(Bloomberg) — A year ago the crypto market was on its knees and the notion that Bitcoin might retest a record high of nearly $69,000 was almost risible. Fast forward 12 months and some studies now point to just that possibility.
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Technical analysis comparing the largest digital asset’s rally to $52,000 with past surges spits out projections of more gains in coming weeks. Some of those studies follow below — with the caveat that the past isn’t always a reliable guide to the future, especially for a young and febrile asset like Bitcoin.
Weekly Advance
Bitcoin’s price has tripled since the start of 2023 amid optimism over dedicated US exchange-traded funds as well as a looming reduction in the token’s supply growth known as the halving. The rally includes four straight weeks of increases through Feb. 18. In the past five years, the original cryptocurrency climbed an average 49% over the three months after four-week winning runs, according to data compiled by Bloomberg. That would take Bitcoin to about $78,000.
“The market set-up for Bitcoin remains very strong,” said Richard Galvin, founder of crypto-focused investment firm DACM.
Bumpy Road
Elliott Wave studies posit that markets are prone to repeating wave patterns. Applying the technique to Bitcoin suggests a retreat toward the $40,000 level before an advance to about $70,000. That compares with Bitcoin’s all-time peak of $68,992 in November 2021, when the world was awash with stimulus.
Derivatives Market
Speculators use options contracts for a variety of trading approaches. Data from Deribit, the largest crypto options exchange, show that Bitcoin call spreads are among the most popular strategies currently. This suggests investors see potential for more Bitcoin gains, but not necessarily substantial increases. A bull call spread involves buying a call option, funded in part by simultaneously selling a contract of the same maturity at a higher strike price.
The options market as whole “is currently pricing the probability of making a new all-time high before halving at around 20% to 25%, an estimate that looks approximately fair to us,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
Bitcoin was little changed at $52,145 as of 9:07 a.m. in London on Monday, close to the highest level in more than two years. Among smaller coins, the Worldcoin token from a project co-founded by OpenAI’s Sam Altman was a standout, surging some 40% in the past 24 hours, CoinGecko figures show.
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