- Bitcoin's rally is driven by the 2024 halving and a crypto-friendly US president-elect.
- Adrian Zduńczyk says bitcoin's price could rally to $200,000.
- Investors, however, should brace for a few pullbacks early next year, he says.
The perfect storm has converged, leading to a rally for bitcoin and the broader crypto market. And while no one can be sure how this rally will play out, many look to bitcoin's historical behavior to predict its coming price action.
Bitcoin's price rally comes as no surprise to its enthusiasts, who anticipate a rally every four years kicked off by the halving, which cuts the rate of new coins created in half, lowering the supply. As demand outpaces tighter supply, it drives the price up, building momentum and attracting even more buyers. In this round, the halving took place on April 19, 2024.
Adrian Zduńczyk, a chartered market technician who has been following bitcoin's price patterns since 2022, marks the reversal of this round's bear market beginning in January 2023, when it broke above a key resistance line of $20,000 and began gradually climbing until the halving.
What's new about this round is the US election, which rung in a crypto-friendly President-elect Donald Trump and helped kick bitcoin's rally into higher gear. Since November 5, the price of bitcoin has surged by 45%.
Indeed, the political environment turned more investor attention to the asset, noted Zduńczyk, who is the founder of the crypto consulting firm The Birb Nest. Trump has voiced support for crypto in several ways, including vowing to retain the bitcoin held by the US government, choosing a crypto-friendly replacement for Securities and Exchange Commission Chair Gary Gensler, who has brought numerous lawsuits against crypto firms, and removing taxes on bitcoin, among other things.
Regardless of the political environment, the asset was set for a bull run, Zduńczyk said.
"For the bitcoin bull market, it doesn't matter who is in the presidential seat too much, as in, it would've been a similar reaction to what it was with Trump," Zduńczyk said. "Maybe with Kamala Harris, it would've just taken a little bit more time."
Forecast
But as the digital asset hovers at an all-time high above $100,000, is it too late to buy? The answer to that question is personal and varies based on numerous factors, including an investor's risk tolerance and capacity.
Since Zduńczyk is a breakout trader, he buys at the start of a breakout to the upside in a "buy high, sell higher" strategy. But for those looking for a bargain price, if bitcoin follows its historical behavior, there will be too much volatility moving ahead. Any correction would be a flash in the pan and hard to time, he noted.
For now, Zduńczyk expects bitcoin's price to continue rallying into the end of the year. Ahead of Trump's inauguration on January 20, he's bracing for heightened anticipation as traders make bets on the event, a move commonly referred to as "buy the rumor, sell the news," which follows the belief that many may take profits at high points ahead of anticipated events.
If this is the case, Zduńczyk believes a correction would then follow, taking effect by late January and into February, resulting in at least two corrections at 15%, with the most likely scenario being three corrections at 30% before it moves into the final phase of its bull run, where it could hit $200,000 for this cycle.
His expectation of a higher price is backed by an assumption that retail traders haven't fully joined the rally. He pointed to last week's Google search trends, which were only at 44% of 2021's search peak when the last bull rally happened.
"So it means that not even five out of 10 people versus the last peak in 2021 are in the game," Zduńczyk said. "And the market has grown so much because of the ETFs."
ETFs don't only have institutional value, they have adoption value for retail investors who have been reluctant to buy the asset due to custody barriers, he said. As more participants are afforded the ability to access bitcoin, it could create a deeper and wider market.