Ten years until mainstream adoption.
In this article I’ll map out exactly how I see Bitcoin price action unfolding for the next several weeks, months, and years, all the way to 2025.
I’ll show how current events in the current economic landscape such as Coronavirus, the global economic recession, and unlimited Fed money printing will impact Bitcoin in the long-term, and how all the hills and valleys of price action will play out on the way to my price target for Bitcoin in 2025.
I chose the year 2025 with the idea in mind that markets typically follow four to five year cycles.
If you look at where Bitcoin stands as of May 21, specifically the three-day timeframe, Bitcoin has formed a large pennant from the 2017 top all the way to the low of 3100 in December 2018, with that particular pattern discounting the wick formed from the Coronavirus crash to favor real candle bodies on the bottom trend line. Price has printed lower highs since that 2018 low, the most recent being the crash in March to about 3600.
Additionally, Bitcoin just completed its third halving event, which comes once every four years and decreases the number of Bitcoins rewarded for processing transactions by half. This time around, the data shows miners are not holding onto their Bitcoin stash as tightly as they once did, selling 622 more BTC than what was mined on the same day of the halving.
The halving made it more difficult for many miners to remain profitable. Smaller, less efficient miners who couldn’t absorb the losses between economic conditions in both Bitcoin and the overall market, on top of losing half the incentive to process transactions, ultimately had to sell from their stash to stay afloat, or shut down altogether.
Continuous selling from miners puts further pressure on Bitcoin’s price as it increases the overall supply in circulation. More efficient miners have a shot at recovering from the economic crisis since the decrease in competition may level the playing field for them to some degree, and many were prepared for the halving itself years ahead of time. In the meantime, the uncertainty in global markets and equities reaching the top of their rebound, as well as BTC correlating with equity markets for the last several months, puts a great deal of pressure on Bitcoin’s upward price movement. Volatility to the upside has increased for several reasons, whether it be hype coming from “don’t fight the Fed” mentality or simply larger price swings due to the volatility created through decreased liquidity. Liquidity has decreased as many players left the Bitcoin market or otherwise had their accounts wiped out, and a closer look at the four-month retrace from the COVID crash reveals a clear decline in volume.
At the top of each move toward the top of the pennant as seen in the chart (the COVID crash as an outlier), there is a spike in volume. More often than not, this implies retail buyers were fueled by FOMO created by institutional investors who guided the price upward. It’s my belief that big players drive up prices because they are orchestrating a steady sell-off of large Bitcoin holdings. It would not be in these larger players’ (often termed “whales”) interest to empty their bags in the valleys of price action. Rather, they’d ideally cascade their positions up into their own sell walls at higher price levels, riding on the volume of retail buyers, and then sell a majority of their position at higher key levels. When the rug is pulled from under retail buyers, it is printed on the chart as a substantial spike in volume right near key levels, marked with an ‘X’ on the chart provided.
Elliott Waves signal a shakeout before the breakout.
We can now map out an Elliott Wave structure which began with wave one reaching the high of May 2011 and then reaching the end of its fifth wave at the top of the 20k bull run in 2017.
What Bitcoin seems to be in now is an ABC correction and more recently, in the process of completing the C wave of that correction. We’ve so far discussed the continuous decline in volume as price moves up, and then a high spike in sell-side volume right at the top where price is possibly rejecting now.
Summary of the ABC correction:
From the 20,000 all-time high, price put in a lower low in late 2018, a lower high in June 2019, a lower high in October 2019, and then a higher low. From there, Bitcoin printed lower highs and lower lows as it failed to hold above the high in February 2020, which was about 10,050. The aggressive drop in March put in a lower low and eventually challenged the recent high again, but was unable to break it and set in a lower high once more.
At present prices, we’ve still technically respected a lower high. Unless price breaks up with convincing volume and isn’t dragged underwater by equity markets topping out, BTC will find it difficult to negate this Elliott C wave count. Considering the current structure of Bitcoin with the big parallel channel at play along with overall market conditions, I expect a movement to the downside over the next several months.
Bitcoin targets for the next several months
From the previous chart, we can use the pivots indicator, as well as the VWAP century indicator (which takes into account a majority of price action for the lifespan of this asset), what is revealed is the VWAP century as well as the S1 pivot on the weekly timeframe all line up right around 2400.
That target could be met between September and the end of 2020. My target for 2025 is a bit different, as there will be many unforeseen road bumps, but 2400 is certainly still in play in terms of technicals. But where’s that 1300 target on the chart coming from?
The chart below shows where Bitcoin put in a high of about 1200 dollars in November 2013, followed by a two-year retrace, followed by a reaccumulation period in 2015 and 2016, and then pushed all the way to the 2017 high of 20,000.
The 2013 high hasn’t been tested, leaving a big vacuum of space which could on higher timeframes still drag the price to at least 2400, and technically 1300.
Bitcoin’s lifespan in terms of investors who intend to buy and hold onto their positions can be imagined in phases, with early adopters arriving between 2010 and 2013. Phase-one early adopters are largely in profit and have been for a long time. The Phase-two investors (revolutionaries and builders) are also still in significant profit. Phase-three traders and speculators, who may have come into the market when prices were aggressively high, are a mixed bag. Some of them are still substantially in profit, others are at some degree of loss. Once the price of Bitcoin comes down below Phase-three levels, all the people investing in Bitcoin for the long-term who entered above that level will begin to feel significant pain in their positions.
The risk appetite of many people will not tolerate a return to Phase-two price levels, especially if the economy at large is struggling. As the economic situation worsens, investors will look to liquidate any assets to cover basic living expenses and debts, and risk-on assets like Bitcoin are likely to be the first to go.
A crack to 2400 levels or lower would wipe out many of the traders and speculators who entered from 2017-onward, a true cleanse that would leave only Phase-two and Phase-one people unscathed. Investors from earlier stages of the project have more reason to hold their positions for a longer period, as the risk-reward is so great. If you get another chance to buy anywhere between 1300 and 2400, you’ll be in the same boat as those early investors in terms of price risk-reward.
I look at Bitcoin from the perspective of it being a developing technology that is going through phases of adoption, which we call the S-curve. All new technologies have gone through these stages, portrayed in the graph below. Electricity, refrigerators, stoves, and colored TVs have all gone through these phases of adoption. From the perspective of other breakthrough technologies, Bitcoin’s current adoption cycle is close to peaking off. But just how “close” are we talking?
Bitcoin is 10 years away from peak adoption
Bitcoin’s target for peak adoption is about 2030, and this is not necessarily a bearish case for Bitcoin. Even if the asset shakes out traders and speculators on a burn to 2400 or 1300 dollars, Phase-two and Phase-one investors will be left largely untouched. I think once we get out of this deep recession and recover from the COVID-19 pandemic, Bitcoin will re-enter an accumulation period, which could last for a year or two before the price ultimately begins to climb up once again. How far will it climb?
Bitcoin’s top could be between 100,000 – 200,000
If Bitcoin’s final cycle looks anything like Phase-two did, a valuation anywhere between 100,000 and 200,000 are within reach, with a solid median being about 156,000 based on cloning the period of the last phase and placing that at the tail end of where price stands today (that includes a potential grind all the way down to 1300). A realistic 2025 target of 20,000 is reasonable based on the same metric.
The current Elliott Wave cycle comes to an end right near July 2024, which is again found by cloning the 2013 top to the 2017 top and placing that at the end of current price action.
Governments across the world are facing a crisis in their own respective economies, devaluing their currencies, buying bonds, and potentially buying stocks just to support asset prices. I don’t see this crisis ending well, based on history. The fall of the Roman Empire and the Weimar Republic are a clear warning from history of what may come sooner rather than later. Whether it’s America, the eurozone, or even Japan, major global economies are in serious trouble.
I am a believer in Bitcoin, but I still think the asset needs another decade to prove itself. If it can do that, especially in the first half of the decade into 2025, the price has fundamental reasons for appreciating quite a lot.
Unfortunately, it’s also very possible that Bitcoin fails during that time. Perhaps that will happen because something new and improved comes along, or governments across the world utilize breakthrough technologies such as the ones Bitcoin is built on top of to harden their own currencies and stave off a collapse of the global monetary system. Either way, Bitcoin is by far one of the most amazing assets and innovative technologies that I’ve ever come across, and I think it could be successful in what it’s set out to do. Its success depends on many factors, particularly the scale of adoption.
There are some powerful and intelligent people behind the Bitcoin project and the cryptocurrency sphere as a whole. People like Ron Paul, Tim Draper, Mark Cuban, Marc Andreessen, Paul Tudor Jones, Mike Novogratz, and many others, these people have it in their interest to continue driving this project forward and towards greater success and stability.
That is my reasoning for this price prediction for Bitcoin through 2025. In my opinion, either Bitcoin will be valued at greater than 100,000 by 2025, or it’s probably going to be less than 1000. I only see two binary ways to look at the price action of Bitcoin; either it’s going to be something great, or it’s going to be a failed experiment that will probably be worth 1000 or maybe even zero. Someday I will come back to this prediction and will likely have a great deal to say on what ultimately happened and what didn’t, and that will be a great conversation.
When considering the events of the dot com bubble and the Japanese Nikkei Index implosion, I don’t see why Bitcoin cannot become a bubble and burst toward more down-to-earth prices like 2400 or 1300. A massive, long and painful shakeout would decrease overall volatility and would ultimately be a positive development for Bitcoin in terms of the project’s price stability.
I think Bitcoin’s a fantastic asset and believe it’s going to be something great for society at large, but I am also aware it could be an experiment that over the next several years, considering how fast technology develops, become a 100,000 asset and higher due to the network effect and S-curve adoption, or it could be a failed or first-mover experiment that goes to 1000 or zero. All hail Bitcoin!
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