Bitcoin‘s recent rally has finally broken out and hit a new all-time high (ATH). After September is over and “October bullish” offers high hopes, many analysts are increasingly confident that this year will be like 2017.
In fact, a recent tweet from analyst TechDev shows that the price chart 2021 is closely following 2017 and will have an amazing ending.
– TechDev (@ TechDev_52) October 6, 2021
“It’s incredible that while it has taken us so long to analyze short-term Bitcoin price action since June, it only took a simple copy and paste of 2017.”
But is the upward trend really that simple?
Follow the indications
Several data points indicate similarities in the patterns between the two cycles. First, the Relative Strength Index, which traders use to identify overbought and oversold markets, follows the same path it did in 2017. In 2013 and 2017, each cycle showed two peaks, so if nothing changes, we still have the second rise to have.
TechDev’s ambitious prediction is a “pre-programmed” price of $ 200,000. The South Korean trader Mignolet is also optimistic and said at the beginning of October that falling volumes from the spot market to derivatives were a positive market signal. Meanwhile, even in September, some were certain that BTC would hit the $ 100,000 mark before the most recent ATH.
The on-chain analytics platform Glassnode also posted: Evaluation form on long-term Hodl patterns, which gives more credibility to the argument for another upcoming rally. The results show that coins held for more than 155 days won’t hit the market until the price breaks the previous ATH. On-chain patterns now also show a trend towards accumulation.
Put simply, Long Term Holders (LTH) ensure that demand for BTC exceeds supply.
Complete range of LTH | Source: Glassnode
However, not everyone agrees that history repeats itself. When asked if he believes 2017 history will repeat itself in 2021, Mati Greenspan, Founder and CEO of Quantum Economics confirms:
“No problem. The year 2017 started with Bitcoin topping the $ 1,000 mark and gradually rising over the course of the year, continuously breaking new highs and peaking in December. This year we experienced a euphoria at the beginning of the year and then slowly expanded the dynamic. ”
This view is supported by other indicators that show no clear correlation. In 2017, BTC dominance fell sharply in the first half of the year and then rose as the price neared the USD 20,000 resistance. Early 2021 shows a similar pattern and bullish dominance since September, but the direction of movement has not been a seamless upward move.
The number of active addresses shows the same thing. This indicator had an almost vertical upward trend in 2017.
Although the uptrend is now more obvious than Bitcoin dominance, it has a smaller slope.
Are individual investors less crazy in 2021 than in 2017?
It is possible. For example, the net outflows to / from exchanges share some similarities with the patterns from the previous bull run. Overall, however, the market is acting more cautiously.
Net volume to / from exchanges | Source: Glassnode
Micha Benoliel, co-founder and CEO of Internet-of-Things Nodle, points out that macro-level differences between 2017 and today could be responsible. He commented on the current situation very differently:
“The COVID crisis has affected many of our economies and the money printed by central banks to support the economy has hit new highs. Inflation rates are escalating and therefore Bitcoin is a safe haven to hedge against what is happening. ”
What to Expect from BTC
Whether or not the present repeats itself, analysts were overwhelmingly optimistic about Bitcoin even before last week’s stellar price action.
TechDev’s forecast of $ 200,000 was higher than most, while analyst Filbfilb put it at $ 72,000 for November.
With consistent conviction, PlanB – the creator of the stock-to-flow model for Bitcoin – set the monthly closing price for the last two months with an error rate of only 1% and forecast an October closing price of USD 63,000. November is $ 98,000. He also points out that BTC will hit $ 135,000 in December (based not on the stock-to-flow model, but on the price and on-chain data). On the other hand, if the model is 100% accurate, BTC will hit the $ 100,000 mark.
The source: Plan B
Instead, it appears that the crowd that expects the analyst to reveal new pricing details and / or on-chain data models is driving these surprisingly accurate monthly price forecasts.
How long can it take
The 2017 bull run peaked in December when optimism dried up near the $ 20,000 mark. Although a slight breakout in early January offered new hope, prices have plummeted since then.
It should also be noted that the last major BTC bull run before that was in 2013, when the price hit late November and early December a few weeks earlier.
If history repeats itself, December could be a time when the market will enter a new phase in the halving cycle. PlanB believes it will take longer based on its undisclosed on-chain model.
Of course, indicators and models can take into account undetected news or other market events that can affect prices. So far this year, Bitcoin has weathered numerous regulatory blows from the Chinese government and Elon Musk’s antics, along with its drive to become legal tender in El Salvador and gain wider recognition from the region’s financial sector and institutions. The sluggish economy and investor interest in the cryptocurrency’s staggering returns have also helped maintain solid support.
While Bitcoin Exchange Traded Funds (ETF) news has propelled the market into epic bull territory for the time being, there is no guarantee that the positive sentiment will continue to propel the market. The history of potential regulatory interference in the US and a warming energy crisis are likely to hurt the profitability of the mining industry – these and other macroeconomic factors can cause market deviations.
Steven Gregory, CEO of Currency.com, believes the current hype surrounding ETFs feels similar, if not identical, to 2017. When Bitcoin futures first entered the CBOE, there was a lot of excitement:
“There was a strong upward move at first, but looking back it was like the end of a bull cycle for BTC.”
But he warns about preparing for a new crypto winter:
“There could be some similarities between this 2017 and 2021 bull cycle here. However, the acceptance is much greater, the open interest is higher and the benefits of cryptocurrencies are significantly wider than in 2017. ”
While this doesn’t guarantee results, it looks like the strong optimism at this point is overwhelming. In any case, 2021 will go down in crypto history as one of the most action-packed years in the industry’s colorful history.
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According to Cointelegraph