Bitcoin Quickly Hits Target & Has Healthy Pull Back But Bull Market Remains Intact

After raising our outlook 50% from $25,000 to $40,000 on December 30th, Bitcoin quickly rose to reach our target late last week. Prices then started to consolidate and slide over the weekend before retracing ~25% down to ~$30,000 and now rebounding to ~$33,800. Bitcoin and crypto are volatile assets, but the speed at which prices moved to hit our target was quite fast and we think a pull back is healthy. 

We don’t think the retracement was indicative of a bull market top – to be clear we firmly believe the fourth crypto bull market remains intact. We think the sell-off was simply a combination of 1) traders taking profits after 50%+ gains in under two weeks, 2) an uptick in treasury yields and dollar strength, and 3) modestly negative news out of the U.K. 

Nearly 70% of investors were in unrealized profit after the sharp move up and that means some selling is to be expected. But investors shouldn’t forget, last time Bitcoin reached these unrealized profit and loss levels during a bull market, Bitcoin still rose from ~$2k to ~$20k or ~10x over the course of the cycle. We think for Bitcoin to sustainably move higher to levels many expect, a similar pattern is necessary.