Bitcoin recently returned to highs that it didn’t see since early May, and many investors are now awaiting for the next leg upwards. While the Bitcoin price is still very volatile, on-chain analysts believe that we might be headed towards a supply shock.

In this article we delve into the possibility of such an event, why it has been much awaited, and how it could proper Bitcoin past an $80.000 pricepoint. Let’s get into it.

What is a supply shock?

Supply shock, or supply shortage, is a term that became popular back in 2019, when Dan Held, head of Growth at Kraken, wrote about the potential of a Bitcoin supercycle. The concept is rather simple, but very important to understand as we are headed towards the later stages of the bull market.

Supply shock would indicate that there are no more Bitcoins available on exchanges for sale. This would increase bid prices to the point where existing holders would be tempted to sell their coins, but this amount would create large upward gaps that could reflect in some of the biggest green candles we have ever seen in this market.

With no more Bitcoin available on exchanges, it wouldn’t be unlikely to expect 1-minute candles of $10.000 or more, propelling Bitcoin to new highs, which would more likely be into the 6-figures. As institutions and “strong hands” continue to accumulate BTC, it is less likely that we will see the selling pressure that has been ongoing over the past few years.

Institutions are currently still buying Bitcoin from exchanges, most of which at Coinbase. At a potential supply shock, this would change, and we could see the same institutions heading over to Bitcoin miners, and trying to deal directly with them. For those with a higher budget, we could even see the creation of new mining farms, all in hopes of claiming a small part of the newly issues BTC.

One thing is for sure – The current economic uncertainty and the gradual weakening of the dollar will eventually lead to more people looking to accumulate hard assets. Since Bitcoin is on the forefront, and the only one with a limited supply, it is nearly inevitable that a supply shock will occur.

So where can the price go?

The so-called supercycle does not necessarily stand for a more aggressive bull cycle. Instead, it crushes everything we knew up to this moment about market cycles in general. Up to this point, the bull market was initiated a few months after the Bitcoin halving, and peaked 16-18 months after that. After the blowoff top the price usually corrected between 80%-85%. This new concept brings forth the theory that this will no longer happen.

No longer will Bitcoin enter a long bear market where its price will drop back to the levels we previously saw. Instead, we may see smalled corrections in the class of 40%-50% which will be short lived. When zooming out, it will still be possible to see a continuation in the bull market, and thus an extended bullish cycle.

Given the extension of the cycle, more use cases for the crypto industry as a whole, and increasing awareness due to higher crypto prices, demand will grow steadily as well.

Pair to that the unexpected economic problems we have been seeing since the introduction of lockdowns, and the overall fear of currency collapse, and you have the recipe for a juicy price prediction.

We tend to think that the crypto market will surpass that of gold, and rightfully so. Bitcoin could continue climbing throughout the next year and eventually reach a price point of $1.000.000 or more.

For this to happen however, a lot more needs to occur. We expect states and nations to join the accumulation game and all claim a fair pair of cryptocurrency as its reputation continues to grow. What may currently seem unfathomable could be very close to becoming a reality.

So, how close are we to $80.000 BTC?

We can speculate about this, but if we look back at history, we can derive that Bitcoin could reach this target before the end of 2021. Historically, it is the last quarter of the year that leads to the higher price gains (when compared to 2017 and 2013). This time around we have a lot more to go with rather than trading and overall sentiment. We have institutions, DeFi, the introduction of blockchain-based gaming, NFTs, and so much more.

All in all, it’s not a matter of “if”, but rather “when” Bitcoin will break through $80.000 and starts heading towards the 6-figure mark. Until then, make sure you continue performing your own research and invest responsibly. We are all gonna make it with patience and conviction.

Also read: Interesting Role of Bitcoin ATMs in the Future Transactions