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Since the beginning of October of the current year, Bitcoin has grown by more than 70%, reaching a new high for 2023 at $44,700 (paired with Tether USDT) on the Binance platform. However, on December 11, the cryptocurrency price dropped by 7% to $42. It is important to determine whether this is a temporary correction or a signal of disappointment for investors.
Bitcoin reached its minimum on November 21, 2022, and has since risen by 185%. This significant growth has pushed the fear and greed index to 'Extreme Greed,' making further growth more fragile.
We have explored possible answers to questions about where a local peak might occur and what the expected correction might be using Fibonacci tools and technical indicators.
Since the inception of Bitcoin, there have been three halvings:
The next halving, according to calculations based on Bitcoin blockchain characteristics, is expected on April 12, 2024. The crypto community anticipates this event, as it usually precedes a significant increase in Bitcoin's value (as seen in previous cases).
We decided to analyze how Bitcoin behaved before and after the previous halvings, focusing on the 2016 and 2020 halvings.
Before the BTC halving, it reached local lows. In 2011, the minimum was $2 (data from the Bitstamp cryptocurrency exchange). The following period, from October to August 2012, brought an increase of over 800% (up to $16). Before the halving, a correction began, wiping out about 61.8% of all gains. After the halving, Bitcoin rose by 58 150%.
Source: Bitstamp
n 2015, the minimum was at $152. The increase before the halving was 61.8% of the previous losses, rising to $779 per coin. Three weeks before the halving, a correction occurred at 50% (to $465). Overall, from the minimum, the price grew to $19,666 (+12,938%).
Source: Bitstamp
The next minimum was recorded in December 2018 at $3,122. Before the halving, the growth returned 61.8% of the previous losses. Then a correction occurred, returning the price almost to the minimum - $3,850 (-93% from the highs). After that, there was growth, and the price increased by 2,210%.
Source: Bitstamp
The first thing we predict is the recovery of the Bitcoin price after reaching the local minimum on November 21, 2022, which is currently observed.
Every time Bitcoin reached a local minimum, it recovered by 61.8% according to Fibonacci. If this scenario repeats now, the current impulse should end at $48,555.
Source: Bitstamp
After each update, there has always been a correction of at least 50%. Based on possible highs ($48,555), we determine the correction level after recovery - $32,017 and below.
Source: Bitstamp
From historical data collected from the BTC/USD chart, it is evident that Bitcoin's growth slows with each halving, and the rates of this deceleration increase. This is logical considering that the capital volume is not infinite, and it becomes more challenging to attract large sums.
Comparing the growth of Bitcoin from local lows to local highs, after which a decline begins, it can be seen that after the second halving, the growth slowed down by 4.49 times, and after the third - by 5.85 times. Assuming that after the 4th halving, the growth will slow down by 7.21 times, Bitcoin will grow from the local minimum ($15,479) by 306.5% - to $62,922.
Source: Coingecko
This may indicate a new stage in Bitcoin's development, which can be called 'Legalization, regulation, and recognition.' According to Coingecko data, more than half of the world's countries have already legalized cryptocurrencies. Such changes herald a new era in the history of cryptocurrencies.
If we are at a new stage in the development of cryptocurrencies, Bitcoin can expect growth by 3.3 or 16.6 times. Optimists may assume 16.6, but a more realistic growth of 3.3 times also seems logical, considering the transition from the initial stage of cryptocurrency development to the second stage. In the first stage, Bitcoin grew by 16.6 times, in the second - by 3.3 times. This indicates a transition to the second stage of a higher level.