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Should you just wait for October to trade Bitcoin?
Traders have been sitting on their hands lately with the Bitcoin
price being stuck between $29,000 and $30,000. This rangebound price action can’t continue forever, though.
Bitcoin awaits breakout
A recent report from Ark Invest entitled “Bitcoin – Breakout or Breakdown?” notes that “Bitcoin’s volatility dropped to a 6-year low during July, suggesting the potential for significant price action in either direction.”
This is not news to anyone watching the crypto markets lately.
Related: Bitcoin price bollinger bands echo January gains
What traders might not be anticipating, however, is the historical price action for Bitcoin during the months of August and September, along with the effects of monetary policy on cryptocurrency markets.
Markets haven’t fully priced in Fed tightening
The Ark Invest report suggests that Fed tightening could be “a leading indicator of price deflation,” and notes that there can be a lag associated with monetary policy.
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In other words, “the real economy and inflation have yet to digest 300 – 500 basis points” of Fed tightening. China’s exporting of deflation also adds fuel to the deflationary fire, the report states.
Federal funds effective rate: current and lagged. Source: Ark Invest
This puts the lagging effect of Fed tightening on course to collide with Bitcoin’s halving rally in 2024 – 2025. If Ark’s analysis proves to be correct, the next bull run will likely be tame compared to previous cycles.
Yet some analysts believe just the opposite: because the Fed has finished raising rates (or is nearing the end of its tightening cycle), the macro situation is about to become even more auspicious for Bitcoin.
Morpher CEO Martin Froehler recently told Forbes that he expects the 2023 Bitcoin rally to resume:
“We are almost done with the interest rate hike cycle, so the current macroeconomic headwinds will soon begin to fade. Simultaneously, we are about 9 months away from the next Bitcoin halving event, which historically has always propelled the price up dramatically,”
Kyle DaCruz, director of digital assets product at VanEck, expressed similar sentiments to Forbes by saying that Bitcoin’s scarcity combined with unprecedented growth in the money supply could lead to a continued rally.
If history is any guide, however, that rally isn’t likely to materialize just yet.
BTC price rally to resume in 2024?
Historically speaking, August and September are the worst months of the year for BTC price.
From 2011–2022, August has seen positive performance for BTC only five times, with the other seven months being in the red. September is even worse with just four out of 12 months seeing positive performance.
Historical Bitcoin monthly price performance table. Source: Bitcoinmonthlyreturn.com
What’s more, five of the 12 negative Septembers saw only single-digit price decreases, a small move for an asset as historically volatile as BTC/USD. The average move in September has been -5%, while the average move in August stands at +0.73%.
The price of Bitcoin has indeed flatlined in the past weeks with BTC price volatility falling to record lows.
Meanwhile, Bitcoin market observer Will Clemente notes that all of Bitcoin’s negatively performing years have occurred two years post-halving, suggesting the worst of the bear market could be in the past.
Bitcoin’s down years have all come in the second year after the halving. (2014, 2018, 2022)
These next two years should be cool pic.twitter.com/vVW0Dc4yvo
— Will Clemente (@WClementeIII) August 7, 2023
This would mean that the largest gains for Bitcoin lie ahead through 2024 and 2025. As noted earlier, however, if this timeline coincides with the deflation and potential recession forecast by Ark Invest, downward pressure on BTC price offset many of the gains in the next potential bull cycle.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Bitcoin
is still on track to hit $180,000 in its next halving cycle, a longtime market participant said.
In a new analysis published on March 3, Filbfilb, co-founder of trading suite DecenTrader, doubled down on his bullish BTC price outlook for the years ahead.
Filbfilb keeps faith in Bitcoin halving cycles
With BTC/USD approaching $30,000 but traders highly suspicious of the 2023 rally, sky-high BTC price predictions have been poorly received.
Two current $1-million forecasts, from ARK Invest CEO Cathie Wood and former Coinbase executive Balaji Srinivasan, respectively, continue to divide opinion in the aftermath of the 2022 crypto winter.
Considering whether either has merit, Filbfilb turned to raw math to determine some likely macro tops and bottoms for Bitcoin after its next block subsidy halving.
Due at the end of March next year, the halving will again cut the block reward paid to miners by 50%. In prior four-year cycles after previous halvings, BTC/USD has displayed patterns of behavior that continue to hold true today.
“When using Days from the Bitcoin Halving (where the inflation rate of new Bitcoins is halves); we can see that Bitcoin peaks around 368–550 days post halving and then bottoms 779–914 days post cycle,” Filbfilb summarized.
Related: Crypto winter can take a toll on hodlers’ mental health
Generating a so-called “price curve,” his analysis shows that it may be possible to get a rough idea of where BTC/USD will top and bottom in the coming halving cycles.
“By combining expected halving dates and days to cycle tops and cycle bottoms alongside extrapolated regression of price data, it is possible to use this model in predicting where Bitcoin price may reside at the peak and trough of future cycles,” he continued.
Bitcoin price curve chart (screenshot). Source: DecenTrader
BTC price to $200,000 or more?
Thus, in line with 2013, 2017 and 2021, 2025 should see a “double top” setup, in which Bitcoin peaks above $200,000 twice.
Related: Bitcoin will hit $200K before $70K ‘bear market’ next cycle — Forecast
The corresponding bear market low a year later centers around $50,000, according to the calculations.
While acknowledging that price volatility and relative blow-off top trajectory will decrease over time, Filbfilb reasons that overall global trends toward digital stores of value will aid Bitcoin bulls.
Nonetheless, for his part, he believes that the next cycle will bring a slightly lower high than the numbers suggest — around $180,000, already in play since February.
“I recently stated $180k is the target next cycle; I will stick to that for now,” he concluded.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
