- These predictions are based on price behavior during previous halving cycles.
- BTC-USD expected to top 150k next year.
- My trading plan on how to play the current and next cryptocurrency cycle explained in detail.
Bitcoin is on a strong bull run in recent months, but this is already old news. What people would like to know is how the current bull cycle will unfold in the following months/years and what would be a good strategy to play the current halving cycle.
First of all, I would like to mention that my prediction is based on past price behavior of Bitcoin halving cycles. My assumption is that halving cycles are the most powerful force behind Bitcoin pricing, and everything else, from technical analysis to news regarding institutional adoption or regulation are just noise. The reason I say this is because I believe Bitcoin's price is determined by the supply-demand dynamics, which in turn are influenced by investor psychology. They halving cycles are perfect examples of self-fulfilling prophecies, and they work extremely well when it comes to valuing an asset such as Bitcoin with no "intrinsic value".
My Price Predictions
The current halving cycle is expected to peak in the second half of next year. I estimate a price top to happen somewhere between July and November next year.
My prediction model based on previous cycles indicates a top of around 160k USD per Bitcoin. This will probably be followed by a quick correction. The price will stay above 120k for a very short period of time.
What will happen next? Here are my forecasts:
- 2021 top of around 160k.
- 2022 bottom of approx 40k.
- 2023 and 2024 should see the price stabilizing and hovering around 70k to 120k.
- 2025 should see the next cycle top at around 500k.
Of course, the current cycle could unfold in a different fashion, but this is my base case scenario based on the halving cycle prediction model and this is the assumption I will be using to develop my cryptocurrency trading strategy.
How To Trade The Cryptocurrency Cycle
I will explain my trading plan in very simple terms, so everyone could get an idea on how I expect the things to unfold.
- BTC below 40k - This is the first phase of the cycle (we are still here) and I will continue to accumulate Bitcoin during this phase.
- BTC between 40k and 120k - This is the second phase of the cycle that should last for a few months during the first half of next year. I plan to hold Bitcoin during this phase and accumulate altcoins. A strong portfolio of good altcoins could be made of Ethereum, Monero, Litecoin, EOS and Waves (at 20% each).
- BTC above 120k - This should be the mania phase of the current bull cycle. Retail investors will be pouring in, Uber drivers will speak about cryptocurrencies and altcoins will get outrageous valuations. This is the time to sell both Bitcoin and altcoins and take the profits. I expect this phase to happen in the second half of 2021.
- BTC below 60k - After a sharp drop, it is time to start accumulating Bitcoin again and prepare for the next bull cycle. Bitcoin may fall even below 40k again, but it is prudent to start accumulating early, just in case this cycle will not have such a big correction because of institutional adoption and lower volatility. You don't want to be left without Bitcoin during the next bull cycle and to buy high because of FOMO.
- Wait for the next bull cycle that should take Bitcoin to new all time highs. Accumulate as much as you feel comfortable owning while the price is below 60k. The lower the price, the more you should accumulate. Unless you are a short term trader, you should just HODL until the next cycle that could bring Bitcoin to 500k in 2025.
While price predictions can be wrong by pretty high margins, there are some indicators that should be watched closely in order to correctly time the Bitcoin cycle and adapt your trading strategy accordingly.
Bitcoin Dominance is a very important indicator of the cryptocurrency market sentiment. When the altcoin surge happens, Bitcoin Dominance falls, and this is an early indicator that the cycle is about to peak soon.
When Bitcoin Dominance falls below 40% it is time to be more careful and probably head for the exits. This cycle Bitcoin Dominance may fall even lower than before, so you could actually wait a little bit longer than before. However, if it goes below 30% you should think about taking profits fast and avoid being left holding the bag. Altcoins are always the ones to fall hardest, so exit the altcoins first.
This is another important indicator in the Bitcoin cycle. Keep an eye on it, and if you see Google Trends for "Bitcoin" breaking new highs compared to the 2017 cycle, you should start to be alert and ready for a quick exit.
Other signs you should look for include excessive discussions about a "better" cryptocurrency than Bitcoin and an excessive number of new ICOs at outrageous prices. Those are usually indicators that the cycle is at the peak.
Please keep in mind that Bitcoin and cryptocurrencies are extremely volatile assets and you should never invest in this asset class more than you feel comfortable to lose.
Analyst's Disclosure: I am/we are long BTC-USD, ETH-USD, XMR-USD.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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