The bitcoin markets are currently in a healthy bull trend that’s lasted over a year. Much of the gains have been recovering lost ground from the parabolic 2013 bubble.
One thing that’s interesting to note is that our current bull cycle hasn’t gone parabolic yet. We had a smaller parabolic blow out on the last price rally but the larger trend is still healthy and somewhat moderate. The reason being is that the bitcoin markets are more liquid with a higher market capitalization, therefor it’s a much bigger ship to steer than it once was.
That said, the user base is estimated to be around 10M, which is still relatively small. This means that we haven’t hit market saturation or the acceleration point on the technology adoption cycle. Based on the limited supply and increased growth in user adoption, I think bitcoin may be due for another bullish super cycle. Here are some technical and fundamental reasons explaining why.
In the event that we continue on our current price trajectory, the next breakout above 8888 CNY resistance may be a catalyst for another super trend. Using Fibonacci extensions we can see the current trend consistently hitting resistance at the 1.618 level.
In this chart I measure a Fib extension off of the capitulation candle:
The next level up hits the 1.618 area before another correction:
And the last rally did the same:
If the price were to break out and continue on the same trajectory then the next major level could be around $1800:
Now compare that to the rally of 2013:
Here’s what that would look like breaking out of current levels:
A similar parabolic super trend could take to price to $4000. We would need to see a viral acceleration in user adoption for something like this to happen.
It’s likely we’ll see several months of consolidation before anything happens and nothing is ever guaranteed.
The 2013 rally took most people by surprise and attracted major attention from legacy investors. It was the 2013 bull trend that elevated bitcoin from an experimental fringe currency into a serious investment.
Bitcoin lacked much of the necessary infrastructure to attract regular people. Securing private keys was complex and purchasing bitcoin was more of a treasure hunt. Today we have several variations of highly secure and easy to use hardware wallets, more fiat gateways and exchanges around the world. Many places in Asia now let you purchase bitcoin at any local 7/11 and you can even pay your utility bills in Japan with bitcoin.
2014 was the year the Bitcoin industry started seeing large sums of venture capital being injected to build up necessary infrastructure. 2015 kicked off with market capitulation as the price hit a multi-year low of $166. Literally one week later, the smart money came in to herald in the “Wall Street adoption phase” of Bitcoin, as the NYSE invested millions into a new Coinbase exchange.
Since then the interest in bitcoin from institutional investors has been on the rise. The ecosystem has all the necessary infrastructure to push us into the consumer adoption phase. Once this happens, the increased demand on such a limited supply can send prices soaring into a new massive bull cycle. There’s already strong evidence of a growing trend in user adoption.