In a November 2018 article we pointed out that Bitcoin historically fell about 85% from long-term highs to subsequent long-term lows. We said that, from a historical viewpoint, the price of Bitcoin should bottom within three months at a price between 2700 and 3700 USD. The price hit a long-term low the following month around 3300 USD. This raises a question: can we predict Bitcoin prices for the upcoming months by looking at its history? In this article we’ll investigate historical behavior in the months following a long-term bottom. We are currently about five months after a long-term bottom that occurred in December of 2018. Please keep in mind Bitcoin is a high-risk investment and most experts recommend not spending more money on Bitcoin than you can afford to completely lose.
The last long-term low
The last long-term low occurred mid-December 2018. It’s been about 5 months since then and we’ve seen an 80% rise in price, from 3300 USD to over 5900 USD. The chart below shows the price of Bitcoin from last December to now.
Low in mid-January, 2015
The following chart shows the price of Bitcoin for over 5 months following the prior long-term low in early 2015. In those 5 months the price increased about 35% from 170 to 230 USD (i.e. not as much as the current upswing). Furthermore, the price fluctuations following that bottom do not closely resemble recent fluctuations. In the sixth month the price increased another 21% to 280 USD (65% over the bottom). The subsequent long-term high didn’t occur until about 1.5 years later (mid June 2016) when the price reached 750 USD (over 340% above the low). There was not a solid long-term bottom after that until the late 2018 low.
July 2013 Low
The chart below shows the price of Bitcoin following the long-term low in early July 2013. In less than five months after the bottom, Bitcoin climbed over 1600%, from 70 to over 1200 USD. In the three months following the bottom it climbed 90% to 136 USD, but then skyrocketed in the following 2 months. This bears little resemblance to the recent price movements.
Nov 2011 Low
This may be too old, and with too small a market cap to be meaningful, but we are including it for reference. A low of about 2 USD occurred in mid-November of 2011. Five months after this low Bitcoin increased 150% to 5 USD. Prior to that, however, it hit a long term high 250% above the low (just 2 months after the low). A plot is provided below.
We took a quick, historical look at Bitcoin price fluctuations following long-term bottoms. We found the recoveries to be quite different, with 150%, 1600% and 35% increases in the following five months. The timing of subsequent long-term highs was also quite varied: one occurred within 2 months while another took 1.5 years. We do not see a pattern to predict the next long-term high. However, all the lows were followed by over 1000% gains long-term (but with much smaller market caps than today). Hence, from a historical viewpoint, it seems likely the price will be significantly higher at some point in the coming months-years, but when and how much is very uncertain.
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