In the latest edition of Capriole Investments’ newsletter, August 20, 2024, Charles Edwards, Founder and CEO, draws striking similarities between Bitcoin’s current market performance and gold’s historical performance, particularly during its 2008 rally.
Bitcoin mirrors the gold rush of 2008.
Edwards points out that Bitcoin is consolidating around $60,000, which mirrors the pattern Gold followed before its significant rally. “Bitcoin is under pressure, mirroring the longest period of consolidation in its history at an all-time high,” Edwards notes, suggesting that this could be a precursor to a significant breakout. He believes that this pattern closely mirrors the pattern Gold followed in the delayed 2000s, when it consolidated for nine months around its 1980 all-time high before embarking on a significant two-year rally in 2008.
Edwards expands on the technical similarities, noting that “Gold’s first significant consolidation following the launch of an ETF preceded a rally that saw it rise 180% in just two years. Bitcoin is currently exhibiting similar market behavior following the launch of its own ETFs and consolidations.”
Edwards notes that during gold’s 2008 consolidation phase, the asset fell -33%, ultimately marking what many investors consider a generational bottom. Bitcoin’s recent decline to $48,000—a -33% crash—strikingly aligns with this aspect of gold’s historical price action. “Bitcoin’s July 2024 decline was -28% to $53,000, and the more recent August 2024 decline mirrored gold’s final decline, falling just half a percent,” Edwards notes, emphasizing the precision of these parallels.
Based on these historical parallels, Edwards predicts that bitcoin could “rapidly rise to $140k without any downside around May 2025.” While he acknowledges that a single data point doesn’t mean gold’s history will necessarily repeat itself for bitcoin, he does believe it is “the most comparable asset at the most comparable time in its history.”
Despite the bullish signal from the backtest and technical analysis, Edwards remains only cautiously positive. He acknowledges that there are discrepancies in the fundamental data signals and suggests a conservative stance until further bullish confirmations can be observed.
“We are still waiting for the month to close; a conservative approach would be to wait for further confirmation of the upside (and potentially into Q4) to fully conclude what is typically the most bearish period of each calendar year for bitcoin and risk assets,” Edwards notes.
If Bitcoin closes above monthly support, Edwards sees a “very attractive technical setup.” He concludes, “I believe this period of market consolidation is coming to an end as we exit the summer, and I maintain a strong belief that the next 12 months will be the best time in the last 3 years to be allocated to this asset class.”
At the time of going to press, the BTC price was $60,712.
Featured image created with DALL.E, chart from TradingView.com
