The Only Bitcoin Chart You’ll Ever Need
This chart is the story of bitcoin. The 2013 bubble and the 3-year bear market. The 2017 bubble and the 3-year bear market. The 2021… Well, welcome to the four-year cycle — and to one of Bitcoin’s best quirks: halvenings.
This may seem like a strange thing to say about something that’s known for its volatility, but one of the most important things that bitcoin offers its owners is certainty. Certainty because the supply of new bitcoin that will enter the market is known, and because the rules for mining that bitcoin are known. And that as part of those rules, the amount of bitcoin that is mined will be cut in half — roughly every four years — until there are no more. These events, popularly called halvenings, are marked in the chart with a vertical dashed line and they cause a dramatic decrease in the supply of new bitcoin that’s available for sale. Each tax year following a halvening is marked with a vertical gray range. See a pattern?
The economics of mining can play a fundamental role in the bitcoin price when we’re not in a bubble, and so the approximate price at the time of each halvening event provides a good anchor point for what the true value may be in-between cycles. The line between those anchor prices is marked in blue and the multiple gained between each anchor price is also labeled in blue.
It’s rare that the price ever falls below this line, and its consistent logarithmic growth up and to the right is what has made bitcoin such an impressive investment for people who can hold onto it long enough. But the mining fundamentals aren’t the only thing that affects the market. Bitcoin is also well known for its bubbles. The line between each anchor price and its peak is marked in purple and the multiple gained between them is, similarly, labeled in purple.
The difference between peak prices and the next anchor price represents a psychological pricing band, which is marked in teal. As previous peaks are a significant psychological boundary for investors, price action inside of this band is usually viewed as normal. However, as prices begin to move above previous highs to meet the pressures of a diminished bitcoin supply, demand also increases exponentially to create a bubble. This is the moment we’re entering now.
Of course, we don’t know where the value will be at the next halvening, and this is not financial advice. But I think a reasonable guess would be that the lower-bound gains will be less than half of what our gains were over the previous cycle as a percentage. That’s somewhere in the range of 750% the previous halvening price of ~$10,000 — or $75,000 per BTC at the end of 2024. And a peak BTC price of~$150,000 in December of 2021.
Just enough time for the critics to call it a bad investment at $20,000 today, and to say they told you so when it drops to $50,000 in 2022. That’s bitcoin.
