Since the start of the year, the price of bitcoin has surged 113% in a remarkable recovery, reaching $8,000 just six months after falling to $3,150 in December 2018.
As Thomas Lee, cofounder of Fundstrat Global, has noted, bitcoin has historically produced a large portion of its gains in a short timeframe—often within a roughly 10-day window—unlike many traditional assets that appreciate more gradually.
Researcher Alex Saunders points out that the last time bitcoin closed above $8,300, it took 13 days to reach a new all-time high of $20,000.
It is not guaranteed that bitcoin will replicate that rapid performance this time, given the notable differences in the catalysts driving the market today. Still, comparing current price behavior to that of the previous bull market is informative.
Will Bitcoin Repeat the 2017 Rally?
It is unlikely that bitcoin will leap immediately from around $8,300 to $20,000 on the basis of that level alone. In 2017, the $8,300 threshold was reached after an extraordinary gain of approximately $7,000 over 12 months.
The fourth quarter of 2017 finished with a 219% increase, driven by bitcoin’s advance from $8,000 to $20,000, but in the quarters before that, the dominant cryptocurrency had already been registering sizable gains against the US dollar.
Therefore, while it is unreasonable to expect an instantaneous jump from $8,000 to $20,000, it remains possible that bitcoin could experience a sharp rally toward the end of the year if its performance stays strong over the coming months.
“The last time bitcoin closed above $8,300 during an uptrend was November 25, 2017. It then took 13 days to reach $20,000,” Saunders said.
Is Bitcoin a Cyclical Asset?
Speaking previously to CNBC, former Coinbase chief technology officer Balaji Srinivasan described bitcoin markets as cyclical. Bitcoin tends to follow a sequence of rally, bubble and burst, consolidation, and then another rally—a pattern that has repeated roughly four times over the last decade.
Most major technologies experience an initial peak of interest, a subsequent plunge, and then a long-term ascent toward broader adoption; the dot-com bubble is a classic example. Bitcoin alone has gone through at least four such cycles.
This pattern emerges because after each bear market, companies, developers, and market participants work to improve the infrastructure supporting the asset class.
In 2019, infrastructure development focused on institutional needs, with participation from major financial firms such as Fidelity and TD Ameritrade.
Since the start of the year, institutional investors have responded positively to significant progress by companies in improving custody services and regulated investment instruments that accredited investors can use to access the market.
Bitcoin has already recorded its second-best quarter since 2014, and its current trend closely resembles the trajectory observed in 2017.
Whereas the 2017 surge was driven mainly by retail investors, industry leaders expect the 2019 upswing to be led by institutional participants.
Should Investors Worry About Volatility?
In recent days, the price of bitcoin has swung between $7,500 and $8,000, demonstrating extreme short-term volatility.
Some cryptocurrency traders argue that bitcoin’s volatility can benefit altcoins and small-cap tokens, potentially sparking broader market rallies as capital rotates into other projects.
“Everything is playing out as expected. Altcoins are starting to move—IEOs are pumping, while LINK and a few others are just getting started. More altcoins will begin to rise as the market gains momentum. In June, they will take off,” one trader said.