- If we take exception to the 2020 Covid crash, there is a clear trend in price action being pulled forward before the halving. With just over two months to halving and a positive macro backdrop, the potential for higher prices is in the cards.
- I see two potential risks to this thesis. The reemergence of regional bank failures would, if the Fed stalls, send crypto south. Also, with cycle dynamics being advertised across social media platforms and expectations high, significant gains could already be priced in.
- At prior halving events, BTC sat between 48-56% of the prior cycle high. This would put BTC at around $35,880 in April. However, if plotting the pre-covid trend growth in the 2020 cycle, price was roughly 71% of the prior cycle high. This places BTC around $49,000 for this cycle. I think this is the more realistic outcome, with outsized right tail risk.
- From a dominance standpoint, price action is largely irrelevant as we have likely achieved peak BTC dominance for this cycle. I expect 2023’s leaders to continue gaining ground. Laggards such as ETH must show life in February or March. Continued underperformance would suggest a significant reduction in exposure.