Remember 3 years ago when Bitcoin was the talk of the town and everyone wanted in? Well, by then anyone who wanted to buy it had already done so. Bitcoin went on to lose over 80% of its value over the next 12 months. That’s how bubbles end. An instant classic.
Now, as we’ve learned, newer markets in their infancy stages tend to have faster and more frequent cycles. When you go back and study the US Stock Market in the 1800s, for example, there was a “Panic” every other year. It was the wild west back then.
Welcome to the 21st Century’s version of the wild west. Cycles happen faster. Bubbles collapsing take less time to reset and begin a new leg higher. I think this is something we should continue to expect in the Crytpo space.
Here we are just 3 years after the bubble peaked, working on a fresh breakout and new leg higher. To put things in perspective, Financials are still down from their peak in 2007, over 13 years later. Technology took 18 years to finally surpass its 2000 bubble peak. And Japan is working on over 30 years so far and still 45% away from its 1989 bubble highs.
So if you’re not sure whether cycles in newer markets happen faster and more frequently, just go study the ones from the past. These are quicker. Which is important to know, I think.
So where can Bitcoin go? After a 3 year base, it can go a lot higher. Go back and check out some of the previous moves in this asset after it completed prior bases over the past decade.
But what’s next?
I think it’s right near 30,000. That would represent the 161.8% extension of the 2017 highs as well as the 261.8% extension of the 2019 highs:
Click on Chart to Zoom in
You can learn more about how/why we calculate these extensions here.
If we’re above the 2017 highs, then a bullish thesis based on a 3-year base breakout makes a lot of sense to me.
If we’re not above those 2017 highs, then we can’t make that case.
That’s how I see this.
Let’s also remember that sentiment is no where near what it was 3 years ago, which I think adds a lot of fuel to this fire.