The price of Bitcoin (BTC) has been consolidating within a narrow margin for several months. If the biggest cryptocurrency breaks out successfully, Bitazu Capital’s founding partner Mohit Sorout says it would be imminent to hit a record.
Since July 2020, Bitcoin has been hovering between $ 10,200 and $ 11,800, a range of 15%. You have experienced moderate volatility for an extended period, except for a few brief spikes in volatility.
When Bitcoin is stable for a long time in a tight price range, a large price movement usually occurs.
It remains an uncertainty if will or will not produce a short-term breakout. But if it happens, Sorout says it would take BTC three months to reach $ 20,000.
Why wait three months for a peak in Bitcoin price after a breakout?
Based on previous price cycles, Bitcoin price tends to move quickly after staying in a range for a long time. Historically, the pattern has applied for both upside and downside breakouts.
From May 1 to July 20, the price of Bitcoin ranged between $ 8,800 and $ 9,800, stabilizing around $ 9,100. After two months of consolidation, it took 12 days for the price of BTC to register a 32% rise to $ 12,123 on Binance.
Considering Bitcoin’s tendency to see large spikes in volatility after extended periods of consolidation, Sorout He said:
“Calm before the storm. If BTC were to break out today, it would most likely hit its previous all-time high of $ 20,000 in 3 months.”
When asked about the reasoning behind the three-month lapse, Sorout said it is based on an observation of volatility.
According to Sorout, a Bitcoin price surge to $ 20,000 could occur even before three months. He pointed that is:
“An observation based on how violent the rises are after periods of moderate volatility. It could be even earlier.”
An important variable to note is the declining open interest on futures compared to previous bull markets.
Particularly after the charges against BitMEX by the U.S. Commodity and Futures Trading Commission or CFTC, open interest in futures has generally declined. This could lead to a more stable and gradual uptrend for Bitcoin, as opposed to previous bull cycles.
BitMEX open interest in the year to present. Source: btctools.io
Factors That Could Strengthen BTC Momentum in Q4 and Throughout 2021
He recent increase in institutional demand continues to promote a strong narrative around a bullish Bitcoin price cycle by 2021.
On October 17, Grayscale CEO Barry Silbert said the company hit a record assets under management of $ 6.4 billion. Silbert emphasized that the firm saw “BIG entries this week.”
Institutions that have been acquiring Bitcoin, such as Square and MicroStrategy, they said that perceive Bitcoin as a potential treasury asset. If so, that could mean that many institutional investors are hoarding BTC with no intention of selling in the near future.
S2F model with its latest update. Source: PlanB
The price of Bitcoin has been relatively stagnant throughout the month of October, despite the positive news around institutional inflows. But stock-to-flow (S2F) creator PlanB said asymmetric returns are likely over time. Declared what:
“Why isn’t the price of #bitcoin going up with all this institutional buying? Who’s selling? The price of BTC is exactly where it should be, holding firm above $ 10,000, waiting for that moment … asymmetric returns. .. patience!”
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