In the latest edition of Capriole Investments' newsletter dated August 20, 2024, Charles Edwards, Founder and CEO, draws striking parallels between the current behavior of the bitcoin market and the historical performance of gold, particularly during its 2008 rally.
bitcoin mirrors the 2008 gold rush
Edwards notes that bitcoin has been consolidating around $60,000, mirroring the pattern that gold followed prior to its major rally. “bitcoin is under pressure, reflecting the longest period of consolidation at any ATH in its history,” Edwards notes, suggesting that this could be a precursor to a significant breakout. According to him, this pattern closely mirrors that of gold in the late 2000s, when it consolidated for nine months around its 1980 ATH before kicking off a major two-year rally in 2008.
Edwards elaborates on the technical similarities, noting: “Gold’s first significant consolidation after the ETF launch preceded a rally that saw its value rise 180% in just over two years. Today, bitcoin is displaying similar market behavior following its own ETF launches and consolidations.”
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Edwards notes that during gold’s consolidation phase in 2008, the asset suffered a 33% drop, ultimately marking what many investors consider a generational bottom. bitcoin’s recent drop to $48,000 (a 33% crash) aligns strikingly with this aspect of gold’s historical price action. “bitcoin’s July 2024 drop was 28% to $53,000, and the most recent drop in August 2024 mirrored gold’s final drop, falling just half a percentage point short,” Edwards says, highlighting the accuracy of these parallels.
Based on these historical parallels, Edwards predicts that bitcoin’s price could “go straight up to $140,000 with no dips by May 2025.” While he acknowledges that a single data point doesn’t mean that gold’s history has to repeat itself for bitcoin, he believes it is “the most comparable asset at the most comparable time in its history.”
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Despite the bullish signal from historical and technical analysis, Edwards remains cautiously optimistic. He acknowledges that there are discrepancies in the fundamental data signals and suggests a conservative stance until further bullish confirmations can be seen.
“We are still waiting for the monthly close; the conservative position would be to wait for further bullish confirmations (and potentially Q4) to fully clear what is typically the most bearish period of each calendar year for bitcoin and risk assets,” Edwards notes.
If bitcoin manages to close above the monthly support, Edwards sees a “very attractive technical setup.” He concludes: “I think this period of market consolidation is coming to an end as we exit the summer, and I remain firmly convinced that the next 12 months will be the best time in the past 3 years to invest in this asset class.”
At the time of writing, btc was trading at $60,712.
Featured image created with DALL.E, chart from TradingView.com
