For several months, the price of Bitcoin (BTC) has been consolidating within a narrow range. Mohit Sorout, the founding partner of Bitazu Capital, said that if this top cryptocurrency succeeds, it will hit a record high.
Since July 2020, the price of Bitcoin has been between $10,200 and $11,800, with a volatility of 15%. Except for some short-term volatility spikes, its volatility has been low.
When Bitcoin remains stable for a long time in a narrow price range, large price changes usually occur.
Whether Bitcoin will break through in the short term is still an uncertain factor. But Sorout said that if a breakthrough occurs, it will take three months for Bitcoin to reach $20,000.
Why did Bitcoin reach an all-time high three months after the breakthrough?
According to previous price cycles, Bitcoin tends to rise and fall rapidly after a long-term cycle. This model will not only break through in history, but also fall.
From May 1st to July 20th, the price of Bitcoin fluctuated between US$8,800 and US$9,800 and stabilized at around US$9,100. After two months of consolidation, BTC rose 32% on Binance Exchange within 12 days to $12,123.
Considering that Bitcoin will fluctuate sharply after a long period of consolidation, Sorout said:
“The calm before the storm. If Bitcoin breaks out today, it is likely to reach the previous $20,000 in 3 months.”
When asked why it took three months for Bitcoin to reach the previous $20,000, Sorout stated that it was based on observations of volatility.
According to Sorout, the price of Bitcoin may even rise to $20,000 within three months. He pointed out:
“Based on observations of a sharp rise after a period of steady volatility. Even earlier.”
An important variable that needs to be pointed out is that compared with the previous bull market, the open interest in futures has decreased.
Especially after the US Commodity Futures Trading Commission (CFTC) filed an allegation against BitMEX, the total amount of open futures positions has declined. Unlike past bull market cycles, this may lead to a more stable and gradual upward trend in Bitcoin.
Factors that may strengthen the upward trend of BTC in the fourth quarter and 2021
A strong argument that the Bitcoin bull market cycle will enter 2021 is the recent surge in institutional demand.
On October 17, Grayscale CEO Barry Silbert stated that the company’s assets under management reached a record $6.4 billion. Silbert emphasized that the company “has a large inflow of funds this week.”
Institutions such as Square and MicroStrategy that have been buying bitcoin have stated that they see bitcoin as a potential reserve asset. If this is the case, it may mean that many institutional investors are hoarding BTC and have no plans to sell Bitcoin in the near future.
Despite the good news of institutional capital inflows, the price of Bitcoin has remained relatively stagnant throughout October. But PlanB, the creator of the S2F model, said that over time, investors are likely to experience asymmetric returns. He said:
“Why won’t the price of Bitcoin increase with all these institutions buying? Who is selling? The price of Bitcoin is exactly where it should be, staying above $10,000, waiting for that moment… asymmetric returns. .keep patient!
