Bitcoin’s price movement prediction for next 2 years
This blog is my personal view and is not meant to disrespect any individual or organisation out there or to compete with them. Also this article is not an investment advice and does not encourage anybody to buy bitcoin, nor guarantees its price in future.
I started investing in bitcoin in mid 2017 and built 3 companies around blockchain and cryptocurrency in last 2 years. I am not an expert in predicting Bitcoin’s price movements. But Honestly, one thing this industry has taught me in last 2 years is that there is no such thing as an expert in this world of crypto; we all are in the same boat just praying to God not to let it sink.
Most technologists, traders, fund managers use graphs in different ways to form patterns in past and predict future. But do commodities like bitcoin follow a pattern? I have no clue but i guess we will someday find out.
Bitcoin came to life 11 years ago and grew over 100,000 times since then. Which pattern, algorithm, human or machine could have predicted that?
“Humans see what they want to see” — Rick Riordan
Human mind is an expert in forming a pattern in almost everything. Thats why religions were born in first place! Well, i have quoted enough debatable statements in one blog so coming back to the point; as a regular human, i couldn’t resist but to observe a pattern. So I broke Bitcoin’s history in 4 year patterns and my goal is to predict the W curve accurately, thus predicting price movements of Bitcoin in coming years ( or honestly the price movements i wish to see ).
I observed the pattern Bitcoin followed between December 2013 upto December 2017 and based on that expect it to repeat a similar pattern between December 2017 upto December 2021. And to my astonishment, bitcoin has been following an identical pattern at least till now.
Lets start with understanding two fundamental phenomenons– Bitcoin rewards and Bitcoin rewards halving.
Bitcoin rewards is how new bitcoins are generated ( or mined ). In Bitcoin Blockchain, the miners produce and validate new blocks and for doing this task, they are rewarded a fix number of bitcoins for each block they generate, thats how new bitcoins come into our world.
Now this number ( bitcoins rewarded for each block ) was initially fixed to be 50 bitcoins per block and this number reduces to half every four years ( this number is also derived mathematically ). This phenomenon is called Bitcoin reward halving.
We saw first reward halving in 2012 which reduced the reward to 25 bitcoins, followed by second reward halving in 2016 ( 12.5 bitcoins ) and the third one is almost here and happening around June 2020 which will further reduce the reward to 6.25 bitcoins for each block generated.
Fundamentally, Bitcoin reward halving should have substantial effect on Bitcoin’s price because of three fundamental reasons.
1. Inflation reduces spectacularly. The new bitcoins entering the market reduces drastically, thus checking supply.
2. The set up cost for miners which includes hardware, regular and substantial electricity costs and operational costs for managing the facility remains the same but reward reduces to half.
3. Another technical but usually missed out aspect is hash rate. This means difficulty to generate each block. Because the total number of bitcoins is capped, fundamentally bitcoin’s hash rate i.e. difficulty to generate new bitcoins should increase with time, thus forcing miners to deploy more and more hardware and electricity with time.
These three points add up after each halving and are the reasons bitcoin adds atleast a ‘0’ to its value every time it rallies.
Bitcoin reward halving occurs every 4 years, which is the reason I decided to form the pattern starting end of 2017 ( few months after 1st halving ) and end of 2021 ( upto approximately a year after 3rd halving ).
As of today ( December 16th, 2019 ), Bitcoin is trading around ~ $7100
Cycle 1:
As observed, Bitcoin gained around ~2000% after its first halving in 2012 and reached its ATH more than a year after its 1st reward halving (Dec ’13) then constantly lost its value for approx a year. During this period, it lost ~70–80% of it value (Dec ‘14).
It took Bitcoin few months to recover from that and more than doubled from its low by end of another year (Dec ’15). By this time, more than 3 years had passed from 1st reward halving and it was approximately half year away from its 2nd reward halving. Bitcoin gained another ~40–50% during the period reaching its 2nd reward halving.
December, 2013 — ~$1000
December, 2014 — ~$250
December, 2015 — ~$450
Cycle 2:
Approximately a year after 2nd reward halving, Bitcoin followed a similar pattern it followed after its 1st halving and gained around ~2000% value within 18 months from halving ( Dec ’17 ). After this, Bitcoin constantly lost its value and reached its low by end of next year ( Dec ’18 ); uptill now, it had lost ~70% of its value from ATH of ~$19000 to its low of ~$3000.
It again took Bitcoin few months to recover and by the end of next year, i.e. Dec ’19, it is trading at just over double of what is was a year ago.
December 16th, 2017 — ~$19000
December 16th, 2018 — ~$3200
December 16th, 2019 — ~$7100
The pattern Bitcoin is following between its 2nd reward halving and 3rd reward halving is identical to which it followed in between 1st reward halving and 2nd reward halving.
This pattern suggests there is a high possibility of Bitcoin following similar pattern in future and we can expect a gain of ~40–50% from here in coming months before 3rd reward halving in June 2020.
Even after 3rd reward halving, I expect Bitcoin to follow a similar pattern and make a new ATH of at least ~700–800% ( if not more ) higher from the value during the 3rd reward halving.
Thus, primarily based on instinct and faith,
My price predictions for Bitcoin upto 4th Reward halving are —
First half 2020 — Atleast ~$12000
Second half 2020 — ~$15000 — ~$20000
December 2021 to February 2022 — a new ATH of at least ~$70000
That’s all Folks!
Sources —
- Hope
- Simple Math ( BDMAS )
- Faith
- Curiosity
- Courage
