In April and May, Bitcoin (BTC) captured market attention with a rise of 46.32%. The period between May 5 and 22 saw an additional increase of 18.48%, pushing Bitcoin's compound annual growth rate (CAGR) to new record levels. This significant rise bolstered positive expectations, with hints from experts of a potential market rally soon.
How has Bitcoin's compound annual growth rate improved significantly?
Cryptocurrency expert Axel Adler Jr. pointed to a notable improvement in Bitcoin's compound annual growth rate over four years, which dropped to just 7% in April. The year began with a growth of 9.54% in January, followed by declines of 17.5% in February and 2.19% in March. By April, Bitcoin prices had dropped to $74,446, but a rapid recovery led to the compound annual growth rate rising to 31% by June, indicating strong shifts in long-term trends driven by robust market demand.
What factors could drive Bitcoin to $168,000 by October?
Adler Jr. has set an ambitious target for Bitcoin's price at $168,000 by October, assuming continued momentum in the futures market and high leverage use. This target aligns with the historical patterns of rapid growth seen in previous bull markets, suggesting that current conditions may enable such significant achievements.
However, not everyone sees the situation the same way. An alternative analysis conducted by a user named Manu suggests studying the compound annual growth rate (CAGR) by considering risk-adjusted returns. Manu believes that dividing the compound annual growth rate by the standard deviation would help calculate volatility and provide deeper insights into market conditions.
Adler Jr. acknowledges this perspective, pointing to the importance of considering risks. He emphasized that when investors begin to take expected returns, market dynamics may change.
Adler Jr. added, "The real turning point occurs when investors start to take profits based on expected returns."
He warns that once Bitcoin's trading volume reaches one million Bitcoins, profit-taking could trigger a new bear market by disrupting the balance of supply and demand.
Among the key insights gained from this analysis are:
Bitcoin's compound annual growth rate has improved significantly from 7% to 31% over two months.
The bold target of $168,000 relies on continued market momentum.
Risk-adjusted returns may provide more clarity for the market.
Market dynamics may change with intensive profit-taking activities.
The potential for future growth remains significant, though the journey is fraught with risks, particularly from volatile trading behaviors and large profit-taking. Assessing these factors will be crucial in determining whether Bitcoin can achieve its ambitious goals or even exceed them.