The price of Bitcoin may surge to $100,000 in the next two years. A popular cryptocurrency analyst gave five reasons why the price of Bitcoin may rise sharply.
DataDash, a popular content creator on YouTube, believes that Bitcoin has entered a long-term bull market cycle. His views are based on several factors, including the well-known stock-to-flow (S2F) model, investors’ growing coin-holding mentality, and the issuance of new coins.
Bitcoin breaks through resistance
According to Nicholas Merten of YouTube’s popular channel DataDash, Bitcoin’s recent performance has consolidated the upcoming bull market. He first looked at the resistance level of Bitcoin in the past three years starting from the historical high in December 2017. After December 2017, the price of Bitcoin has been unable to exceed the resistance line, but it broke through the resistance line this week. Merten called it the “big moment for Bitcoin.” Even from a weekly perspective, we have entered a bull market. ”
BTC/USD trading pair weekly. Source: TradingView
Bitcoin’s expansion cycle
Merten also looked at monthly charts that involved longer periods. He believes that Bitcoin does not, as most people think, a cycle of halving every four years. He believes that the price of Bitcoin follows an expanding cycle.
The first such cycle occurred around 2010. At that time, “we began to obtain the real price data of Bitcoin, the real trading volume, and the first major exchanges began to list Bitcoin trading.” The first cycle was as long as 11 month. Each subsequent cycle will add about a year (11-13 months) to make each cycle last longer, so I call it the “expansion cycle”.
The second cycle runs from October 2011 to November 2013, and the third cycle ends in December 2017 when the price of Bitcoin reached its highest level of 20,000 USD. Bitcoin’s current cycle begins at the end of the 2019 bear market and will probably end “around November 2022.”
Merten pointed out:
Let’s take a look at the logarithmic chart below. Bitcoin’s price resistance line will bend over time, and the next bull market will be around $100,000.
Bitcoin expansion cycle data. Source: YouTube
Merten also talked about the famous stock-to-flow (S2F) model. Stock represents the size of existing bitcoin stocks (or reserves), while flow is the annual supply of bitcoins in the market. Bitcoin is halved approximately every four years, which reduces the amount of newly mined Bitcoin by half. Based on Bitcoin’s stock-flow ratio, the asset price of Bitcoin may indeed soar to $100,000 per coin within a few years.
Many people began to criticize the S2F model after the third halving in May this year because the price of Bitcoin did not rise immediately after the halving. In this regard, Merten pointed out that according to historical data, the price of Bitcoin sometimes soars months or even years after the halving occurs.
When we look back at the previous halving events, we can see that the increase in Bitcoin prices has more and more delayed effects. In November 2017 in the last cycle, the price of Bitcoin began to gradually exceed the red line in the S2F model chart, which represents the expected currency price of Bitcoin.
Bitcoin S2F model. Source: LookIntoBitcoin
Coin hoarding helps Bitcoin price rise
In addition, more and more Bitcoin investors are beginning to hodling (hodling) is another sign of Bitcoin price increase. Through the “coin hoarding curve” below, it can be found that the number of bitcoins that have not been moved for at least one year has reached a record high.
The hoarding curve. Source: LookIntoBitcoin
62% of Bitcoins haven’t moved in a year or more. Merten emphasized the importance of this to price, because it means that people prefer to hold the coins in their hands rather than consume or sell.
As more and more investors, such as participants from Grayscale or other different institutions, began to acquire more bitcoins, the liquidity of bitcoins in the market began to become insufficient.
Puell Multiple shows that Bitcoin price is undervalued
Piller’s multi-measurement divides the daily issued price of bitcoin (the number of newly mined bitcoins added to the ecosystem by the mine) by the 365-day moving average of the daily issued price. According to Merten, this data is quite accurate in predicting the top and bottom of the Bitcoin price. Moreover, since the price of Bitcoin is currently at a relatively low level, this may further prove that the price of Bitcoin is currently undervalued.
Peler multiple measures. Source: LookIntoBitcoin
Merten explained that in the end all the above factors support that Bitcoin is heading towards a big bull market:
When the supply of Bitcoin decreases due to the halving, the increase in the price of the currency leads to continued strong demand for people to buy coins, and more and more investors begin to hoard coins, the price of Bitcoin is likely to rise many times.