Is Bitcoin’s 4-Year Market Cycle Real?
Happy Birthday Bitcoin! On January 3, 2023, the Bitcoin blockchain turned fourteen years old. In some ways, 2009 seems like an eternity and in others, like it was yesterday. After 14 years, Bitcoin, the first successful cryptocurrency, is still king, and as king, the rest of the crypto market follows suit.
Throughout Bitcoin’s short history, its price has seen huge swings to new all-time highs, followed by retracements that reverse most of the gains. By studying the four Bitcoin market cycles, it becomes clear that aside from the first cycle, the others are relatively consistent in terms of timing.
This pattern is especially true for the last two cycles, which are very close to 4 years each from peak to peak and bottom to bottom. Some have speculated that this timing results from the Bitcoin halving that occurs roughly every four years (210,000 blocks mined). The question now is: is the 4-year Bitcoin cycle a real phenomenon or just a coincidence? And if it’s real, will it continue?
Dissecting Bitcoin’s Market Cycles
For clarity, this article defines a market cycle from one bear market low to the next.
Market cycle from 2010 to 2011
The first accurate Bitcoin price tracking was in July 2010. In October, the Bitcoin price started to rise and peaked on June 8, 2011, at $31.90. The price began to decline over the next five months and reached a low of $2.01 on November 19, 2011. This first cycle was the shortest of any cycle to date.
Market cycle from 2011 to 2015
Cycle #2 began at the bottom of the 2011 bear market on November 19, after which price rebounded almost immediately. After the rebound, there was a six-month period of consolidation. After BTC exited consolidation, it peaked at over $268 on April 10, 2013; a drop of 76% followed this peak.
BTC rallied almost immediately and reached a bull market peak of $1,177 on November 30, 2013. An 86% decline followed this peak; the bottom was reached on January 14, 2015.
Market cycle from 2015 to 2018
The third cycle began at the bottom of the 2015 bear market on January 14. For the first 9.5 months, the Bitcoin price accumulated in a range around $100. After Bitcoin price broke out of the accumulation range, it retested the range once before rising.
The upward movement culminated with the peak of the bull market at just under $20,000 on December 17, 2017. Once again an 84% price decline followed the peak and the trough was reached near $20,000. a year later, on December 15, 2018.
Market cycle from 2018 to 2022
The fourth cycle started on December 15, 2018 and after about four months of accumulation, the price of Bitcoin broke dramatically. Over the next three months, the price of Bitcoin increased by more than 200% and reached a high of $13,831 on June 26, 2019.
For the rest of the year, the price of Bitcoin slowly declined, but still ended up around 90% up for the year. The start of 2020 saw a 45% increase in the price of Bitcoin, which peaked in mid-February. This was followed by the COVID crash, which bottomed out in mid-March.
The recovery from the COVID crash was quick and eventually led to the next bull market. This bull market was reminiscent of the 2013 bull market. After rising for much of 2020, Bitcoin price peaked on April 14, 2021. This peak was followed by a 55% pullback that bottomed out on April 20. July.
Over the next month, the price of Bitcoin rose over 134%, leading to the bull market’s ultimate peak on November 10 at $69,000. The price of Bitcoin immediately started falling and just over a year later, on November 21, 2022, it hit what appears to be a low of $15,495.
Complete Bitcoin (BTC) Price History – Weekly Chart
By zooming out and looking at Bitcoin’s full price history, 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 dotted lines mark the bear market lows, with the time intervals between them.
Take note of the timing of the last two market cycles. They are close to a four-year cycle, peak to peak and bottom to bottom. Another interesting observation is the time of year when peaks and troughs occur.
Apart from the very first peak in 2011, all the others occurred in November, December or January. November has the most with two peaks and two troughs, assuming November 21, 2022 marks the trough of this bear market. Is it a coincidence or is there a reason behind it?
Another observation is that each low in the bear market is higher than the previous low. Will this continue? Below is another chart showing the full price history of Bitcoin.
Complete Bitcoin (BTC) Price History – Weekly Chart
The vertical lines on this graph mark each peak (green), when each halving occurred (red), and the date one year before each halving (yellow). The percentage increase in price is then measured between the vertical lines for each cycle. It is calculated for the year before the halving and from the halving to the next peak.
It is clear that with each successive cycle, the percentage increase in price for the year before the halving decreases. The same pattern is evident from the halving to the next peak. Again, with Bitcoin’s short history, it’s hard to know if this trend will continue or not. Visually, it’s easy to see the diminishing returns with each successive cycle.
Timeline for Bitcoin Bottoms – Halvings – Peaks
This graph shows how consistent the timing is from the bottom to the halving and from the halving to the next peak. The next halving is expected to occur on March 28, 2024. Just for fun, extrapolating data from other cycles places the next bull market peak at the end of October 2025.
Is there a meaning behind these patterns? Will these patterns continue? Can you even call these models with the limited amount of data? So many questions and because no one has a crystal ball, all people can do is watch the next Bitcoin market cycle unfold. It should also be noted that since many altcoins follow the price action of Bitcoin, there is also a crypto market cycle.
Will Bitcoin’s 4-year market cycle continue or evolve?
Another important question is how changing investor demographics will affect the Bitcoin market cycle. Over the past two years, the number of institutional investors has increased. The number of companies holding Bitcoin has also increased. As regulations are introduced into the sector, institutional investment will increase.
The days of only retail investors and traders buying Bitcoin are over. Will this trend affect Bitcoin’s market cycle? As investor demographics change, steep bear market pullbacks can become shallower. If this happens, it will not only affect Bitcoin, but the entire crypto market cycle as well.
Retail buyers will arrive late and panic when the market turns against them. As they become a minor part of the overall pool of investors, their effect on Bitcoin’s price will diminish.
Institutional investors and businesses will be more likely to hold onto their Bitcoin. And depending on their average cost, they can even withstand bear markets. Together, these changes can have a significant impact on Bitcoin’s market cycle.
What is the current state of the Bitcoin market?
The 2018 bear market low occurred two days before the first anniversary of the 2017 bull market peak. November 10, 2021 bull market peak.
It may be too early to say that November 21, 2022 is the bottom of this bear market. But, after 49 days of sideways price movement, Bitcoin’s price jumped over 50% to just under $24,000. The likelihood of it being the bottom continues to increase.
Bitcoin (BTC) Daily Chart
In the history of Bitcoin, a macroeconomic environment like the past 12 months has not happened. Inflation has reached levels not seen for 40 years. To combat this, central banks around the world have raised interest rates to slow economic growth. The unknown now is whether this policy will lead to recessions in some countries or worse worldwide.
A severe recession would cause markets around the world to plummet and would most likely put downward pressure on the price of Bitcoin. If a severe downturn can be avoided, 2023 should be a year of recovery for BTC. January is just days away and Bitcoin is up around 45% for the month, marking a great start to the year.
Historically, the meat of bull markets has happened after every halving. The next halving is estimated for the end of March 2024, so if this cycle follows past cycles, the next macro bull market should begin soon after.
Mark Twain is credited with saying, “History never repeats itself, but it often rhymes.” This appears to be true for Bitcoin market cycles. Whether the rhyme continues or not is anyone’s guess. What is becoming more and more evident is that every day draws closer to the most exciting time in crypto. Will you be ready for take off?
How to buy bitcoins
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