In a recent episode of The Milk Road Show, Charles Edwards, the founder of the crypto hedge fund Capriole Investments, offered a comprehensive analysis of Bitcoin’s current state. He delved into its future trajectory and discussed the potential conclusion of the traditional 4-year Bitcoin cycle.
Bitcoin’s Journey to $100,000: A Catalyst for Growth
According to Edwards, Bitcoin’s ascent to the $100,000 mark could ignite an unprecedented price surge. He speculates that breaching this significant psychological and technical barrier might lead to Bitcoin doubling its value in a matter of weeks. Drawing comparisons with gold’s recent market performance, Edwards noted, “If you look at gold this year, it went up 33% in 16 weeks—that’s a $3.8 trillion move in a really old asset. For Bitcoin to go from $100K to $200K, that’s just $2 trillion on an asset that trades 24/7 and is more accessible globally.”
Bitcoin’s relatively smaller market capitalization compared to gold allows for rapid price movements. Historically, after surpassing previous all-time highs, Bitcoin has experienced significant and swift appreciations, entering periods of price discovery where supply constraints can lead to vertical price increases.
When Will Bitcoin Price Double?
The $100,000 mark is more than a round number; it represents a critical resistance level due to several factors. Edwards emphasized the presence of a substantial sell wall at this price point, stating, “We have the biggest sell wall we’ve ever seen in the order books for Bitcoin at $100,000. Once that’s cleared out, you’ll see sharp, rapid vertical price appreciation moves because there’s just no more supply left.”
Seasonal Strength in Bitcoin’s Price Movements
Many investors who entered the market at lower prices might view $100,000 as an ideal point to realize profits, potentially creating selling pressure. However, Edwards remains optimistic that this barrier will be surpassed, especially in the next few months. He attributes this to the seasonal strength observed in Bitcoin’s price movements during Q4 and Q1.
Edwards explained, “We are at a point in the cycle where we are seasonal, and this is kind of like the optimal two to four-month period, maybe a five to six-month period every four years. After each Halving, you have about 12 to 18 months where you get 90% to 95% of all the cycle’s returns. If you look at Q4 and Q1, that again is the majority of the returns once you have a strong monthly breakout above all time.”
Understanding Market Volatility
While Edwards is bullish on Bitcoin’s prospects, he cautions investors about the inherent volatility of the market. He pointed out that corrections of 20% to 30% are normal during bull markets and that investors should be prepared for such fluctuations. “It’s normal to have 30% drawdowns every few months in a Bitcoin bull market,” he noted.
Factors such as increasing leverage in the market could exacerbate price swings. Edwards mentioned that if leverage and funding rates continue to rise without chipping away at the existing sell wall, Bitcoin could revisit lower support levels, potentially around $80,000. However, he emphasizes that such volatility is a natural part of Bitcoin’s growth cycle and not necessarily indicative of a long-term downturn.
The End of the Traditional 4-Year Cycle?
A significant point of discussion was whether the traditional 4-year cycle, largely driven by the halving events, is reaching its conclusion. Edwards believes that as Bitcoin matures and integrates more deeply with traditional financial systems, the impact of the halving on market cycles will diminish.
“As Bitcoin’s inflation rate decreases and it becomes more integrated with traditional finance, the four-year halving cycles may become less impactful. The large 80% drawdowns we’ve seen in the past might not happen in future cycles,” he stated.
Future Catalysts for Bitcoin’s Growth
Edwards suggests that future cycles may see shallower corrections, possibly around 60%, rather than the dramatic declines of previous years. Notably, several potential catalysts could propel Bitcoin’s price to unprecedented levels. Edwards mentioned the possibility of the US government establishing a Strategic Bitcoin Reserve under President-elect Donald Trump.
While he estimates the probability of this occurring in 2025 to be around 30%, he acknowledges that such an event would be a game-changer. “Assuming [the U.S. government] doesn’t sell their existing holdings is great, but it’s probably not going to help the cycle a lot. Actively buying Bitcoin could be a game-changer,” he remarked.
Corporate and Institutional Adoption
Corporate adoption is another significant factor. The potential for major corporations to add Bitcoin to their balance sheets could drive substantial demand. Edwards highlighted the upcoming vote by Microsoft on this matter, saying, “Let’s hope it’s Microsoft [on December 10].”
Furthermore, the success of spot Exchange-Traded Funds (ETFs) has opened the doors for institutional investors. The sustained demand from ETFs has been absorbing Bitcoin supply steadily. Edwards observed, “The ETFs have just been sucking Bitcoin out of the system ferociously.”
Bitcoin Price Predictions
Edwards provided a base and an optimistic scenario for the Bitcoin price in this cycle. He stated, “I’d be surprised if we don’t get to $140,000.” This base case assumes steady market conditions without any extraordinary positive events.
In a more optimistic scenario, he believes Bitcoin could reach $200,000, especially if significant catalysts, such as government or corporate adoption, materialize. “We could easily get to $200,000. Once we clear those all-time highs, Bitcoin does multiples very quickly,” he explained.
He concluded: “Once we’re above $100,000, people who aren’t in Bitcoin just cannot comprehend Bitcoin above $100,000 […] That’s when you see the real switch flick and the flows happen.”
At the time of writing, BTC was trading at $94,814.
