How High Can Bitcoin Go?

The market is testing you right now...

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I have a group chat with four of my college buddies.

The three other people in the group chat are an investment banker, corporate lawyer, and professional trader.

We’ve been through multiple crypto cycles at this point. Like many of you have in previous crypto bull runs, all of us fell victim to crypto euphoria in the 2017-2018 cycle.

And while we all made some money at first, we ended up losing money by the end of the cycle as we continued to average down losing trades.

So when November 2020 came and Bitcoin was back at its previous all-time high of $19,000, the lawyer of the group was thrilled because he could “finally sell.”

This turned out to be a bad idea. While he was no longer underwater on his position, Bitcoin proceeded to rise another +263% over the next 12 months.

The Seduction of Price Anchoring

Price anchoring refers to the human tendency to rely too heavily on the first piece of information offered (i.e. the "anchor") when making decisions.

In the context of cryptocurrency investing, this translates to fixating on past all-time highs as benchmarks for future performance.

However, history has shown that Bitcoin rarely trades back to these previous peaks and stops.

Instead, Bitcoin puts in new highs and goes significantly higher. In fact, three of the last four times Bitcoin hit a new all-time high it proceeded to double again in 18 days or less.

Let Previous Crypto Cycles Guide You

I’ve invested in crypto since 2017.

I also wrote a book that teaches new investors to take advantage of crypto’s upside.

That’s in addition to sharing my personal stock and crypto portfolios with my 800+ member community (if you want access to my portfolio and real-time trades, click here).

That means I’ve seen multiple crypto “cycles” at this point. And I’ve made a lot of money along the way:

One thing I’ve learned is understanding these cycles can help you put the current bull run into much needed perspective.

For instance, Bitcoin first hit a notable peak near $31 in June 2013.

Following a significant pullback, it took years before Bitcoin retested these levels. Yet, once it broke past this “anchor,” it eventually reached heights of around $1,100 in 2013 – a gain of approximately 3,445%.

The same thing happened in the 2017-2018 cycle. After reaching the $1,100 mark in December 2013, Bitcoin experienced a prolonged multi-year downturn.

Many investors anchored to the $1,100 level, hoping to break even. However, those who looked beyond this past peak and held on saw Bitcoin shatter this previous all-time high to eventually hit around $19,000 in December 2017, marking a gain of over 1,627%.

We saw the same dynamic play out again in the 2020-2021 cycle, where the major anchor was the $19,000 peak in 2017.

Following a significant crash, Bitcoin struggled to revisit this level until late 2020 when my lawyer friend wanted to sell his position.

But again, Bitcoin didn’t simply stop at the previous all-time high of $19,000. Instead, it rocketed 263% higher to $69,000 over the next year.

The Cycles are Getting (Relatively) Weaker

It’s clear that “anchoring” our price targets to previous highs is an exercise in futility.

But it’s also true the crypto cycles are getting markedly weaker as the sector matures.

As you can see, the trough-to-peak of each cycle has waned as new cycles come and go.

But that said, every time Bitcoin has hit a previous all-time high the price ended up going significantly higher… albeit less than in the prior cycle.

That said, “less” is a relative term. Even if the percentage gain for Bitcoin from the currently all-time highs is 50% of what it was the previous cycle (i.e. 263%), that’s still a 132% gain from current prices.

And it pegs Bitcoin’s cycle target price at $160,080 for this cycle.

Don’t “Anchor” Yourself to Old Prices

Anchoring to past all-time highs can be detrimental for several reasons.

For one, Bitcoin's history is marked by periods of volatility followed by substantial growth beyond previous peaks. By selling as soon as a previous high is reached, investors may miss out on significant upside.

In addition, price anchoring plays into cognitive biases that can cloud your judgment. This leads investors to make premature exits based on historical prices rather than considering the potential for future growth or changes in market dynamics.

Lastly, the cryptocurrency market is evolving rapidly, with increasing adoption, institutional investment, and technological advancements. Anchoring to past prices fails to account for these changes that can drive prices to new highs, particularly the new Bitcoin ETFs:

Focusing on the “high” for Bitcoin last cycle is silly because Bitcoin typically goes much higher in subsequent cycles. Selling now because you’re back at all-time highs goes against a decade of historical trends.

And you’re potentially leaving thousands of dollars in gains on the table.

Keep Your Eye on the Prize

Previous all-time highs in both stocks and crypto are merely stepping stones to future gains, not ceilings to growth.

That means obsessing over previous all-time highs as a “signal” is counterproductive.

For me, I still have a “soft target” for Bitcoin this cycle is $165,000. However, it’s important to remember nobody really knows. We can only use previous cycles as our guide.

But as someone who’s invested in crypto since 2017, these patterns are reliable.

And I plan to keep using them to make money.

Stay safe out there,

Robert