Prediction: This will be Bitcoin’s next big move

Even after a steep decline in early August, Bitcoin (BTC -1.16%) it is still growing at nearly 40% per year. That’s the good news. The bad news is that Bitcoin recently dropped below $60,000 again and shows little, if any, signs of a comeback anytime soon. Over the past 30 days, Bitcoin has fallen by 11%. In fact, August is shaping up to be Bitcoin’s worst month since April.

But I think many of the fears of the Bitcoin bears may be overstated. In fact, I predict that the next big move for Bitcoin will be a return to $100,000 by the end of the year.

Why is Bitcoin falling?

As a first step, it is important to figure out why Bitcoin went down. The best explanation, from my perspective, is that inflows into new spot Bitcoin exchange-traded funds (ETFs) are slowing down, and that’s holding back any bullish Bitcoin price action. Since the launch of the new spot ETFs in January, the constant flow of new money into Bitcoin is what has pushed prices up. So if these inflows dry up, then it makes sense for Bitcoin to trade sideways or down.

Moreover, investors were clearly spooked by the rapid crash in August, when the price of Bitcoin and other cryptocurrencies literally collapsed overnight. So from a sentiment perspective, it makes sense for investors to become much more cautious about the risk assets they are willing to put their money into. The new narrative is that investors are rushing to get their money out of Bitcoin so they can put Nvidia (NVDA 1.51%).

Image source: Getty Images.

Thus, for Bitcoin to begin its ascent to $100,000, investor sentiment must improve and flows into the new spot Bitcoin ETFs must return to their previous pace. And that seems to be what’s happening. In the last days of August, spot Bitcoin ETFs recorded eight consecutive days of positive inflows.

Key catalysts ahead

There are two key catalysts that could help boost ETF flows and restore investor confidence in Bitcoin. The first is the Bitcoin halving that took place in April, reducing the rate of new coin creation. At the time, it was heralded as the most important crypto event of the year and should have resulted in a skyrocketing Bitcoin price. So far, though, the halving has been a nothing-burger, and many investors may have completely forgotten about it.

But there is growing reason to expect that the real impact of the halving will begin to be felt as we head into the final months of the year. For example, historical evidence suggests that it takes at least 200 days from the halving date for Bitcoin to move into a higher gear. And guess what: 200 days from Bitcoin’s April 19 halving brings us to the end of October as a potential start date for a new Bitcoin market cycle.

This is the same pattern that occurred during the previous Bitcoin halving cycle in 2020. As can be seen in the chart below, Bitcoin meandered through the summer and early fall following its May halving event, before to move into a new higher gear in the last months of the year. There’s no guarantee that the same pattern will show up again, of course, but my fingers are crossed.

Bitcoin / USD Chart from TradingView

The second key catalyst is the US presidential election. Pro-crypto sentiment seems to be building on both sides of the political aisle, and Bitcoin has actually emerged as a campaign issue. The biggest impact would be felt if Republicans win the White House, as Donald Trump is the first presidential candidate with a pro-Bitcoin agenda.

But there’s reason to believe that Democrats could also be persuaded to pass sweeping pro-crypto legislation that makes investing in Bitcoin much more attractive. Either way, Bitcoin could benefit from a so-called relief rally as investors pile back into the crypto in November.

How likely is $100,000?

Of course, for the price of Bitcoin to nearly double and hit $100,000 by the end of the year, a lot of things will have to go right. But if ETF flows pick up and crypto sentiment turns bullish again, it could happen. Also note that there could be a number of positive surprise events — such as China’s lifting of its ban on crypto — that could unlock an enormous amount of upside potential for Bitcoin.

Over Bitcoin’s 15-year history, a strategy of buying the dip has usually paid off for investors. And I don’t think this time will be any different. This could be the last time you buy Bitcoin at such a low price. By the end of the year, six-figure Bitcoin could be the new normal.