This article is also available in Spanish.
In the latest episode of The Milk Road Show, Charles Edwards, founder of crypto hedge fund Capriole Investments, provided an in-depth analysis of Bitcoin’s current state, its future trajectory, and the potential conclusion of Bitcoin’s traditional four-year cycle.
Edwards speculates that Bitcoin’s journey to $100,000 could be the catalyst for an unprecedented price acceleration. According to him, once this psychological and technical barrier is overcome, the value of Bitcoin could potentially double in a few weeks. Drawing a parallel with gold’s recent performance, Edwards said: “If you look at gold this year, it’s up 33% in 16 weeks – that’s a $3.8 trillion move for a truly old. To take Bitcoin from $100,000 to $200,000, that’s only $2 trillion on an asset that trades 24/7 and is more accessible globally.”
He points out that Bitcoin’s relatively smaller market capitalization compared to gold allows for faster price movements. Historically, after surpassing previous all-time highs, Bitcoin has experienced rapid and significant appreciation, entering periods of price discovery where supply constraints can lead to vertical price increases.
When will the price of Bitcoin double?
The $100,000 threshold isn’t just a round number; represents a significant level of resistance due to several factors. Edwards highlighted the presence of a substantial sell wall at this price, noting, “We have the biggest sell wall we’ve ever seen in the order books for Bitcoin at $100.00. I think yes, once we clear that up, that’s when you know everyone who wanted to sell has sold and you have these really quick, rapid vertical price appreciation movements because there’s just no more supply.”
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Additionally, many investors who entered the market at lower prices may view $100,000 as a sweet spot to take profits, potentially creating selling pressure. However, Edwards remains optimistic that this barrier will be overcome, especially in the coming months, given the seasonal strength seen in Bitcoin’s price movements during the fourth and first quarters.
“We are [at a point] in the cycle where we are seasonal and this is kind of like the optimal period of two to four months, […] perhaps a period of five or six months every four years. After each four-year halving, you have about 12 to 18 months where you get 90% to 95% of all four-year cycle returns. So most of this only happens in that year. If you look at the fourth and first quarters, that’s again the majority of the returns […] when there is a strong monthly breakout above all time,” the hedge fund CEO said.
While Edwards is optimistic about Bitcoin’s prospects, he cautions investors about the market’s inherent volatility. He stressed that corrections of 20% to 30% are normal during bull markets and that investors should be prepared for such fluctuations. “It is normal to have 30% withdrawals every few months in a Bitcoin bull market,” he noted.
Factors such as increased leverage in the market could exacerbate price movements. Edwards said that if leverage and funding rates continue to increase without denting the existing selling wall, Bitcoin could revisit lower support levels, potentially around $80,000. However, he points out that such volatility is a natural part of Bitcoin’s growth cycle and not necessarily indicative of a long-term recession.
The end of the traditional four-year cycle?
A significant point of discussion has been whether the traditional four-year cycle, largely driven by halving events, is reaching its conclusion. Edwards believes that as Bitcoin matures and integrates more deeply with traditional financial systems, the halving’s impact on market cycles will diminish.
“As Bitcoin’s inflation rate declines and becomes more integrated with traditional finance, four-year halving cycles may become less influential. The large 80% declines we’ve seen in the past may not occur in future cycles,” he said. stated.
This maturation process could lead to more stable growth patterns and reduced volatility. Edwards suggests that future cycles could see shallower corrections, perhaps around 60%, rather than the dramatic declines of previous years.
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In particular, several potential catalysts could push the price of Bitcoin to unprecedented levels. Edwards mentioned the possibility of the US government establishing a strategic Bitcoin reserve under the leadership of President-elect Donald Trump.
While he estimates the likelihood of this happening in 2025 is around 30%, he acknowledges that such an event would be a game changer. “Assuming [the U.S. government] not selling its existing holdings is great, but probably won’t help the cycle much. Actively buying Bitcoin could be a game changer,” he noted.
Corporate adoption is another significant factor. The ability for large companies to add Bitcoin to their balance sheets could stimulate substantial demand. Edwards highlighted Microsoft’s upcoming vote on this topic, saying, “Let’s hope it’s Microsoft [on December 10].”
Furthermore, the success of spot exchange-traded funds (ETFs) has opened the door to institutional investors. Sustained demand from ETFs has steadily eaten into Bitcoin’s supply. Edwards noted, “ETFs have just ferociously sucked Bitcoin out of the system.”
Bitcoin Price Predictions
Edwards provided a baseline and optimistic scenario for the price of Bitcoin this cycle. He stated, “I would be surprised if we didn’t get to $140,000.” This base case assumes stable market conditions without 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 you get past these all-time highs, Bitcoin multiples very quickly,” he explained.
He concluded: “”Once we are above $100,000, people who are not into Bitcoin simply cannot understand Bitcoin above $100,000 […] That’s when you actually see the switch flip and the flows happen.”
At the time of writing, BTC was trading at $94,814.
Featured image created with DALL.E, chart from TradingView.com