With the price of bitcoin hovering near $50,000, momentum has returned to the market and strong hands have accumulated more bitcoin than ever. A 2013- style double bubble is in the cards.
The 2013 cycle saw the price of bitcoin draw down 75% from the highs before rallying a staggering 1,750% in less than six months. We aren't suggesting that the rally will occur again with the same performance, but rather an explosive “double bubble” within the traditional four-year boom-and-bust cycle.
The market has gone through quite a similar cycle compared to 2013 as well, with an initial parabolic run up, a large amount of coins becoming liquid before an aggressive reaccumulation re-accumulation and parabolic run up.
If bitcoin continues to transfer to strong hands at the current pace, a parabolic run up will commence that most in the world cannot fathom. Bitcoin, at nearly a $1 trillion asset today, can elevate to a $5 trillion asset in 2022 with relative ease.
After all, $1 of capital that flows into bitcoin adds far more than just $1 of market cap to the asset, and during a bull market when most market participants are holding, the market value to realized value of bitcoin explodes upwards. If 1% of capital flows out of global debt funds into bitcoin as a safe haven, as the global economy experiences massive supply chain disruptions causing rising prices across the board.
Interestingly enough, the biggest commodity shortage of them all may end up being satoshis, as the 100% transparent nature of the asset’s ownership confirms this is true.
To add fuel to the fire, bitcoin has a difficulty adjustment to keep supply inelastic on roughly a biweekly basis. Market value to realized value in this scenario is very likely to look somewhat similar to what occurred in 2013 if this trend continues.
A 2013 double bubble that pushes bitcoin towards a multi trillion dollar market cap? It’s in the cards, and it very well might be the most likely outcome…