Is the Bitcoin 4-Year Market Cycle Real?

Throughout Bitcoin’s short history, its price has experienced enormous swings to new all-time highs, followed by retracements that take back most of the gains. Studying several Bitcoin (BTC) market cycles, it becomes clear that other than the first cycle, the others are relatively consistent regarding timing.

This trend is especially true of the last two cycles, which are close to four years each from peak to peak and bottom to bottom. Some have speculated that this timing results from the Bitcoin halving that occurs approximately every four years or 210,000 blocks mined. The question now is: Is the Bitcoin four-year cycle a real phenomenon or just a coincidence? And if it is real, what will it look like in 2024 and beyond?

Dissecting Bitcoin’s Market Cycles

For clarity, this article defines a market cycle from one bear market bottom to the next.

The first accurate Bitcoin price tracking occurred in July 2010. By October, Bitcoin’s price started to rise and peaked on June 8, 2011, at $31.90. The price began to fall over the next five months and bottomed at $2.01 on Nov. 19, 2011. This first cycle was the shortest of all the cycles to date.

Cycle No. 2 began at the 2011 bear market bottom on Nov. 19, after which the price bounced higher almost immediately. After the bounce, there was a six-month period of consolidation. After BTC broke out of the consolidation, it peaked at over $268 on April 10, 2013; a 76% drop followed that peak.

BTC recovered almost immediately and hit a bull market peak of $1,177 on Nov. 30, 2013. An 86% drop followed that peak; the bottom was hit on Jan. 14, 2015.

The third cycle began at the 2015 bear market bottom on January 14. For the first 9 ½ months, the price of Bitcoin accumulated in a range of about $100. After the price of Bitcoin broke out of the accumulation range, it re-tested the range once before moving higher.

The move higher culminated in the bull market peak at just under $20,000 on Dec. 17, 2017. Once again, a price drop of 84% followed the peak and the bottom was hit almost one year later, on Dec. 15, 2018.

The fourth cycle began on Dec. 10, 2018, and after about four months of accumulation, the price of Bitcoin broke out in a dramatic fashion. Over the next three months, the price of Bitcoin increased by over 200% and hit a high of $13,831 on June 26, 2019.

Over the remainder of the year, Bitcoin’s price slowly dropped but still finished up about 90% for the year. The start of 2020 saw a 45% increase in the price of Bitcoin, which peaked in mid-February. That was followed by the COVID crash, which bottomed in mid-March.

The recovery from the COVID crash was swift and eventually led to the next bull market. This bull market was reminiscent of the 2013 bull market. After pushing higher throughout much of 2020, the price of Bitcoin peaked on April 14, 2021. This peak was followed by a 55% pullback that bottomed on July 20.

Over the next month, the price of Bitcoin increased by over 134%, which led to the ultimate bull market peak on Nov. 10 at $69,000. Bitcoin’s price immediately began to drop and just over a year later, on Nov. 21, 2022, it hit what appears to be the bottom at $15,495.

By zooming out and looking at the entire price history of Bitcoin, you can calculate the timing of each market cycle. In the chart above, the green vertical lines mark the bull market peaks and the time intervals between them. The yellow dashed lines mark the bear market bottoms, with the time intervals between them.

Note the timing of the last two market cycles. They are close to a four-year cycle, from one peak to the next and from bottom to bottom. Another interesting observation is the time of year when the peaks and bottoms occur.

Other than the first peak in 2011, all the others occurred in November, December or January. Is this timing a coincidence, or is there a reason behind it?

It is also clear that with each successive cycle, the percentage increase in price for the year leading up to the halving is declining. The same pattern is evident from the halving to the following peak. Again, with Bitcoin’s short history, it is unclear whether this pattern will continue. Visually, it is easy to see the diminishing returns with each successive cycle in percentage terms.

Timing for Bitcoin Bottoms: From Halvings to Peaks
Timing for Bitcoin Bottoms: From Halvings to Peaks (Image:

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Bitcoin’s Market Cycle

What is the Bitcoin Market Cycle?

The Bitcoin market cycle refers to the recurring pattern of price behaviour in the Bitcoin market, characterised by alternating periods of appreciation and depreciation. This cycle is a result of market participants’ perceptions and actions, such as buying and selling, and is influenced by a variety of factors, including market sentiment, regulatory changes, technological developments and the wider economy.

Historically, Bitcoin has followed a four-year cycle tied to Bitcoin halving events, which happen approximately every 4 years. A halving event marks a 50% cut in the Bitcoin reward miners receive for mining new blocks and verifying transactions; in effect Bitcoin supply continues to increase, but at a slower rate. The knock-on effect can be a steep increase in price, assuming the demand for Bitcoin remains the same or increases after a halving. The next halving is due April 2024, when the block reward will fall to 3.125 bitcoins.

What are the Bitcoin Market Cycle Phases?

Phase 1 – Accumulation

Occurs when prices are low, but small signs of growth appear. During this phase buyers will accumulate cheaper Bitcoin and so it represents the point of maximal financial opportunity.

Typically, there is bearish sentiment in the market so volume is low and prices are fluctuating in a tight range, near the bottom.

Phase 2 – Continuation

The price continues moving towards the all time high. A halving event has historically occurred here, coinciding with shrinking exchange reserves as buyers hoover up supply as they look to capture rising prices in anticipation of new all-time highs.

Phase 3 – Parabolic

When the price eclipses the previous all-time high, price action will start to move exponentially to the upside pushing the price to a new all-time high, which has exceeded the previous landmark by a significant factor. This phase is extremely volatile, with rapid price increases followed by large corrections

Sell volume builds as a portion of investors lock in healthy profits, while many market participants will continue buying believing the bull market has more room to run. As a result, price volatility is low given the buy and sell volumes begin to balance against a backdrop of overconfidence. At this point, many investors would see the Fear & Greed Index flashing Extreme Greed.

Phase 4 – Correction

Following the euphoria of the Parabolic phase, this is when the market will see a major correction to the downside. Previous bear market periods have resulted in approximately 80% drawdowns from the top and negative price action for approximately a year. The most recent example saw the price tumble from an all-time high of $69,000 (November 2021) to $15,476 (November 2022).

The chart below shows the cyclical nature of Bitcoin’s price and how it has played out in the past.

The Crypto Market Cycle: Bitcoin's Performance Over Time
The Crypto Market Cycle: Bitcoin’s Performance Over Time

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Bitcoin and the Predictability of Crypto Market Cycles

[An interesting summary of Bitcoin cycles from the end of 2023]

History shows there’s likely a bright year ahead for BTC’s price.

The crypto market may seem like a foreign world to many, with no real rhyme or reason for how it trades.

Just like traditional markets, though, crypto goes through its own cycles – and these price cycles are remarkably consistent, including their timing between peak-to-trough bottoms, price recoveries and subsequent rallies to new cycle highs.

We believe we’re in the early stages of a new cycle. Using bitcoin (BTC) as our benchmark, here’s the typical structure of a crypto market cycle:

  • BTC’s price peaks at a new all-time high.
  • BTC then suffers a painful 80% or so drawdown.
  • The price eventually bottoms almost exactly one year after the prior cycle’s high.
  • BTC starts to recover and takes about two years to reach a new all-time high.
  • BTC continues to rally for another year before topping out at its next cycle high.
  • Then the cycle repeats.

The last few cycles have followed this playbook to a T.

Crypto Market Cycles (Image:
Crypto Market Cycles (Image:

The consistency of these cycles isn’t by coincidence. It’s driven by bigger, more powerful macro trends – and one that lies at the very heart of bitcoin’s value proposition.

Bitcoin is not an inflation hedge in the way many believe it to be. Bitcoin is not a hedge on the Consumer Price Index, or CPI. It’s a hedge against currency debasement.

That distinction is important because currency debasement is driven by monetary inflation and the expansion of central bank balance sheets. In essence, BTC is of the most leveraged bets on an expansionary liquidity environment.

Bitcoin halvings aren’t the primary catalyst for BTC bull markets – liquidity cycle uptrends are. It just so happens that each halving has lined up with an expansionary liquidity environment. The next halving is expected to occur in April 2024, which once again looks to be right on cue.

That’s not to say the Halving isn’t important – it’s a strong narrative that can certainly pour fuel on a bullish uptrend, especially if we see a spot BTC ETF approved ahead of time given liquidity upcycles tend to turbocharge fund flows.

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What is Bitcoin?

I was asked at the start of the year what is bitcoin, is it all virtual, and are you actually buying and selling anything real? This is the answer I gave, and I’m reposting it here as it may be useful to newcomers.

In a nutshell Bitcoin is virtual or software money, it’s a little bit like how banks used to issue their own currency in the past. The clever thing about it is that it is trustless – for hundreds of years people have wanted a universal payment system that didn’t need a third party to take their money (credit and debit cards, PayPal, Western Union, etc.) and Bitcoin was the first to solve that. A network of computers around the world hold a record of all Bitcoin transactions ever, and when a new transaction (block) takes place it is added to the list of previous transactions with a software pointer to the previous transaction (so it is impossible to add, remove or replace any transaction without breaking the chain) – hence the term Blockchain. That makes Bitcoin virtually impossible to hack. Also anyone can run one of these computers – I did for a while – so it is completely decentralised and no-one can change Bitcoin or devalue it.

What is Bitcoin? (Image: AI/BIC)
What is Bitcoin? (Image: AI/BIC)

There will only ever be 21 million BTC, that is fixed, and 19M have already been issued, following an algorithm hardcoded into it. As to whether you are buying and selling anything real, that is a complex question. Since fiat currency (pounds, dollars, etc.) are no longer connected to anything but printed at will there you are definitely not buying and selling anything real – all you know is that there will be more next year and what you’ve got will be worth less, which can’t happen with Bitcoin. I don’t want to get into the politics, suffice to say a staggering amount of new currency was created in the pandemic (…/80-us-dollars-existence…/) and we are starting to reap the effects of that with inflation and the cost of living crisis. Suffice to say that the big investment houses and banks know all this and have been getting into BTC for the last few years. A number of applications for Bitcoin funds have also gone in, with Blackrock the biggest, and approval is hoped/expected for January. At that point tens of thousands of businesses and pensions will be able to buy into Bitcoin ETFs, which will jump up the demand for Bitcoin (since any money invested has to be backed by the same amount of Bitcoin being bought, same as a gold ETF).

In parallel, the next halving is in April when the amount of Bitcoin produced per transaction halves, so we are hitting a demand/supply perfect storm. I believe Bitcoin will continue its bull run until late next year and will definitely exceed $80k but could potentially exceed $200k. My first 2 Bitcoin I bought for £500 each in 2017, and continue to buy in whenever I can. I think people with software knowledge are able to appreciate it better than most, and in the bigger picture we are still early into Bitcoin. Some people say it will eventually replace fiat currency altogether, as the world becomes more digitised, but certainly its increasing use by banks, and as sovereign currency (El Salvador so far, other countries likely to follow), show the direction of travel is clear. I expect in the next 4 year halving cycle (from early 2027) it could hit $1M per Bitcoin.