A hedge fund trader and Bitcoin researcher known for his online alias “Spook” recently released a simple Bitcoin prediction chart, making a solid case for $50,000 by the end of 2018.
This is what 50k looks like by the end of 2018 pic.twitter.com/ReUyvMBQl5
— Spook (@CypherSpook) July 6, 2018
Bitcoin has experienced similar bear cycles throughout the past nine years. The dominant cryptocurrency would increase in value by several hundred percent and plunge by 70 to 90 percent, recording a mid-term correction.
In 2014 for instance, Bitcoin suffered its second-worst correction in history, recording a loss of over 80 percent in a year-long period. In a sense, 2018 has been a sped-up version of the 2014 correction, and a case can be made that the two corrections are similar in concept because both were caused by the eruption of the retail or individual trader bubble.
So How Can Bitcoin Reach $50,000 by 2018?
After a 70 to 90 percent correction, Bitcoin tends to surge by large margins to the upside. While it first needs to secure a relatively short period of stability, which in crypto is equivalent to a couple of weeks, Bitcoin, along with the rest of the market, has always surged beyond its all-time high to achieve new support levels.
Due to this trend of the crypto market and the tendency of Bitcoin to record large gains and losses in a short period of time, prominent crypto investors like BKCM founder Brian Kelly said that traders must expect 50 to 80 percent losses if they anticipate 10 to 20-fold gains within a year.
The chart provided by Spook essentially assumes that Bitcoin bottoms out at the $6,000 region and makes it move towards its all-time high at $20,000 first, and eventually achieves $50,000 by the end of 2018, falling to its previous all-time high at $20,000 subsequent to reaching $50,000.
It is unlikely that the chart would all play out in 2018 given that experts expect Bitcoin to bottom out in the range of $3,000 to $5,000, and whether the next peak would be at $50,000. But, it is possible that the trend of Bitcoin replicated the chart of Spook over the past nine years and it is very likely that in the next bull rally, it will surpass the current all-time high, establish a new all-time high, then fall 70 to 80 percent.
Given that a fall from $50,000 to $20,000 is equivalent to a 60 percent drop, $70,000 to $80,000 is possibly a more plausible mid-term target for the next Bitcoin bull rally. This is especially applicable if investors expect the dominant cryptocurrency to experience an 80 percent correction in the future, as it had three times in the past six years.
ETF is the Big Bet
As CryptoSlate previously reported, Cboe, the biggest options exchange in the world, filed for a Bitcoin exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC), increasing the probability of the first bitcoin ETF being approved by the SEC.
SolidX, another Bitcoin ETF developer, has brought in VanEck, which operates more than 70 ETFs and ETPs, to convince the SEC to approve bitcoin ETFs that will allow accredited retail investors in the public finance market to invest in Bitcoin with insurance and custodianship.
The approval of an ETF, a change in regulation for cryptocurrencies, or a sudden shift by major banks to provide crypto custodianship could lead the crypto market to experience intensified movements on the upside by the end of 2018.
In May 2018, upon the release of several reports that claimed the parent company of the New York Stock Exchange is preparing to offer crypto custodianship, Kelly said:
“Up to this point, it has been very difficult for them [institutional investors] to get comfortable compliance wise in holding cryptocurrency. If ICE has a custodian solution that is SEC compliant, that’s going to open the floodgate”.
If one of these three situations unfold before the end of 2018 and sufficient volume can support the momentum of the market, a run towards $50,000 could be a possibility. Of course, nothing is guaranteed.
Cover Photo by Cristina Gottardi