It's impossible to know if Bitcoin has hit its peak in real time, but dead simple to figure it out in hindsight. That's why there are so many analysts comparing current price charts to old ones and invoking a famous Mark Twain quote.
On Wednesday morning in Europe, Bitcoin was trading for around $42,560. That's a 2.3% drop from the same time yesterday, but 6% higher than the BTC price a week ago, according to CoinGecko data.
The narrative around prices at the start of the week was that Bitcoin was starting to gain on expectations that U.S. Federal Reserve Chairman Jerome Powell might drop hints about lowering interest rates later this year when he announces the Fed's rates later today. Investors overwhelmingly expect him to maintain rates as they are, according to the FedWatch tool.
That optimism evaporated, and prices slid with it. But to hear some analysts tell it, Bitcoin is still making the same kinds of movements it has ahead of other bull market runs.
"The notion of history rhyming rings strikingly true, with the last three cycles experiencing eerily similar performance," writes Glassnode in its latest Insights blog post. "Our current cycle remains marginally ahead of both the 2016-17 and 2019-20 periods, due in part to an extremely strong year in 2023."
The phrase "history rhyming" is likely a reference to a quote from the American novelist: "History doesn't repeat itself, but it often rhymes."
In the context of financial markets, including Bitcoin prices, this means that while the specific details of market movements and conditions will not exactly repeat, they can exhibit patterns or trends that are reminiscent of past occurrences.
That's why so many analysts are pulling out old price charts to say that Bitcoin's price is moving very similar to the way it has just before past bull runs.
Halving years are always BULLISH years. pic.twitter.com/OuzXXlCaIE
— Stockmoney Lizards (@StockmoneyL) January 21, 2024
The main headwinds have come from Grayscale Bitcoin Trust (GBTC) redemptions.
"As a closed end trust fund, GBTC amassed an extraordinary 661.7k BTC in early 2021, as traders sought to close the NAV premium arbitrage," Glassnode analysts wrote. "After many years of trading at a severe NAV discount (with a very high 2% fee), conversion to a spot ETF has triggered significant a re-balancing event. Around ~115.6k BTC have been redeemed from the GBTC ETF since conversion, creating significant market headwinds."