Bitcoin Market Cycles (Image: AI/BIC)

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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