Bitcoin is currently experiencing a pullback after a strong rally that took its value from $20,000 to $29,000 in just two weeks. This surge has left many speculating that a bottom may have been reached. If this turns out to be true, based on Bitcoin’s historical trends, the cryptocurrency could be retesting all-time highs again in less than 120 days.
All market cycles are cyclical, and Bitcoin is not exempt. The halving event, for example, is one such event that drives Bitcoin’s cyclical behavior. During this time, the block reward miners receive in Bitcoin is cut by 50%. Just like with other financial markets, technical analysis identifies timing-related behavior in cryptocurrencies. For instance, investors adhere to the January Effect, which is selling in May and going away during August, as it represents seasonality in both crypto and other markets.
Another time-based observation is serial correlation or autocorrelation, whereby price action correlates with the previous data set’s price action in the same asset. A good example of this is one of Bitcoin’s peaks occurring between November and December three times in a row – in 2013, 2017, and most recently in 2021.
Using the six-week Bollinger Bands and combining the principles of serial correlation, it is possible to make a prediction that Bitcoin will retest $65,000 per coin within 120 days, as past data suggests. A review of prior price history indicates that Bitcoin’s bottoms in price always showed two large white candles on the six-week timeframe. This is because there was more than 12 weeks of positive performance, which is almost a full quarter.
Moreover, in the past, after Bitcoin reached a bottom, it surged past the middle-SMA on Bollinger Bands and then went on to touch the upper Bollinger Band within the next few candles. In 2015, after the cryptocurrency’s bottom was in, it took seven six-week candles before it touched the upper BB. In contrast, four years later in 2019, it only took five six-week candles. Even taking the longer period of the two instances would suggest that Bitcoin could touch the upper Bollinger Band within 120 days.
What separates this latest surge from previous ones is that the upper Bollinger Bands on this timeframe are situated at $64,000 per coin, or just around the cryptocurrency’s former all-time highs. The implication is that Bitcoin could potentially return to former ATHs in under four months or 120 days.
While past price history is not necessarily indicative of future performance, technical analysts and investors can increase their chances of success through such information. As the market remains highly volatile and unpredictable, it remains essential to evaluate numerous scenarios and plan accordingly.
The Bitcoin market remains highly speculative and driven by many factors, including political and economic uncertainty, global crises, and the adoption rate of new technologies and regulations across different countries. While current trends and historical data often inform market movements, unforeseen circumstances can also alter the market trajectory unexpectedly.
In conclusion, while Bitcoin may potentially hit its former all-time highs within 120 days, investors and traders should remain cautious and assess the market’s behavior, as it can change dramatically at any moment. It would be best to bear in mind the cryptocurrency’s highly volatile patterns and approaches trading accordingly.
