Will Bitcoin Recover? Is it the End of Bull Run?

Since December 2020, a lot of retail investors have entered the cryptocurrency universe. Attracted by the massive returns, people have put in their hard-earned savings into the crypto world and many have got handsome returns. But the problem arises when our crypto king instead of giving 2x or 3x gains starts bleeding. People who are in the crypto market since 2017 are very well familiar with the massive fluctuations which come with owning Bitcoin. Bitcoin hit its all-time high in April at $ 64,863.10. This means if someone sold a bitcoin at this amount, someone was present to buy it too!

Bitcoin on Laptop

The month of May hasn’t been that pleasing for Bitcoin. It is making lower highs and lower lows. This means that Bitcoin is following a downward path. The current crash which started in the second week of May has installed a sense of fear among the traders. Everyone is asking if BTC can recover from here or it is the start of the bear run.

The Current Scenario

This is what is happening with BTC in the current scenario. As you can see the purple trendline, BTC is making lower lows as well as lower highs, indicating a bearish trend. Currently, it is at the support level of 45k-46k. If seller volume increases, we could see the BTC ladder down to the 39k-40k mark which is a crucial zone. If this support level also breaks, we can see BTC go as low as 30k to 32k.

In the weekly time frame, BTC failed to confirm support at 21 EMA and is now expected to test 34 EMA which rests at the 39k zone. Crypto hodlers are hoping that EMA 34 will act as good support for the cryptocurrency and we can see a major jump from here which will push the price back into the uptrend.

What Previous Data Tells Us

If we look at the data from the previous cull cycles, it clearly indicates that the bull cycle is not over yet and this is a healthy correction.

Price Analysis Before and After BTC Halving

BTC Halving Price Data

If we analyze the Bitcoin price before and after Bitcoin halving, we can see that in the last 2 halvings, BTC has given significant returns after halving was completed. Although the % gains in price from halving till Peak in prices after halving have reduced, we can still expect a 1040 % return on $8700 (BTC price at halving). This means the BTC price is expected to reach $99234.98 at its peak, which we have clearly not reached yet.

One thing to note here is that is the above data does not consider the first bull run cycle of BTC. It only caters to the price data before and after BTC halving.

To make things clearer, let’s analyze the data of the previous 3 bull cycles.

Price Analysis of Last 3 Bull Cycles

Last 3 Bull Cycle Price Data

If we look at the last 3 bull cycles of BTC, clearly in every cycle we can expect diminishing returns. Further, with every cycle, the time taken to reach the top from the bottom is also increasing. According to the calculations, the 4th cycle could see a $154240 Bitcoin anywhere in mid-2022.

Stock to Flow Ratio

BTC Stock to Flow Model

Stock to flow ratio is the ratio of Bitcoin in circulation to Bitcoin production through mining. With every Bitcoin halving, the stock to flow ratio increases. Upon analyzing the above chart we could see that the Bitcoin price is following the stock to flow ratio and is expected to reach $ 100,000 by 2021.

The Conclusion

We have enough data to assume that BTC will recover and reach new heights but all the early birds and folks who are in crypto for the past few years know how volatile this market is. The past data is definitely telling us that BTC will reach the 100k mark but we should always manage our risk.

Note: I am not a financial advisor. This article is for informational purposes only and this is by no means financial advice.

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