Bitcoin has hit another all-time high this week, leaving analysts and investors speculating on when this latest price rally will finally peak.
The world’s leading cryptocurrency has risen more than 70 per cent since 1 January, reaching above $70,000 for the first time in its 15-year history. It builds on gains of more than 150 per cent last year, which saw it rise up from below $17,000 at the start of 2023.
The price surge has been fueled by a new wave of institutional investors, brought in after the Securities and Exchange Commission in the US approved the first ever bitcoin spot exchange-traded funds (ETFs).
More significantly, according to some crypto market analysts, is an upcoming event known as the ‘halving’, which will see the rewards for mining the cryptocurrency cut in half.
Scheduled to take place on 19 April, previous halving events have historically preceded record-breaking rallies. Taking place roughly every four years, the reduction in supply is believed by some to be fundamental to bitcoin’s quadrennial price cycles.
One of the most notable price prediction models that uses halving cycles as its basis is the Stock-to-Flow (S2F) model created by the pseudonymous Dutch analyst PlanB.
First published in 2019 ahead of the previous rally, the apparent accuracy of the S2F model has gained PlanB close to 2 million followers on X (formerly Twitter).
The price crash that followed 2021’s peak saw bitcoin briefly slip into the lower bounds of the S2F model, however commenting on the latest price run, PlanB said his S2F model “is back… like clockwork”.
The upper limits of PlanB’s model put bitcoin’s price at well above $100,000 this cycle, which other analysts are viewing as increasingly realistic. Ultimately, PlanB believes bitcoin’s inbuilt scarcity – only 21 million bitcoins will ever exist – will see it rival the $14 trillion market cap of gold, putting its price 10 times higher than current levels.
The latest price gains mean it is becoming common for crypto market watchers to predict bitcoin heading into six-figure territory in 2024. The milestone is now just another 40 per cent leap away, leaving some to question what the top limit might actually be.
“Looking at the technical picture, the all-time high is around the corner with the psychological level of $80,000 acting as a possible resistance down the road,” said Lukman Otunuga, a senior market analyst at the online trading broker FXTM, whose firm found that the average price prediction across its sources was $123,056.
“Beyond this point, it is unchartered territory. Regarding the average price prediction for BTC of $123,056, this will require the cryptocurrency to rally another 60 per cent from its current levels. While the timeline is unclear, this could be a possibility given how prices have rallied.”
Running parallel to these bullish forecasts is speculation on when and by how much bitcoin will fall.
Previous price rallies in 2013, 2017 and 2021 saw bitcoin suffer dramatic falls from those peaks, dropping 83 per cent, 84 per cent and 77 per cent respectively.
“The volatile nature of cryptocurrencies remains, underscoring the speculative aspect of these investments,” Andrea Barbon, a professor of finance at the University of St. Gallen in Switzerland.
“As the landscape evolves, driven by technological innovations and regulatory adjustments, investors are reminded of the balance between high potential rewards and significant risks.”