Bitcoin is on fire right now. Today we have set another higher high close to the $18,000 mark and it does not appear that Bitcoin will stop rising before reaching its all-time high of $20,000 again. I already shared my personal price prediction of $75,000 – $85,000 for one bitcoin, considering the halving cycle and how Bitcoin’s price moves seem to be tied to this event. This price prediction is based on Fibonacci analysis, the stock-to-flow model, and the overall trend analysis of Bitcoin’s past performance after halving block rewards.
But why are there so many price predictions in the region of $300,000? In the following, I will show you how these targets can be determined, based on technical analysis, past performance, and chart structures.
Bitcoin past performance = future performance?
First, if we take a close look at the Bitcoin price chart and apply typical Fibonacci analysis on the bear market throughout 2014 and 2015 we cannot measure the top of the bull market in 2017 of $20,000, using the 4.236 Fibonacci extension. We will only get a target price of approximately $4,500 by using this tool. If you had relied on that target and sold your Bitcoin at $4.500 at that time, you would have missed another 340% rally.
However, let’s assume that Bitcoin will do the exact same thing again and exceed the 4.236 Fibonacci extension by 340% during the next bull market. So, let’s apply the same method on the current chart.
By doing that, we will get a target in the region of $330,000 per Bitcoin. But in addition to that, there is another possibility to identify a $300,000 target. For this purpose, we have to copy the structure of the chart during the bull market from 2015 to 2017 and paste it into the current chart. Then we will have to align the bottom of that copied chart structure with the bottom of the recent bear market (bottom in 2019).
The result is a price target of approximately $390,000, which is even higher. But both methodologies provide price targets in the $300,000 range.
Is it likely that Bitcoin will reach these targets? I think these types of analysis, of which you find plenty recently, underestimate one fact. They are completely based on Bitcoin’s past performance and transfer past performance to the future. Thereby, they do not take into consideration that Bitcoin’s price movements have mitigated with each additional market cycle in the past, which I have explained in my previous post already. Due to that, a $330,000 to $390,000 price target seems to be less likely during the next bull market. By the way, Bitcoin’s market capitalization would reach a total of approximately 6 trillion $ in this case. But it is not impossible, especially if we take our current monetary policy into consideration and that institutional money could enter the cryptocurrency market on a grand scale during the next market cycle.
Though, an interesting fact is that the current chart structure and overall price moves of Bitcoin fully align with Bitcoin’s past performance in terms of growth rate and timeframe (yellow circle).
Bitcoin exit strategy
The question is, how to use these targets to define an exit strategy? We do not yet know how Bitcoin will perform in the future, but without having a strategy defined it will be difficult to determine the right time to get out of the market. Timing the market and selling at the top, especially in the very volatile cryptocurrency market, is almost impossible from my point of view. Thus, it is important to take profit at defined targets. Based on my analysis, the following exit strategy could be defined to sell Bitcoin holdings in tranches:
- Price target $75,000: Sell e.g. 50% of Bitcoin holdings
- Price target $150,000: Sell e.g. 25% of Bitcoin holdings
- Price target $300,000: Sell e.g. 15% of Bitcoin holdings
The remaining 10% could be held as a long-term investment, without touching it for the next 5 to 10 years. The ratio that you sell at each target could be adjusted in accordance with your personal expectations. Of course, these targets and this strategy should not be considered as investment advice or recommendation, but only as an example.
The advantage of selling in tranches is that you will take a part of your investments off the market at clearly defined targets. In addition, because still being invested, you do not have to fear the feeling of missing out another rally. In any case, if the market drops, after you have sold your first tranche, you will still be able to decide whether to sell all your assets or to keep them long-term.
What are your price targets for Bitcoin during the upcoming bull market? Leave me a comment. Subscribe to my newsletter or follow me on Twitter if you would like to get a notification when I publish a new article. You may also like: