The cryptocurrency landscape is once again full of speculation as Bitcoin goes through its current fourth halving cycle. Amid varying predictions, renowned crypto analyst CryptoCon’s insights based on the Gann Square methodology, the November 28 Halving Cycles theory, and the 5.3 Diminishing Returns theory have received a lot of attention.
CryptoCon noticed via He emphasized the accuracy of the Gann Square theory during previous cycles, noting its accuracy in predicting the cycle tops.
Will Bitcoin Price Reach $135,000?
According to the analyst, by using the “blue 2×1 fan as the fair value line and drawing the end on November 28 (Halving Cycles Theory),” Gann Square successfully captured the tops of cycles 1 and 3 established at the fourth level. However, the second cycle diverged and rose slightly above the fifth level.
This sets the stage for two possible outcomes in the ongoing fourth cycle, with the $135,000 forecast aligning with both CryptoCon’s November 28 price model and its Trend Pattern price model. Conversely, the $89,000 figure corresponds to the 5.3 theory of diminishing returns.
Historical data adds even more depth to this analysis. During Bitcoin’s inaugural cycle, which spanned from 2010 to 2014, it shot from a minuscule value to a peak of $1,177. The subsequent cycle from 2015-2018 started at $250, and witnessed an unprecedented climb to $20,000 towards the end. The 2018-2022 journey manifested Bitcoin’s resilience as it rose from sub-$6,000 levels to a commendable $68,800.
Delving into the intricacies of Gann Square’s “Waaier” lines offers greater clarity. The “2×1 Fan” line, shown in blue, represents a trend angle where the price trend is double the time. When the Bitcoin price is close to this line, it traditionally indicates ‘fair value’.
In its 13-year history, Bitcoin has only very rarely fallen below the mark, most recently in late 2022 after the collapse of FTX, the second-largest crypto exchange at the time, and during the Covid crash in March 2020.
The “1×1 Fan” line, shown in green, represents a market in equilibrium, with prices rising over time. Historically, Bitcoin’s price peaked near this line during the parabolic run-up in the second and third cycles, providing the theoretical basis for the $135,000 prediction.
The Diminishing Return Theory: Only Less than $90,000?
CryptoCon will continue in a subsequent post explained the goal of $89,600. He stated that “$90,000 is slightly above the theory of diminishing returns of 5.3.” According to the theory, Bitcoin’s returns decrease by a factor of 5.3x from the bottom to the top of each cycle, suggesting that the next cycle’s peak could be around $77,000.
CryptoCon noted: “After measuring the returns from cycle tops to highs as accurately as possible on the daily time frame, the returns from cycle tops to lows are not 5.3. They are as follows: 5.34x, 4.96x and 5.63x.”
Diving deeper, CryptoCon noted: “There is merit in the 5.3, as the average of these figures is 5.31. However, we cannot say with certainty that this will be the return if this is just an average.”
He highlighted the potential peaks based on previous cycles and commented on the more solid numbers. “The real numbers so far range from a low cycle top of $73,522 to a high of $81,675 with an average cycle top of $77,122.”
Discussing the possibilities of Bitcoin reaching the long-awaited $100,000 mark, CryptoCon explained: “$100,000 would represent a decline of 3.84x, implying that Bitcoin should exhibit drastically lower diminishing returns this cycle.”
He drew attention to Bitcoin’s historical relationship with Fibonacci extensions, saying: “Bitcoin has consistently reached a Fibonacci extension level at every cycle top. If $77,000 is the expected target, this would be an anomaly. The cycles previously corresponded to Fibonacci extensions of 58.764, 19.764 and 3.618. For this cycle, the lowest Fibonacci extension measured based on weekly candle bodies is 1.618, suggesting a price of $104,000, corresponding to a 3.7x decline from the previous cycle.”
CryptoCon concluded with speculation on whether external factors, such as the adoption of spot Bitcoin ETFs, could provide the necessary momentum to change these models. “Many believe that ETFs will have the power to disrupt these models and predictions. Returns are clearly declining, but will the average return of 5.31x ($77,122) be the peak of this cycle?”
At the time of writing, BTC was trading at $26,906.
Featured image from Shutterstock, chart from TradingView.com