For good reason, prediction market traders are down on Bitcoin (BTC 1.11%) right now. The world's most popular cryptocurrency is down a staggering 47% since October, and shows no signs of heading higher anytime soon. It's currently trading for just $66,000.
As a result, Polymarket only gives Bitcoin 3% odds of making it to the $150,000 mark by the end of June. If you're a short-term investor, that's obviously bad news. But just how seriously should you take this number if you are a long-term investor?
Bitcoin's track record in Q2
As a starting point, I looked at Bitcoin's historical returns over the past decade. If Bitcoin is going to hit $150,000 by June, then it's going to need a monster second quarter of the year. More specifically, it's going to need to skyrocket in value by 128%. So just how likely is that?
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As it turns out, it might be more likely than you think. In 2017, for example, Bitcoin skyrocketed in value by 124% in Q2. And, in 2019, Bitcoin skyrocketed in value by 159% in Q2. If you had bet against Bitcoin in those two years, you would have lost big.
Historically, Bitcoin has averaged a 27% return in Q2. So there have obviously been some very bad Q2 results as well. In 2021, for example, Bitcoin fell by 40% in Q2. And, in 2022, Bitcoin collapsed by 56%.
Beware Bitcoin's volatility
The big takeaway lesson here for long-term investors is that Bitcoin is extremely volatile. If you're primarily an equity investor and new to crypto, you might not realize how volatile Bitcoin really is.
CRYPTO: BTC
Key Data Points
In a single 24-hour period, Bitcoin can gain or lose 10% of its value. The latest example of this was a "flash crash" that took place in early February, when Bitcoin fell by 17% over 24 hours to $60,000.
Moreover, Bitcoin is extremely volatile even on a quarter-by-quarter basis. In a single quarter, it's capable of doubling in value or losing half of its value. And it's capable of turning on a dime. In 2024, for example, Bitcoin lost 12% of its value in Q2. But it shrugged this off and ended up gaining nearly 50% for the year from that point onward.
When building a Bitcoin pricing model, it's important to keep volatility in mind. Yes, Bitcoin has delivered incredible returns to investors over the past decade, increasing in value from $400 in February 2016 to $66,000 today. But the way it has done so has at times seemed wild, chaotic, and completely unpredictable.
All of which is to say: I'm not betting against Bitcoin right now. Bitcoin may not make it to the $150,000 mark by June, but it has a better chance than you might think of getting there by the end of the year. And, from there, the sky's the limit. If Bitcoin continues to increase in value at an exponential rate, some investors think it might eventually be worth $1 million or more by 2030.
