Bitcoin’s Next All-Time High Could Be Five Years Away, According to Crypto VC
An analysis of bitcoin’s last three hyper bull markets suggests it may take another five years for a new high to emerge, according to Anthony Pompliano, founder and partner of Morgan Creek Capital Management. Pompliano’s outlook contrasted sharply with his previous prediction calling for $50,000 bitcoin by year-end.
A more thorough examination of the bitcoin market reveals a much different reality than the one put forth by Pompliano and others at the beginning of the year. In a recent post, he argued that bitcoin is unlikely to hit a new high anytime soon.
“Parabolic increases in price continue to take longer — each parabolic run is measured from the last all-time high to the new all-time high. The first rapid price appreciation took just over 300 days (2010-2011) and the second took over 900 days (2011-2013). The last parabolic price increase peaked at ~$20,000 (2013-2017) and took almost 1,500 days to complete.”
Although past performance is not indicative of the future, Pompliano’s latest view is more consistent with long-term trends in the bitcoin price. Based on this examination, it will take more than 2,000 days, or mid-2023, for bitcoin to notch a new high. Previously, Morgan Creek Capital Management had predicted the network effect to launch bitcoin toward $500,000 by 2024.
Comparing Bear Markets
At its lowest point this year, bitcoin had declined more than 70% from its December peak. Only one other bear market shaved more percentage points off bitcoin, according to Kristov Atlas. Bitcoin’s most famous bear – Nov. 30, 2013 to Feb. 21, 2017 – saw values declined by as much as 83%. This period also has the distinction of being the longest-ever bear market for bitcoin.
Going back to 2012, bitcoin has faced six bear markets – all of which resulted in the loss of at least 36%.
An analysis of bitcoin’s trade volumes (or lack thereof) suggests that the current bear market may persist for much longer than many had initially presumed. This is further corroborated by declining searches for terms like “bitcoin” and “cryptocurrency.” These search terms are currently trending at more than one-year lows, a sign that interest among first-timers is declining. Google trends are an indirect measure of investors’ interest in cryptocurrency. At the height of the bull market, terms like “bitcoin” and “cryptocurrency” had the highest trend score, according to Google.
To hasten adoption, cryptocurrency exchanges like Coinbase have developed new custody services to attract institutional capital. Efforts to securitize bitcoin through exchange-traded funds are also underway. Developments on both fronts could reduce the time it takes for bitcoin to string together another parabolic run like the ones described by Pompliano. However, regardless of when the next rally occurs, bitcoin’s long-term holders have always been rewarded for their patience.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.