A new Money Morning Bitcoin analysis indicates the worst is over for 2018 and that the price could jump to $11,000 by the end of this quarter.
We've taken the quarterly results from the past four years, from 2014 through 2017, to see how the Bitcoin price has fared in each quarter.
The first quarter on average has been the worst for the price of Bitcoin by far. Through last year, Bitcoin returns in Q1 averaged -13.78%. It's the only quarter with an average negative return.
And that doesn't include Q1 2018, in which Bitcoin plunged 50%.
But if Bitcoin follows its pattern of the past few years, the next three quarters will be positive, most likely producing double-digit gains in both Q2 and Q4.
Let's take a closer look...
Our Bitcoin Analysis Says We'll Revisit the All-Time High This Year
First, here are a few caveats.
Because Bitcoin is so new, we don't have a lot of data to work with. I left 2013 out of this analysis because most of the trading then was on Mt. Gox and affected by the actions of the "Willy bot." Before that, volume was too insignificant to yield useful data.
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Analysts have noticed these kinds of patterns in the stock markets as well, with some months faring better than others. It's unclear why these patterns form, but being aware of them is one more piece of information investors can use to plan their trading strategy.
So what does the Bitcoin analysis of the last four years tell us to expect for the rest of 2018?
Bitcoin has fared much better in the second quarter than the first. The four-year average gain is 60.1%. If the Bitcoin price increases that much in Q2 from where it ended in Q1 ($6,926), it will climb to $11,088 by June 30.
The third quarter, on the other hand, has a history of near-neutral returns. Over the past four years, the Bitcoin price has on average risen just 3.77% in Q3. So based on this Bitcoin analysis, the BTC price will hover in the $11,000 to $11,500 range through the summer.
The fourth quarter has been Bitcoin's best. The four-year average gain is an impressive 85.61% - and that doesn't include the massive 615% gain in Q4 2013.
Assuming Bitcoin is in the neighborhood of $11,500 at the close of Q3, such a gain would put the Dec. 31 Bitcoin price at about $21,345. That's comfortably above the all-time high of $19,783.21 reached Dec. 17.
However, that's still lower than a lot of current Bitcoin price predictions for the end of 2018.
One of the most notable examples is the Bitcoin forecast from Fundstrat Global Advisors co-founder Tom Lee, who has set a target of $25,000 by the end of the year.
And that's one of the more conservative Bitcoin predictions we've seen. Take a look at what these experts are saying...
Bitcoin Price Predictions That May Surprise You
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Julian Hosp, the co-founder and president of TenX (a company that makes cryptocurrencies spendable), has estimated Bitcoin will reach $60,000 by the end of December.
John Pfeffer a London-based entrepreneur and investor who served as a partner at private equity firm Kohlberg Kravis Roberts for 11 years, has an end-of-the-year BTC price target of $75,000.
And another Wall Street analyst, Saxo Bank global macro strategist Kay Van-Petersen, thinks Bitcoin could go as high as $100,000 by the end of 2018.
At the same time, Bitcoin's steep Q1 decline is actually good news for investors who buy now in anticipation of these steep BTC price increases.
"This is a rare opportunity to get into something 65% below its highs, you don't get that opportunity very often," Pantera Capital CEO Dan Morehead said on CNBC last week.
Morehead, who last November said he could see Bitcoin hitting $50,000 in a few years, expects a rebound in 2018.
"Bitcoin has been growing at 165% a year for the six years that we have been in business," he told CNBC.
This also means Bitcoin investors with longer time horizons can expect even more impressive returns. And the longer the time horizon, the more dramatic the Bitcoin price forecast.
Tim Draper, founder of the VC firm Draper Fisher Jurvetson, recently predicted a Bitcoin price of $250,000 just four years from now. Draper is the venture capitalist who famously won 30,000 bitcoins in a July 2014 auction by the U.S. Marshals Service. At the time, Bitcoin was trading at just under $600.
Then there's cybersecurity pioneer John McAfee's December prediction, in which one bitcoin will reach a cool $1 million by 2020. From today's price of $9,350, that's a return of about 10,600%.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.