Bitcoin’s Current Cycle: Will It Reach New Heights?

History suggests that bitcoin is likely to hit a new all-time high this year, according to a research report by CCData. The report analyzed historical trends, including the length of time bitcoin appreciates after halving, and suggests that if these trends play out, bitcoin could reach new heights.

Bitcoin’s price action

The approval of Ethereum ETFs in the U.S. is also expected to bring more demand for cryptocurrencies, which could contribute to bitcoin’s growth. Bitcoin has not reached the top of its current appreciation cycle and is likely to go past its all-time high this year.

The Journey to the Record High

Bitcoin hit an all-time high of above $73,700 in March but has since been trading within a range between roughly $59,000 and $72,000. The journey to the record high in March was largely driven by the approval and launch of spot bitcoin exchange-traded funds (ETFs) in the U.S. in January.

Bitcoin ETFs

ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Crypto proponents say this has helped legitimize the asset class and make it easier for larger institutional investors to get involved.

The Bitcoin Cycle

The bitcoin “cycle” refers to the period in which the digital currency ascends to a new record high, then falls again to enter a bear market or “crypto winter.” These cycles, of which three have now been completed since the launch of bitcoin, have tended to follow a similar pattern.

Bitcoin’s cycles

That pattern has been centered around an event called the halving, during which the reward for miners is cut in half, reducing the supply of bitcoin onto the market. Typically, halving often occurs months before bitcoin hits an all-time high for the cycle.

Will Bitcoin Reach a New Height?

CCData’s report suggests that bitcoin can reach a new height. The data and research firm said historical trends have shown that the halving event has always preceded a period of price expansion that can last anywhere from 366 days to 548 days “before producing a cycle top, with each halving experiencing a longer cycle than the one prior, due to maturation of the asset class and lowered volatility.”

Bitcoin halving

The last bitcoin halving took place on April 19 this year, so those historical timeframes have yet to pass. Moreover, the analysts acknowledged that the “influence of institutional participants in the industry” in the current cycle has “altered the previous trends,” adding that low trading activity is likely to take place in the third quarter, which could in turn suggest more sideways price action.

“However, the data and previous trends are strong enough to suggest that any sideways price action is temporary, and we are likely to breach the previous all-time highs once again before the end of the year,” CCData said.

The company’s report said that the upcoming launch of an Ethereum ETF in the U.S. and other similar products around the world “is destined to bring further capital, liquidity, and demand to the asset class.”

Ethereum ETF

CCData highlighted another key historical data point to support its thesis, saying that the price appreciation of bitcoin takes place over a short time. For example, in the 2012 cycle, 91.4% of bitcoin’s overall price expansion from halving to the record high happened in the four months before the cycle peak.

“Such parabolic expansion is yet to be made in the current cycle,” CCData said.

Other commentators have also highlighted how historical patterns in bitcoin have played out. For example, Thomas Perfumo, head of strategy at cryptocurrency exchange Kraken, told CNBC that “historically, market cycles peak 12 to 18 months after a Bitcoin Halving, which last took place in April of this year. We also haven’t seen volatility reach prior peak highs. Lastly, prior market cycle peaks coincided with a rapid succession of all-time highs – upwards of 10 to 20 new highs set in a 30-day window.”

“We haven’t triggered any of these signals yet,” Perfumo said.