​A year ago, bitcoin was worth $69 000. When BTC will be able to update its all-time high

On Thursday, November 10, the crypto market continues to fall as the community faced the aftermath of Sam Bankman-Fried’s lightning-quick business collapse and Binance’s abandonment of plans to acquire the long-suffering FTX exchange to bail out its users’ deposits. Ironically, exactly one year ago on the same day, bitcoin hit an all-time high (ATH) of $69 000.

On the night of November 10, the price of bitcoin (BTC) dropped to $15 742. At the time of publication, the rate of the first cryptocurrency is $16 000. Such values of the BTC price have not been observed since November 2020, which was the beginning of a bull period on the market, at the end of which BTC reached its maximum heights. Today, the market has changed dramatically, with overall negative investor sentiment wiping out nearly $100 billion in the total market capitalization of all digital assets in just 24 hours.

The total capitalization of the crypto market is $856 billion as of November 10, the lowest it has been since January 2021. According to Coinglass, $591 million worth of margin positions has been liquidated in the past 24 hours, with more than $50 million of that falling on the Solana (SOL) coin. Undoubtedly, the news background of the market, first of all, is connected with the collapse of FTX, as well as with the macroeconomic situation.

A year ago, analysts attributed the record growth of bitcoin and other cryptocurrencies to different narratives. The effects of “halving,” hedging against inflation, the approval of exchange-traded funds, technical upgrades — all these and more were thought to be reasons for the growth.

Halving is bitcoin’s code embedded cut in half of the reward to miners for a mined block on the blockchain. Initially, miners received 50 BTC, this was reduced to 25 BTC on November 28, 2012, to 12,5 BTC on July 9, 2016, and to 6,25 BTC on May 11, 2020. The next reward reduction to 3,125 BTC is expected ~ in May 2024.

Overall, starting in late spring-summer 2020, bitcoin was predicted to rise by most analysts simply because the stock market, especially the tech sector, was rising amid multi-billion dollar injections into the US market to stimulate the economy during the COVID-19 pandemic, notes ENCRY Foundation co-founder Roman Nekrasov. “The growth was expected. The main question was how powerful it would be, and to what level would bring the first cryptocurrency,” comments the expert.

According to Nekrasov, the current collapse of the crypto market was also predictable given stagflation, the winding down of the economic stimulus program, key rate hikes in the United States and Europe, and the collapse of crypto lending platforms following the collapse of the Terra ecosystem. “But we also don’t know exactly where the bottom is, or what level bitcoin will fall to. Maybe up to $15 000, maybe up to $10 000,” Nekrasov draws an analogy.

The main theory on the market is that global trends are tied to bitcoin halving. This creates a self-sustaining narrative of a four-year cycle on the crypto market, which investors adhere to one way or another, explains Nikita Zuborev, the senior analyst at Bestchange.ru.

Why bitcoin may rise in price by the next halving. Analyst’s explanation

A private presentation of this narrative was published by a now widely known Dutch analyst under the pseudonym “PlanB” among crypto investors. He picked up the necessary parameters and applied the standard for scarce raw materials model Stock-to-Flow (S2F) on the crypto market. In short, its essence boils down to the fact that a resource, which has a finite supply will become more expensive by a certain algorithm because of the emerging market shortage, explains Zuborev.

The theory is interesting, the Bestchange.ru analyst believes, and it is fitted quite accurately, although in practice there are noticeable discrepancies when the model is used to calculate the exact values rather than the current trend and possible price range. For example, many believed in the S2F model for bitcoin and expected its execution, according to which the final mark was noticeably higher than $100 000. But in practice, the first cryptocurrency managed to barely approach $69 000 before the start of the correction that continues today.

When to expect new highs

“I wouldn’t expect a new ATH until the second half of 2024. The bullish cycle is unlikely to start before the second half of 2023,” Nekrasov says. According to the ENCRY Foundation representative, if we draw an analogy with previous growth cycles, the bullish period on the market will gradually gain momentum in the run-up to the halving, and the main effect of the halving will be in the 12 months after the reward cut, which is the winter of 2024-2025.

According to the same self-fulfilling prophecy model of a four-year crypto market cycle, the coming months will be moderately negative for long-term investors, according to Zuborev. If one expects the market to continue to obey the previously defined laws, then 1,5-2 years of correction before the start of growth should be expected, the expert predicts.

“At the moment, exactly one year has passed since the correction began. There is at least another six months of calm before the possible beginning of an uptrend. Then about a year before the halving, a smooth growth will start “on expectations,” and immediately after it a powerful rise to the new price records,” Zuborev explains. According to him, if we stick to the current model, the new ATH will be achieved tentatively in late 2024.