Bitcoin tops $60,000: will we see another 2017-style rally ahead?

Prices of the world’s biggest cryptocurrency, bitcoin, regained the $60,000 level on Saturday after trading sideways since the start of the month. At 12.10 pm IST, the digital asset traded at $60,675.87, up 4.5%, while ethereum was 4.7% higher at $2,173.63.

After six straight months of double-digit returns in bitcoin (BTC), volatility fell in the crypto market over the past few weeks. However, experts say that there are signs of a significant move on the horizon.

During 2017, bitcoin had a low of $777.76 and a high of $19,497.40 during the course of the year. So far this year, the world’s oldest cryptocurrency is up 109%.

Institutional demand and the passing of a $1.9 trillion covid-19 relief package in the US helped lift bitcoin by 30% in March 2021. According to Kraken Intelligence, with April being, on average, the second-best performing month, one could expect bitcoin to finish higher and thus tie for the longest winning streak since the cryptocurrency’s inception.

Historical data indicates that the second quarter of the calendar year is typically a positive yielding quarter for both bitcoin and ethereum. Since 2011, BTC has returned, on average, 256% in 2Q while ETH has returned, on average, 141% when looking as far back as 2016.

With the exception of the second quarter of 2018, bitcoin has always generated a positive return in 2Q and has an average return of 256%.

Given bitcoin’s March-end price of $58,786 and assuming it closes 256% higher in the second quarter of 2021, one could expect it to trade at roughly $209,000 as of 1 July 2021. Using the median second-quarter return of 39.5%, a more appropriate statistical measure, the world’s biggest cryptocurrency would stand at approximately $82,000.

Meanwhile, during March, bitcoin’s steady uptrend resulted in volatility falling nearly 40 percentage points month-on-month to finish the month at 63%, a near three-month low. The lack of market volatility resulted in trading volumes falling 5% and hitting a year-to-date low of roughly $255 billion.

Considering that April is, on average, 21 percentage points more volatile than March and is the second-best performing month behind November, one could expect a resurgence of market volatility to influence bitcoin’s price.