oinonen_t
An On-Chain Thesis for $100K Bitcoin
The leading cryptocurrency bitcoin has been offering exceptional returns during early 2023, climbing 69 percent year-to-date. Praeterea, the correlation between bitcoin and the technology-related index Nasdaq 100 has weakened, dropping -60 percent from October's 0,75 to the current value of 0,3. In a bigger picture, bitcoin's market behaviour can be segmented into accumulation (turquoise) and distribution (purple) phases, which form a multi-year sequence of cycles. Accumulation cycles have been favored by smart money (institutions), while distribution cycles have been characterized by retail demand. Bitcoin’s history is also dominated by halving events, which are preceded by pre-halving accumulation cycles (turquoise). The shift from accumulation to distribution cycle can be forecasted by fees to reward on-chain data (yellow), which tends to spike before each distribution cycle. The phenomenon occurred in 2019 and 2020. In the accumulation cycle of 2019, the fees to reward ratio spiked before the summer relief rally (white arrow on left), rising to 0,12. In 2020, the fees to reward ratio spiked again, first reaching 0,21 in May and 0,29 later in November. Now the fees to reward indicator seems to be spiking again (white arrow on right). Additionally, bitcoin is moving towards my earlier 2019-based price model, which forecasts a 46 092 dollar spot price level. According to the model, bitcoin should reach its target during the upcoming summer of 2023. However, the real target is the halving event of 2024, which also represents a paradigm shift in the sequence of bitcoin's market cycles. The estimated date for bitcoin’s next halving event is 29.4.2024, and it will increase the scarcity of the cryptocurrency by dropping the block reward from 6,25 to 3,125. After reaching the 2019-based target price of 46 092 dollars, it's easy to see bitcoin reaching $100 000 in the aftermath of the 2024 halving event.