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Everything you need to know about Bitcoin’s price discovery

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Bitcoin investors, those who were around for the 2017 bull run, the price drop that followed in 2018, and who later survived the Black Thursday crash of March 2o20, understand how Bitcoin’s market cycles work. Though the ongoing price rally has kept Bitcoin traders on their toes, one can argue that the market cycles haven’t changed by much.

Not only has the cryptocurrency’s price crossed the $30,000-level, but it has blown past $35,000 to touch a new ATH on the charts, a level much higher than its 2017 ATH. However, according to the market’s many on-chain analysts, there is still scope for a full-blown price rally, one triggered by a further institutional interest in 2021.

As the crypto’s price continues to rally, the media is abuzz with talk of a price correction and a new price rally. However, the important thing to be noted here is that Bitcoin’s price is high only relative to its previous cycles. The price rally in every market cycle does not take into account the price from the previous cycle and by the same logic, Bitcoin’s price is never too high. 

In fact, Gemini’s Tyler Winklevoss recently tweeted along the same lines, commenting on the state of Bitcoin’s price rally and the anticipation of further institutional participation and price discovery.

Besides, the hype generated on crypto-Twitter by screenshots of 100% or higher profits and leverage may not be the best motivation after all. Based on widely popular statistics, 95% of traders lose money, and it is the remaining 5% that book profits.

Bitcoin’s press time price of $35,250 wasn’t even close to the predicted rise of 10x and buying at different points in the cycle wouldn’t correspond to the price being too high at any point. However, the price may be high at a certain point in the market cycle. For instance, in the current market cycle, the rally started post-$20,000, with the crypto having gained by over 70 percent since then.

70 percent! That figure denotes a very significant gain in a single phase of the cycle. And, it is important that this finding is put into context since based on on-chain analysts’ prediction of increased institutional interest and activity on the Bitcoin network, price discovery has only just begun.

With the entry of institutions, retail traders’ sentiment has turned positive, based on trade volume data from CoinMarketCap, and this narrative may continue for the next few weeks as the asset’s price continues to rally. No price may be too high contextually for the crypto-asset and every price point may seem to be lucrative at a later point in the market cycle. 


Ekta is a full-time journalist at AMBCrypto and her specialization lies in spot markets. Currently pursuing her MBA, she is passionate about trading, fintech, and everything decentralized.
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