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Bitcoin recently reached a new all-time high of $123,000, even though many market indicators still point to a mid-cycle stage. Normally, such price increases indicate overheating, but current indicators such as the MVRV Z-score (a metric for assessing overvaluation or undervaluation relative to realized price) remain in a healthy range between 2 and 3. This suggests that while the market is in an uptrend, it is by no means in a euphoric or overbought phase.
Leverage Reduction Creates a New Basis
The recent price jump above the $120,000 mark was triggered by a massive liquidation of short positions. This was followed shortly thereafter by a similarly strong sell-off of long positions, which led to a market correction. This so-called “leverage flush” is a healthy phenomenon in bullish markets, whereby excessive leverage is flushed out of the market. The market is now in a consolidation phase, which typically serves as the basis for the next upturn.
Corporate Treasuries Are Driving Demand
A key driver of the current market cycle is the increasing number of publicly traded companies acquiring Bitcoin as a strategic reserve asset. This so-called Bitcoin treasury strategy is no longer pursued by just a few technology companies, but is now spreading to various industries, including industrial groups and financial services providers. Many of these companies use structured financial instruments or specialized service providers to process their Bitcoin purchases efficiently and in compliance with regulations.
Companies holding the most Bitcoin (Image: bitbo.io)
Related article: Why all companies are suddenly buying Bitcoin – and what that means for you
The Supply Side Is Drying up
With the current Bitcoin supply of only about 450 coins per day (after the last halving), a price level of around USD 110,000 results in a natural daily sales volume of about USD 50 million. This low supply is currently meeting rising demand – both from institutional investors and from ETFs, family offices and listed companies. When demand exceeds daily supply, higher prices must be offered to motivate sellers – a classic supply and demand effect.
Bitcoin Compared to Traditional Asset Classes
Measured against traditional benchmarks such as the S&P 500 or the NASDAQ, Bitcoin has significantly outperformed since the halving in May 2020. While the NASDAQ has gained around 150% since then, Bitcoin has recorded an increase of over 1,100% in the same period. Even gold, often seen as a hedge against inflation, lags behind with less than 100% growth in value. This discrepancy shows how strongly Bitcoin is perceived as the “hardest” investment alternative – especially in an environment of monetary policy uncertainty and rising global debt.
The Myth of Missing the Boat
Many investors believe they have already missed the optimal entry point. But this assumption is mostly based on a misunderstanding of the nature of Bitcoin: unlike stocks or real estate, Bitcoin does not generate cash flow – its appeal lies in its scarcity, decentralization, and resistance to inflation. Anyone who understands Bitcoin as a monetary asset – comparable to gold, but digital, divisible, and mobile – recognizes that the total addressable market (TAM) is still in its infancy. Estimates suggest long-term market potential of between USD 200 trillion and USD 300 trillion, compared with a current Bitcoin market capitalization of less than USD 3 trillion.
Institutional Buyers Are still in the Early Stages
Despite numerous prominent examples, the majority of institutional investors – from large corporations to sovereign wealth funds and insurance companies – have yet to build up any or only very limited Bitcoin holdings. Many potential large buyers are still in the regulatory or organizational preparation phase. Once these players begin to allocate significant volumes, this could trigger a new surge in demand that significantly accelerates price growth.
Possible Price Targets and Chart Analysis
Several long-term charts and valuation models point to further upside potential. For example, the MVRVZ score predicts a possible price target of around $196,000 per Bitcoin for a comparable peak to the last cycle. Long-term trend channels spanning almost a decade even point to potential targets of $228,000 to $300,000 in the current cycle. Of course, these models are no guarantee – but historically, major parabolic movements have usually started precisely in the current valuation zones.
Bitcoin price (Image: Tradingview)
The “Suddenly” Scenario: When Things Suddenly Move Quickly
A well-known narrative among Bitcoin enthusiasts is the “gradually, then suddenly” theory. It states that Bitcoin will initially be adopted gradually over many years until a tipping point is reached where confidence in traditional systems collapses and capital suddenly flows toward Bitcoin. In such a scenario, price movements in the six-digit range could occur very quickly, especially if there are no sellers and buyers are willing to pay drastically higher prices.
The Macroeconomic Environment as a Catalyst
Another aspect that should not be underestimated is global monetary policy. Despite declining inflation, many central banks have not yet lowered their key interest rates – a potential catalyst if this changes in the near future. Combined with geopolitical uncertainties, fiscal instability, and structural debt in many economies, Bitcoin is increasingly seen as a global store of value. Against this backdrop, renewed monetary stimulus could further enhance Bitcoin’s appeal.
Outlook
Bitcoin may be at the beginning of an extraordinary price cycle driven by structural supply shortages, institutional demand, and macroeconomic uncertainties. Despite the already high price gains, many fundamentals are still in the early or middle stages of the cycle. Those who understand Bitcoin not just as a speculative asset but as a new monetary base recognize that the market has only begun to realize its potential.
Related article: Has the Bitcoin supercycle already begun? – The end of the classic four-year cycles
Author
Ed Prinz is Chairman of Austria’s most renowned non-profit organization specializing in blockchain technology. DLT Austria is actively involved in educating and promoting the value and applications of distributed ledger technology. This is done through educational events, meetups, workshops, and open discussion forums, all in voluntary collaboration with leading industry players.
Disclaimer
This is my personal opinion and not financial advice.
For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor whom you trust. This article does not make any guarantees or promises regarding profits. All statements in this and other articles are my personal opinion.
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