In the latest installment of The Milk Road Show, Charles Edwards, the founder of Capriole Investments, a renowned crypto hedge fund, offered an insightful analysis of Bitcoin’s current status, its prospective trajectory, and the impending conclusion of the traditional 4-year Bitcoin cycle.
According to Edwards, the journey of Bitcoin to $100,000 could potentially trigger a price acceleration unlike any seen before. He suggests that once Bitcoin crosses this critical psychological and technical barrier, its value could possibly double within a matter of weeks. Drawing a parallel with the recent performance of gold, Edwards shared, “If you look at gold this year, it went up 33% in 16 weeks—that’s a $3.8 trillion move in a really old asset. For Bitcoin to go from $100K to $200K, that’s just $2 trillion on an asset that trades 24/7 and is more accessible globally.”
He underscored that the relatively smaller market capitalization of Bitcoin compared to gold facilitates more rapid price movements. Historically, Bitcoin has witnessed significant and swift appreciations after surpassing previous all-time highs, entering periods of price discovery where supply constraints can lead to vertical price increases.
The $100,000 mark represents a significant resistance level due to a multitude of factors. Edwards pointed out the existence of a massive sell wall at this price point, stating, “We have the biggest sell wall we’ve ever seen in the order books for Bitcoin at $100,000. Once that’s cleared out, that’s when you know everyone who wanted to sell has sold and you have these really sharp rapid vertical price appreciation moves because there’s just no more supply left.”
However, despite potential selling pressure from investors who entered the market at lower prices and may view $100,000 as an optimal point to realize profits, Edwards remains optimistic that this barrier will be surpassed within the next few months, especially considering the seasonal strength observed in Bitcoin’s price movements during Q4 and Q1.
Edwards is bullish on Bitcoin’s prospects, but also cautions investors about the inherent volatility of the market. He pointed out that 20% to 30% corrections are common during bull markets and that investors should be prepared for such fluctuations.
In discussing the traditional 4-year cycle, largely driven by the halving events, Edwards believes that as Bitcoin matures and integrates more deeply with traditional financial systems, the impact of the halving on market cycles will diminish. He stated, “As Bitcoin’s inflation rate decreases and it becomes more integrated with traditional finance, the four-year halving cycles may become less impactful. The large 80% drawdowns we’ve seen in the past might not happen in future cycles.”
Edwards also outlined a base and an optimistic scenario for Bitcoin’s price in this cycle. In the base case, he stated, “I’d be surprised if we don’t get to $140,000.” In a more optimistic scenario, he believes Bitcoin could reach $200,000, especially if significant catalysts, such as government or corporate adoption, materialize.
Concluding his analysis, Edwards stated: “Once we’re above $100,000, people who aren’t in Bitcoin just cannot comprehend Bitcoin above $100,000. That’s when you see the real switch flick and the flows happen.”
