23 April, 2024



Bitcoin’s 4-Year Cycle: Tracking Timing and Recovery Patterns

01 Aug, 2023

06 Nov, 2023

  • Bitcoin’s 4-year cycle exhibits three distinct phases, each marked by specific events and price behavior.
  • On-chain analysis allows gauging unrealized profits and losses, providing unique market insights.
  • Blackrock’s ETF approval and the possibility of a recession are significant factors that could influence Bitcoin’s trajectory within its cycle.

The world of cryptocurrencies has its fair share of mysteries, but one phenomenon that continues to captivate investors and analysts alike is Bitcoin’s 4-year cycle. This intriguing pattern, comprising three phases, holds even as the digital currency evolves. On-chain analysis has emerged as a powerful tool for understanding the market’s dynamics, shedding light on the real-time profit and loss scenarios in Bitcoin’s history.

Root, an on-chain and cycle analyst, shared insights about Bitcoin’s current market state and its 4-year cycle:

In this captivating cycle, the first phase commences with the Halving event, historically signaling the start of a full-grown bull market. During this period, fresh demand surges, leading to exponential price increases. The hype typically lasts for a year, culminating in a double top, as seen in 2013 and 2021, or a single top, like in 2017 and possibly 2025.

After the exhilarating bull market, Bitcoin enters the second phase – a year-lasting bear market with an 80%+ drawdown and multiple capitulation events. The ultimate low point, or bottom, is usually reached by the end of this year. It is a period of despair for many investors, but it sets the stage for the longest and final phase of the cycle – a 2-year recovery.

Bitcoin’s price generally rises slowly during the recovery or early bull market. Approximately six months into this recovery phase, Bitcoin has recouped around 30% of the total drawdown from $69,000 to $15,000, now hovering around $30,000. On a cycle basis, it is expected that Bitcoin may recover the remaining 70% over the next 1.5 years, aiming to surpass the $40,000 mark by the next halving in April 2024.

However, this predictable cycle is not without its risks of deviation. In previous cycles, Bitcoin showed rapid recoveries, akin to the 65% bounce observed in 2019 when news of Facebook’s Libra project hit the scene. But these gains were short-lived as Bitcoin corrected back to its baseline, showcasing red colors. Despite a 30% recovery in the current cycle, it has maintained a trajectory closer to the expected recovery pattern.

The potential approval of the Blackrock ETF presents both opportunities and uncertainties. It could fuel a faster recovery if approved by mid-August or even in Q1 2024. Nevertheless, the more likely scenario is a postponed decision until February 2024, aligning with the halving in Q2 2024, a combination that could keep Bitcoin on track with its 4-year cycle.

Conversely, the possibility of a recession could disrupt Bitcoin’s cycle. Though no historical precedent exists for Bitcoin being in a recession, its perceived correlation with the S&P 500 indicates a potential for temporary turmoil. Nevertheless, Bitcoin’s maturing process includes being perceived as a risk asset in traditional finance, as it eventually decorrelates.

As of now, Bitcoin is valued at $28,897, experiencing a 1.17% decrease in the last 24 hours. After encountering repeated rejections, the cryptocurrency broke below the crucial $29,000 support level. Notably, its trading volume stands at $13,190,667,402. Currently ranked 1 on CoinMarketCap, Bitcoin holds a live market cap of $561,911,177,189. Its circulating supply comprises 19,444,768 BTC coins, with a maximum supply capped at 21,000,000 BTC coins.

In conclusion, Bitcoin’s 4-year cycle has proven to be a reliable guide for understanding its timing and recovery patterns. On-chain analysis provides invaluable insights into the market’s current state, making this a captivating journey for enthusiasts and investors. While potential catalysts like the Blackrock ETF approval and the specter of a recession loom, only time will reveal how this digital pioneer weathers the storm and emerges stronger in its quest for mainstream adoption.

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