In this photo, a visual representation of the digital cryptocurrency Bitcoin is displayed in Paris, France, on March 5, 2024.
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Bitcoin has not topped its current appreciation cycle and is likely to surpass its all-time high this year, according to a research report released Tuesday by CCData.
Bitcoin hit an all-time high above $73,700 in March, but has since traded in a range between about $59,000 and $72,000.
The trip to a record high in March was largely driven by the approval and launch of spot bitcoin exchange-traded funds, or ETFs, in the US in January. They have attracted about $14.41 billion in net inflows to date, according to CCData.
ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Crypto supporters say this helped legitimize the asset class and make it easier for larger institutional investors to participate.
The bitcoin “cycle” refers to the period in which the digital currency rises to a new record high and then falls again to enter a bear market or “crypto winter.” These cycles — three of which have now been completed since bitcoin launched — tended to follow a similar pattern.
This has centered around an event called a halving, in which the reward for miners is halved, reducing the supply of bitcoins in the market.
Typically, the halving often happens months before bitcoin hits an all-time high for the cycle. This current cycle was different. Bitcoin climbs to latest record high before halving on bullish trend around US ETFs
With bitcoin trading in a range after its all-time high, many have questioned whether the cryptocurrency has topped the current cycle.
CCData’s report, which looked at bitcoin’s historical price movements, suggests that it may reach a new high. The data and research firm said historical trends showed its halving event has always been preceded by a bullish period that can last anywhere from 366 days to 548 days “before producing a topping cycle, with each halving experiencing a longer cycle than the previous one, due to asset class maturity and reduced volatility.”
The last bitcoin halving took place on April 19th of this year, so these historical timelines have yet to pass.
“Furthermore, we have seen trading activity on central exchanges decline for almost two months after halving in previous cycles, which appears to mirror this cycle. This suggests that the current cycle could extend further into 2025.” , CCData said.
Analysts acknowledged that the “influence of institutional industry participants” in the current cycle has “reversed previous trends”, adding that trading activity is likely to be subdued in the third quarter, which could in turn suggest more sideways action of prices.
“However, the data and past trends are strong enough to suggest that any sideways price action is temporary and we are likely to break past all-time highs once again before the end of the year,” CCData said.
The company’s report said the upcoming launch of an Ethereum ETF in the US and other similar products around the world “is intended to bring further capital, liquidity and demand to the asset class.”
CCData highlighted another key point of historical data to support its position, saying that bitcoin’s price appreciation is taking place over a short period of time. For example, in the 2012 cycle, 91.4% of the total expansion of bitcoin’s price from the halving to the record high occurred in the four months before the peak of the cycle. That share of price growth was 78.8% and 71.5% in the four months before the respective record highs of the 2016 and 2020 cycles.
“Such parabolic expansion has yet to happen in the current cycle,” CCData said.
Other commentators have pointed out how historical patterns have played out in bitcoin.
“Historically, market cycles peak 12 to 18 months after the Bitcoin halving, which last occurred in April of this year. We also haven’t seen volatility reach previous highs. all-time highs – over 10 to 20 new highs are made in a 30-day window,” Thomas Perfumo, chief strategist at cryptocurrency exchange Kraken, told CNBC via email.
“We haven’t activated any of these signals yet,” Perfumo said.
