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It’s been a while since we wrote an article on Bitcoin.
Now that Bitcoin's price is within striking distance of the all-time high, we figured we'd
provide another one of our historical price comparisons.
Our past comparisons
have proved very useful - the subsequent price action closely matched the historical price dynamics
we compared to (e.g. Bitcoin Bottom: In 2018?).
Bitcoin currently trades for about 18500 USD, roughly 95% of the prior high.
That high was achieved mid December of 2017 - almost 3 years ago.
The price versus time is shown in the above chart, from just before the 2017 high until now.
Can we identify a similar scenario in the price history? Let’s try.
The chart above shows the price of Bitcoin from October 2013 until January 2017.
In January 2017, like today, Bitcoin was quickly increasing in value and nearing the record high from three years prior.
Within those three years, the price decreased over 80% from the high, again analogous to the most recent three years.
Hence, there's significant similarity between the Bitcoin price dynamics now and in January 2017.
As a result, we'll use the price dynamics post January 2017 as a historical-based
indication of what may happen in the coming months.
The above chart shows the Bitcoin price from the beginning of 2017 until September.
Despite the apparent momentum leading up the start of 2017, the price retreated about 20% in
mid January and didn't near the high again until the end of February.
It subsequently dropped again, below 1000 USD in March (3 months after what we'd relate to
today's scenario). Finally, in late April, the price gained momentum and more convincingly
broke through the old high. Within a month, it doubled the old high.
Back to Today's Bitcoin Price
Back to the present. If Bitcoin's price continues to follow this historical
trend from late 2013 through 2017 (a huge if!), a drop in the short term would occur,
bringing it as low as 16k USD. It would remain in the 16k to 21k USD range for a few months.
After that, a quick rise to around 50k USD (over 200% of the prior high) would occur, before mid 2021.
That high would be followed by declines in subsequent months but, by the end of 2021,
much higher Bitcoin prices would be achieved.
Will this historical price action really repeat?
These historical analyses have played out well in many cases, but we can't assume it will continue.
There are always new nuances that threaten the old patterns. For one, it will take a lot
more money now to mirror the percent changes in 2017 - the market cap is 20x larger now.
More hedge funds and large capital sources do appear to be investing in Bitcoin, potentially
providing the needed funds, but political threats or major hacks could completely stop those inflows.
As usual, we'll reiterate that many experts recommend only investing money into
Bitcoin if you can afford to completely lose it.
November 24 Update: We've uploaded this video "Bitcoin Price Late 2020 and in 2021" based on this article.
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Comments / Feedback
shrinkme Feb. 19, 2021, 2:19 p.m.
Well the $50k happened early but otherwise good call. Looking forward to see what happens for the remainder of 2021!
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