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Our Best Shot at Estimating the Price of Bitcoin at the Next Cyclical Top

Ordinarily, we refrain from making predictions, focusing instead on responding to significant market data trends. However, we are currently seeing more and more people predicting bold prices for Bitcoin at the top of the upcoming cycle, so we decided to give it a shot using some intriguing patterns we uncovered while conducting extensive analysis of several gigabytes of data. In the light spirit of Christmas, we're excited to share our findings with you.


If we look at the historical relationship between the Market Value and the Realized Value, we see that they follow a linear downtrend, which is normal considering that with a growing market cap, it takes more energy (more capital) to create a spread between the Realized Value and the Market Value. If this downtrend continues, we could expect to see an MVRV (Market Value to Realized Value Ratio) of around 3.2 at the next peak.

For a Realized Value ranging between what it is now and double the current Realized Value (which is conservative in regard to the analysis of previous cycles), this gives us a price range at the top of [$144K-$224K].


One of the on-chain metrics that gives a consistent relation through each cycle's top and bottom is the relationship between the Thermocap (which is the calculation of the total value of all bitcoins at the price at which they were created) and the Market Cap. By analyzing this relationship, we can derive what we call our price floor from the Thermocap, which represents the price at which Bitcoin will usually bottom out after each cycle.

At each cycle, we observe that the peak occurs when the price of BTC minus the price floor, all that normalized by the same price floor, is between 5 to 7. This relationship has been quite consistent across each cycle.

I know that the previous cycle had a slightly lower peak in that metric, but our opinion is that this does not represent a significant change of trend in this metric, unlike with other indicators. This was largely due to the disruption caused by China banning mining. But actually, if we look at the area under the curve of this indicator for that bull run (calculated by a numerical integration of the curve), we had about the same energy as in the previous run. It was just distributed differently over time. This means that the trend in this metric is not necessarily decreasing, unlike with the MVRV.


Since the price floor rises more predictably than the price of BTC during euphoria, it is easier to forecast. With the current price floor at $23.4K and a conservative target for this floor to rise to around $33K (obtained by a linear approximation using the current trend, which is really conservative since in a cyclical bull the trend goes into a slight exponential trend), at the peak, this suggests that the top should be conservatively in the range of [$140K-$198K].


These two different ways to extrapolate the price do converge toward the same range, with a combined average price target of $176K. We believe that the lower spectrum of this range is very conservative, as it uses the current realized value and the current price floor from the thermocap, which is unrealistic if price continue to rise.


All this need to be taken with a grain of salt. This is simply an exercise we did trying to see what would be a price at the top that would be in line with some trends we see on the on-chain metric. Some might think our BTC price prediction is too high, remembering unmet prediction from analyst from the last cycle (Hint: Stock to flow model was a fundamentally flaw and simplistic model that should never has been used everywhere last cycle and the modified version recently made by Plan B, still suffer from the same flaws). Others could argue it's too low, anticipating a surge from factors like the Halving, BlackRock ETF, and Michael Saylor buying all the bitcoins in the world like a giant Pacman.

Indeed, the price of Bitcoin could very well end up higher or lower, as Bitcoin always loves surprising us. But seeing the price of BTC top during the next cycle in the range of [$144K-$200K] would put it in line with some trends we have observed over the previous cycles in some on-chain metrics and therefore I think the odds for that range are relatively high.


As Bitcoin continues to rise, we'll probably get a clearer picture of these targets. Other on-chain metrics, like our Kwiatkowski indicator, could provide a more accurate prediction, as this indicator is normalized to give consistent readings at each top and bottom.

The only issue is that the complex math equation is path-dependent and cannot be mathematically inverted and solved. As Bitcoin's path becomes clearer, we'll run numerical simulations to provide a more accurate price prediction.


Again, take these predictions with a grain of salt. Our intention was not to be sensationalist like some crypto gurus. But actually, unlike most of the price predictions we have seen out there that are based more on what the person would like to see Bitcoin at, this was our best shot at giving a realistic price range based on math and history. Will that price be reached in 2024? Perhaps not, as 2025 seems like a more realistic target for the next peak. But with Bitcoin, we can never be sure. In any case I do expect that we will be on the way toward this top by the end of next year.


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