Prediction: This Is What Bitcoin Will Do in the Next Bull Market

The mood among casual Bitcoin (CRYPTO: BTC) holders is closer to a funeral than it is to fireworks at the moment. Yet the setup for the next bull market is already being built by the exact set of bear market conditions that feel the most defeating now.

The history of the coin's prior market cycles is a good guide for what it might do during its next bull market, so here's what I predict will happen.

Image source: Getty Images.

The supply squeeze will march on

When it comes to Bitcoin's long-term price movements, the coins that count the most are the ones not being touched, and there are quite a few of those.

There are presently 16.7 million Bitcoin that have been held in one wallet for 155 days or more; at this point in 2020, there were just 13.7 million Bitcoin held for the same duration or longer. There can only ever be 21 million Bitcoin, so the fact that long-term holders are accumulating and then sitting on a larger and larger number of coins over time is going to continue to be a driver of Bitcoin's scarcity. And April 2028's halving is also on track to cut new issuance in half yet again, thereby tightening the asset's float, which is already thinning.

That supply squeeze will, as always, eventually result in upward pressure on the asset's price.

The main question is how much will it be worth at the peak of the bull market, which, based on prior market cycles, will likely occur sometime in 2029, given that each of the coin's all-time highs has been set in the 12 to 18 months after a halving. Estimates about price are mostly guesswork, but some of the more commonly used analytical frameworks for that guesswork suggest that one Bitcoin could be worth somewhere between $300,000 and $800,000 during the peak of the next bull market. But don't take those numbers too literally; the point is that they're pointing to substantially higher prices in the future.

Beyond that, the next bull market will probably start sometime after September 2026, in line with the approximately 12-month duration of Bitcoin's prior bear markets.

There's a wild-card risk in play

One new potential problem in the coming years is quantum computing, a risk Bitcoin investors never had to consider before.

In a nutshell, it's theoretically possible that a quantum computer powerful enough to break Bitcoin's encryption will exist within the next five years. If that looks likely to occur, it'll dampen the bull cycle until the risk is either disproven or dealt with by upgrades to the chain's security. In either case, the process might cause holders a lot of headaches.

Bitcoin's developers have to agree upon, implement, and coordinate any such upgrade without a boss, and they may make some controversial choices along the way. That could drive some severe drawdowns.

Aside from the quantum risk, the macro environment could amplify a bull market or mute it. Cheap money and loose liquidity tend to benefit Bitcoin a lot, but the reverse is also true.

Nonetheless, for Bitcoin, the future is bright, and the next bull market will show it.

Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.