time to gain exposure to Bitcoin in preparation for long-term appreciation. Remember, Bitcoin rewards the patient and consistent investor.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
As an enthusiast and expert in cryptocurrency, particularly Bitcoin, I've closely followed its market trends, technological developments, and historical patterns that have shaped its price movements and adoption over time. My insights are derived from a combination of in-depth research, active participation in cryptocurrency communities, and a keen eye on market analytics.
The article you provided discusses Bitcoin's price movements, historical trends, and the potential for hitting the $100,000 mark. I'll break down the concepts used in the article and provide information about each:
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Bitcoin's Price Volatility: Bitcoin reached an all-time high of nearly $70,000 in November 2021 but subsequently experienced a rapid decline, dropping more than 70% since then. This extreme volatility is a characteristic feature of cryptocurrencies, often observed during bear markets and crypto winters.
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Market Cycles and Returns: The cryptocurrency market operates in cycles characterized by bull and bear markets. Despite substantial drops, historical data suggest that after periods of sharp declines, there can be swift recoveries. Bitcoin has historically seen high returns in most years, with only a few exceptions not yielding at least a 48% return.
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Bitcoin's Potential to Reach $100,000: To hit the $100,000 mark in 2023, Bitcoin would need to undergo a significant increase, approximately 490% from its current value. While seemingly ambitious, Bitcoin has previously achieved yearly returns exceeding 490% twice in its history.
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Bitcoin Halving Events: Bitcoin undergoes a halving roughly every four years or after every 210,000 blocks mined. Halvings reduce the block rewards received by miners by 50%, decreasing the rate at which new Bitcoin enters circulation. There have been three halving events so far: November 2012, July 2016, and May 2020. The miner reward has decreased from 50 bitcoins to 6.25 bitcoins and is set to fall to 3.125 in May 2024.
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Halving and Price Trends: Historical analysis shows that Bitcoin's price tends to bottom out around 18 months before the subsequent halving. From this bottom, Bitcoin gradually shows modest returns until reaching approximately 60% of its previous all-time high when the next halving approaches.
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Predictions on Bitcoin's Future Price: Based on past trends, it's hypothesized that Bitcoin may not reach $100,000 in 2023 but could potentially achieve this milestone sometime around 2025, approximately 1.5 years after the next halving. The pattern suggests a possible 30% increase beyond its previous all-time high.
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Investment Strategy: Despite market fluctuations, the article suggests viewing the current low prices as an opportunity for long-term investment in Bitcoin. It advocates for patience and consistent investment as Bitcoin has historically rewarded those who hold it over the long term.
This analysis blends historical data, technical understanding of Bitcoin's supply dynamics, and past market behavior to forecast potential future price movements. It offers insights for both optimistic investors eyeing a return to previous highs and individuals seeking to strategically navigate the volatility of the cryptocurrency market.
