Fidelity Digital Assets Explores Bitcoin’s Price Cycle
Fidelity Digital Assets recently published an article discussing whether Bitcoin’s price has reached a peak in the current cycle or if it is at the beginning of the next “acceleration phase.” Analyst Zack Wainwright stated that the characteristics of Bitcoin’s acceleration phase include “high volatility and high profits,” similar to the price discovery phase that followed Bitcoin’s breakout above $20,000 in December 2020.
Despite Bitcoin’s negative return of 11.4% year-to-date and a nearly 25% drop from its all-time high, Wainwright noted that this “post-acceleration phase” price performance aligns with the average retracement levels commonly observed in past market cycles.
Source: Fidelity Digital Assets – Correction magnitude during Bitcoin’s acceleration phase
Historical Data Suggests Bitcoin May Not Have Topped
Wainwright pointed out that while uncertainty looms in the future, the trends from past cycles indicate an increased likelihood of a “Blow-off top” scenario as the acceleration phase extends. The analyst wrote:
Source: Fidelity Digital Assets – Bitcoin’s acceleration phase gains versus days
Wainwright added that this does not necessarily mean the current phase will conclude within this specific time frame; however, history suggests that Bitcoin’s acceleration phase may end with a sharp, dramatic rebound, quickly losing momentum and entering a reversal phase.
Monitoring the Presence of Momentum
Wainwright also mentioned a noteworthy indicator: the number of days within a rolling 60-day period that Bitcoin reached new all-time highs. Historically, Bitcoin has typically experienced two major waves of strong upward movement during its previous acceleration phases. In the current cycle, the first acceleration surge occurred after the election; if a new wave of historical highs is imminent, the starting point could be around $110,000.
However, Wainwright pointed out that the only instance in history without a second wave of upward movement occurred in November 2021. “As we continue to observe the current cycle’s development, the key will be to monitor whether Bitcoin follows its historical patterns or begins to show signs of deviation,” he stated.
Source: Fidelity Digital Assets