At Frontier Protocols we are dedicated to providing contextual, economic, and technical analysis for the most exciting protocols at the frontier of innovation.
However, we understand that our readers are also interested in price developments.
In the following, we are going to analyze cryptocurrency market cycles and compare price projections of various industry observers. In the end, we will present our own price projections.
References for Analysis
Our analysis is based on the predictions and assumptions of various industry observers. We analyze their arguments and make our own conclusions based on the data and evidence they present.
Among the influencers from whom we have borrowed for this prediction are:
- Benjamin Cowen, founder of Intothecryptoverse
- Bob Loukas, famous for his 4-year-journey Youtube video series
- Raoul Pal, founder of Realvision, a financial intelligence platform based on long-form video content
- Plan B, a pseudonyms Twitter personality predicting Bitcoin based on the stock-to-flow model
Benjamin Cohen is using the most data-driven approach for valuing cryptocurrency networks. This is due to his background which is a Ph.D. in Engineering. His analysis seems to be realistic with regard to potential price levels.
He projects the peak of the next cycle will occur in the middle of 2023. With his logarithmic regression, he reaches a fair valuation of 40,000 USD for the price of Bitcoin.
He suggests that BTC at the peak will be 250% overvalued compared to the fair valuation. This would price BTC around 140,000 USD.
Bob Loukas started covering the market cycle of Bitcoin very early in the current cycle. He predicted the market bottom correctly by analyzing the price dynamics and fundamentals of Bitcoin.
He released his first video on the 4-year-journey in January 2019 when Bitcoin was at a price of 3,600 USD. Back then he was telling people to get an allocation for the long term and got his own allocation which he made public.
In his initial video, he stated a price target of 100,000-200,000 USD which should be reached by 2021. His price prediction came earlier than the prediction of other influencers.
In the meantime, he updated his price prediction and assumes now that the peak will occur later on in 2022 and that it will most likely be in the lower range from what he predicted initially. Additionally, he assumes that a left translated cycle will follow the current market cycle.
Based on this assumption he believes that after the next peak we will observe a sharp correction and thereafter an instant rally to new highs which will be followed by a long and enduring correction.
Bob disregards the price discovery in the early history of Bitcoin. This is an assumption with which we agree at Frontier Protocols. Bob always stated that his cycle analysis is more about time than it is about the price. Therefore he did not provide precise price targets.
Raoul Pal is specialized in global macroeconomic analysis. He started looking at Bitcoin in detail in the course of the past year.
He reached the conclusion that Bitcoin is the ultimate hedge against the uncertainties of the current macroeconomic climate which is driven by deflation, insolvency, and aging demographics combined with quantitative easing by central banks across the world.
Raoul Pal predicted on August 28, 2020, at a time when BTC traded for 11,400 USD, that the cryptocurrency has an upside of 50x-100x. This would value it between 500,000$ and 1 million $.
He repeated this assumption in October 2020 and projected that BTC can go to 1,000,000 USD by 2025. However, in one of his recent YouTube videos, he said he was bullish on Bitcoin on a 18-24 months time horizon mostly.
Plan B is a pseudonymous Bitcoin investor who has published a series of articles on Bitcoin. Plan B famously applied the stock-to-flow valuation model to Bitcoin. The model was previously mostly used to value precious metals such as gold and silver. If you are interested in his stock to flow model, feel free to read his original work.
Plan B predicts a market capitalization for Bitcoin of 5.5 trillion USD in the time horizon from 2020-2024. This would value Bitcoin at 288,000 USD. For comparison gold in Q4 of 2020 is hovering around a market capitalization of 10 trillion USD.
Summary of Bitcoin Price Predictions
If this was not enough hopium for you in the table below we have the summary of all price predictions mentioned above:
|Influencer||BTC Price Target||Time Horizon|
|Benjamin Cohen||140,000 USD||Middle of 2023|
|Bob Loukas||100,000-200,000 USD||2021-2022|
|Raoul Pal||1 million USD||2025|
|Plan B||288,000 USD||2020-2024|
In case you are missing any important price predictions feel free to send us a tweet and we will include the prediction in our analysis if it is relevant.
Be aware that there are even more people who predict Bitcoin will end up being worthless and the price will go to zero. So be open towards any possible outcome.
Let’s go back to our own valuation model. In the following, we are presenting you with our assumptions.
Lower Volatility & Diminishing Returns
Our prediction model assumes that there are diminishing returns. This is obvious since it is what the price data is telling us. People who predict a price of 1 million USD/BTC within the next ten years are in our view not credible because it is not what the data suggests.
As the market cap grows it is harder to move the price in both directions. This means the volatility decreases and extreme outcomes become less likely.
Returns from the market bottom to the following market top are diminishing. During the first cycle, the return was 50,000%. During the second cycle, the return was 12,000%.
For the third cycle, we are expecting a return of 2200% from the bottom to the peak which is the underlying assumption for our price prediction.
Longer Accumulation Periods & Market Cycles
Based on the historical cycle length and the price performance of Bitcoin from its December 2018 low until today we can assume that the accumulation period is expanding and the market cycle length is increasing as it is suggested by Benjamin Cohen.
Just as Bob Loukas we disregard the early-stage price discovery of Bitcoin and assume that so far we have seen only two market cycles.
We have calculated the time from market low to market low and observed that it is increasing by a factor of 1.2. We assume that the growth in market cycle length is linear. Based on the limited number of observations we note that it is impossible to derive convincing conclusions out of historic data.
We agree that market cycles are lengthening as Benjamin Cohen suggests. However, we assume a lower growth rate in market cycle length and disregard the price-performance from what he identified as the first cycle. This is why our prediction reaches a peak one year earlier compared to his analysis.
Based on the historic all-time highs of Bitcoin, the diminishing returns, and the lengthening cycles our price prediction suggests a price at a peak of 80,000 USD per Bitcoin in July 2022. The 80,000 USD price target corresponds to a more than 20x return compared to the December 2018 bear market lows.
Ethereum Price Prediction
Ethereum is actually the big question mark in this equation. The price prediction of Ethereum largely depends on how optimistic you are for the future of Ethereum since you can engage in less fundamental analysis in comparison to Bitcoin.
ETH is obviously younger and comes with more opportunities but also more risks. Therefore it has higher alpha and volatility than BTC.
We at Frontier Protocols are extremely bullish for Etherum and the ecosystem it is building. The price of Ethereum at the peak of the next market cycle which we project for the summer of 2022 will mostly depend on the ETHBTC ratio at this point.
The ETHBTC ratio peaked in June 2017 at around 0.15. That was well before the peak of BTC in December 2017. When BTC peaked ETHBTC was at 0.036. That was already down 75% from the peak of the ratio.
We assume that the ratio ETHBTC will likely peak before BTC will peak again.
Let’s assume that the ETHBTC ratio will be three times as high as it was in December 2017 at BTC’s last peak. This would price the ratio at around 0.108. Based on our price projection of 80,000 USD per Bitcoin this would price Ethereum at 8,640 USD.
However, we at Frontier Protocols consider every ETHBTC between 2x from BTC’s 2017 peak to 2x from ETHBTC’s all-time high as possible. This corresponds to a range for the ratio between 0.072 and 0.3 which corresponds to a USD range between 5,760$-24,000$. We’re sorry to not provide more precise numbers but we want to remain credible with our prediction.
A lot of Ethereum’s price action during the next market peak will depend on the progress and adoption that the Ethereum ecosystem achieves in the next two years.
In the table below you find a summary of our price prediction:
|Frontier Protocol Forecast||Price Target||Time Horizon|
|BTC||75,000-85,000 USD||Middle of 2022|
|ETH||5,760-24,000 USD||Middle of 2022|
Before You Go…
For our prediction to be true there is one caveat: Bitcoin needs to be at least consolidating around a stable 20,000 USD per coin by summer 2021. Otherwise, our price predictions are very likely wrong.
In this case, we assume a later peak in 2023 just as Benjamin Cohen does or it might even turn out that we are in a failed market cycle of Bitcoin.