Alternate Market Cycle Thesis

[thecodebear]

Alright guys, we know the basic market cycle idea for Bitcoin is the 4 year halving cycle: Bitcoin goes up leading into the halving, explodes and peaks the year after the halving, then crashes, and repeat for the next halving.

In general I think that will continue, as I expect 2020 to be upwards and 2021 to be a huge year where the price goes parabolic again.


But..what if the market psychology has changed since 2017.
Ever since the 2017 boom a lot of people around the world have known about Bitcoin. Sure the vast majority didn't buy any, but a significant amount of people have known about Bitcoin since 2017, they know it shoots up and then crashes. Many of them still don't even realize it has done this plenty of times before 2017, they still think 2017 was THE big bubble and now its crashed and that's that for Bitcoin. People tend to be fear focused investors when it comes to Bitcoin and so most people haven't invested in Bitcoin because they just assume it will crash again (funny example: I had a coworker a year ago, when Bitcoin was sitting at the bottom, tell me he would surely buy Bitcoin once it crashes...needless to say I looked at him strangely as I made another purchase at the bottom) - they focus on the crashes not the gains or the overall uptrend picture.

Anyway, my new market cycle thesis is:

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

So my suggestions is that we've just been through the first of these smaller market cycles. Price more than quadrupled from $3100 to $13,900 in 3 months, then we had over 50% bear market that lasted 6 months. If this theory holds then we could see the price shoot possibly to around $20,000 or more in the next few months and then see another downtrend for most of the rest of the year before turning upwards again perhaps around end of year. Something more like a year long or less cycle of a few hundred percent gains followed by 50% or so crashes rather than a 4 year cycle of thousands of percent gains followed by 80% or so crashes.

Or we could just be in the same old 4 year cycle still   as so far it's pretty much tracking on pace with the previous cycle from 2015/2016.

[piebeyb]

yes some well-known people in bitcoin analyze the same thing about this 4 year cycle, I am also among those who support this analysis here

I also see people who have different thoughts in the price analysis with us out there very much, they predict prices below $ 5,000 and say that this cycle will not apply anymore, but still they must be appreciated whatever it may be possible in the crypto world, it seems that all prices follow the cycle that has happened up to now, but we are not proud of it, what do they think if the bear market continues to occur from 2018 to 2 to 5 years, maybe they are immortal bears, there are times when we really come out from the bear market isn't it

just look at the avatar I use seems like it's our cycle year now where the bullish market should come for everyone, consciously not aware that maybe a lot of people lost money and bled in 2018 - 2019, I think their emotions and feelings reached their peak in the year this and next year for holding back this, this is the peak

[Febo]

Ever since the 2017 boom a lot of people around the world have known about Bitcoin. Sure the vast majority didn't buy any, but a significant amount of people have known about Bitcoin since 2017, they know it shoots up and then crashes.

No one buys Bitcoin when he first hear of it. It takes some time for everyone. Some need few months, some a year and others few years. Bitcoin is not something that people gets familiar with really fast.  Usually the ones that buy Bitcoin after few months after they fist learn about spend those few months studying Bitcoin.   For me personally took like a year and a half.

[Wexnident]

Isn't it because it's well known that most would FOMO out of the halving? Let's be honest. Most, if not all traders whom enter the market because of the boom of 2017 have absolutely no Idea about how the market works. Now, they're pretty much just listening in to the halving, and see, they entered the market because of the result of the last halving. Now that the next one is coming, most of them would believe that the same would occur, since in the past halvings, they have shown similar results, just on different scales. They may have not entered the market as soon as they discovered BTC, but the enticement of possible profit should've pushed a few of them to enter it. Now, BTC has been pretty much on a roll since the start of the year, which is tbh, a part of the FOMO since you could already say this is the result of the halving FOMO.

[panganib999]

With the price growing a few percentages everyday, I'd doubt that the FOMO wouldn't achieve its goal of $15k and higher though. As for possible crashes, I guess the market is just waiting a point where they can exit it, a point where they would profit and they know that most of the traders would exit at that point in time. I'd say somewhere around $15-$20k is the exit point they are looking for? Since the last ATH was around there, and seeing as the FOMO has spread far and wide, fear has also started being rooted in their minds, fear that the halving would not bring a boom just like what happened last year.

[moviebuff777]

Your point makes sense but also consider that there is going to be a new group of investors this cycle that are going to FOMO in so there will be an increase but I agree it could be a little more conservative than last time.

In fact, the parabolic move in 2013 was more extreme than in 2017 so it could be even less volatile this time.

[gentlemand]

Bubbles are created by psychology. Psychology never changes. Delusion will descend again. People will arrive right at the peak convinced it will continue forever just like last time.

The actual size of it will be dictated by the numbers arriving and the amounts required to push it to certain figures. The attitudes will remain absolutely identical.

Take that to the bank and cash it.

The only thing that'll change it is pure speculation being overtaken by other factors.

[wheelz1200]

Alright guys, we know the basic market cycle idea for Bitcoin is the 4 year halving cycle: Bitcoin goes up leading into the halving, explodes and peaks the year after the halving, then crashes, and repeat for the next halving.

In general I think that will continue, as I expect 2020 to be upwards and 2021 to be a huge year where the price goes parabolic again.


But..what if the market psychology has changed since 2017.
Ever since the 2017 boom a lot of people around the world have known about Bitcoin. Sure the vast majority didn't buy any, but a significant amount of people have known about Bitcoin since 2017, they know it shoots up and then crashes. Many of them still don't even realize it has done this plenty of times before 2017, they still think 2017 was THE big bubble and now its crashed and that's that for Bitcoin. People tend to be fear focused investors when it comes to Bitcoin and so most people haven't invested in Bitcoin because they just assume it will crash again (funny example: I had a coworker a year ago, when Bitcoin was sitting at the bottom, tell me he would surely buy Bitcoin once it crashes...needless to say I looked at him strangely as I made another purchase at the bottom) - they focus on the crashes not the gains or the overall uptrend picture.

Anyway, my new market cycle thesis is:

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

So my suggestions is that we've just been through the first of these smaller market cycles. Price more than quadrupled from $3100 to $13,900 in 3 months, then we had over 50% bear market that lasted 6 months. If this theory holds then we could see the price shoot possibly to around $20,000 or more in the next few months and then see another downtrend for most of the rest of the year before turning upwards again perhaps around end of year. Something more like a year long or less cycle of a few hundred percent gains followed by 50% or so crashes rather than a 4 year cycle of thousands of percent gains followed by 80% or so crashes.

Or we could just be in the same old 4 year cycle still   as so far it's pretty much tracking on pace with the previous cycle from 2015/2016.

I dont believe in repeat markets.  While we can use certain data points as trend analysis, peoe are relying on this 4 year cycle to keep rinsing and repeating, the market and the environment is way different than the fall in 2015 and the parabolic rise in 2017, I dont expect the same cycle to happen because people learn from history and wont make the same mistakes with certain alt markets.

[YuginKadoya]

Analyzing the recent movement of Bitcoin we can depict the closest movement it can give us so analyzers sometimes can be quite accurate sometimes and looking closely to the Price of bitcoin right now it is surely going upwards in cooperation with the closing halving just like speculators all suggesting and have to analyze,

I think we can assume about 75% that the halving event has an effect with most bitcoin enthusiasts because of the recent event occur in the past just like this.

[exstasie]

Anyway, my new market cycle thesis is:

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

So my suggestions is that we've just been through the first of these smaller market cycles.

I have an alternate theory. It's based on this idea in Elliott Wave Theory called the "guideline of alternation":

The guideline of alternation states that if wave two of an impulse is a sharp retracement, expect wave four to be a sideways correction, and vice versa.

Sharp corrections never include a new price extreme, i.e., one that lies beyond the orthodox end of the preceding impulse wave. They are almost always zigzag (single, double or triple); occasionally they are double threes that begin with a zigzag. Sideways corrections include flats, triangles, and double and triple corrections.

Let's apply this idea to both the 2015-2017 bull market and the current one:



Working from left to right:

Last cycle's primary (ii) was a long sideways correction. Without going into details, I would term it a "double sideways correction" (for more info, see the section on "double and triple threes"). It did not reach the 50% retracement level and it took very long (5 months) compared to the primary wave (iv), which was a short-lived zig zag.

These distinctions become much more obvious when we switch to linear view:



Applying this idea to the current cycle: I would characterize the primary (ii) as a zig zag. Combined with the deep retracement of nearly 70%, I would definitely consider this to be a "sharp retracement." Thus, after a sufficient wave (iii) (which should surpass the 2017 ATH by a good margin) I expect wave (iv) to be a long, sideways correction.

In other words, I don't think the long term cycles are necessarily changing, becoming smaller in magnitude, accelerating, etc. I believe the corrections are just playing out differently (in alternated order) than they did during the 2015-2017 bull market. To me, nothing has really changed yet.

[thecodebear]

Your point makes sense but also consider that there is going to be a new group of investors this cycle that are going to FOMO in so there will be an increase but I agree it could be a little more conservative than last time.

In fact, the parabolic move in 2013 was more extreme than in 2017 so it could be even less volatile this time.

Yeah new money is new money, but the difference is now there are a lot of people who know about bitcoin because of the 2017/2018 boom/crash. From talking to people who casually know about bitcoin, they just say "it always crashes". I think in previous FOMO driven bull markets most of the people coming in had just recently heard about bitcoin because the price was going nuts so they FOMO'd in as quickly as they could - I know that was the case with me in Nov 2013, and multiple people I know in 2017, they heard of it and bought in very soon afterwards. But even the 2013 boom wasn't big enough to get Bitcoin real global attention. 2017 was - a very significant amount of the internet-going population now has heard about bitcoin. Sure plenty of them will FOMO in when it gets real hot, but there is a pervasive idea that "it always crashes" so I just see it being a possibility that bull runs now might be shorter and much smaller than what we would expect this next one to be based on previous ones.

And yes 2017 was smaller than 2013, and if the same huge bull run occurs on a halving cycle then the current bull run that culminates probably in 2021 will be much smaller than 2017. But it would still likely be high 5 digits or possibly creep over $100k. If it is the same ratio smaller than 2017 as 2017 was 2013 then it should go up to right around $100k.

Here in this alternate hypothesis of the psychology of the market moving forward, I'm talking about it being much smaller than that, and much shorter cycles. If the same cycle continues then it might go to $100k, which would be a much smaller run than 2017, but if this alternate theory holds I'm talking about several much smaller cycles playing out over shorter time periods (one of which we just saw in 2019), so that it will take several cycles (several years) to make it up to $100k or close to it, instead of one big cycle top in 2021 or thereabouts.

So if this were the case, instead of shooting for perhaps $100k in the next two years, it'd probably take maybe like 5 cycles over the next 4 or 5 years to go that high.

[thecodebear]

Bubbles are created by psychology. Psychology never changes. Delusion will descend again. People will arrive right at the peak convinced it will continue forever just like last time.

The actual size of it will be dictated by the numbers arriving and the amounts required to push it to certain figures. The attitudes will remain absolutely identical.

Take that to the bank and cash it.

The only thing that'll change it is pure speculation being overtaken by other factors.

True psychology doesn't change. But that doesn't mean the market is gonna play out the exact same way every time. The psychology of FOMO, greed, fear, etc will always be in play. But with new information - that people actually know about bitcoin already and they think "it always crashes", instead of  the people FOMOing having just learned about Bitcoin and they think for sure its gonna keep skyrocketing forever, market forces could sway a bit. This could lead to FOMOing at a more conservative level, basically people get too scared because "it always crashes" so they pull out sooner rather than assuming its gonna keep going up because now they already know about at least one past Bitcoin crash rather than the only thing they know about Bitcoin is that it is going straight up and everyone is going crazy about it.

[hello_good_sir]

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

A counterargument can be made to this just as easily - the fact that there has been so much gains in the crypto markets over the past few years every time there has been a halving shifts people's expectations towards the right tail every time a halving is close - which means that beliefs of price growth overshoots actual long term mean price growth.

But yes, I do think that the effects of what you've described will trump.

Given a larger market cap it is way harder to have FOMO affect the markets in a substantial way (or at least, in a way close to 2017 and 2013).

[1Referee]

Given a larger market cap it is way harder to have FOMO affect the markets in a substantial way (or at least, in a way close to 2017 and 2013).

It depends though. If enough time is given to accumulators, more coins are being kept offline and thus the actual available supply on spot exchanges will decrease significantly.

What I believe will be quite a barrier to break through is the $1 trillion market cap mark. It boils down to a price of ~$55,000 per coin. It's something in the legacy financial world holds a lot of weight. In times where we are seeing more institutional capital enter, that could turn out to be an exit point for some of them. It's purely speculation on my side, but it does make sense.

[gentlemand]

But with new information - that people actually know about bitcoin already and they think "it always crashes", instead of  the people FOMOing having just learned about Bitcoin and they think for sure its gonna keep skyrocketing forever, market forces could sway a bit. This could lead to FOMOing at a more conservative level, basically people get too scared because "it always crashes" so they pull out sooner rather than assuming its gonna keep going up because now they already know about at least one past Bitcoin crash rather than the only thing they know about Bitcoin is that it is going straight up and everyone is going crazy about it.

The people who are already here or know their stuff will be the ones who are out at the right ish time hopefully but even that's doubtful. Everyone else will be the same old toast. No newcomer comes to their senses just after arriving with dollar signs in their eyes. That's not how the average human works.

Every new rise comes with a new justification in the minds of those who turn up. That's what inspires the classic 'it's different this time' and it never, ever is.

[Soots]

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

A counterargument can be made to this just as easily - the fact that there has been so much gains in the crypto markets over the past few years every time there has been a halving shifts people's expectations towards the right tail every time a halving is close - which means that beliefs of price growth overshoots actual long term mean price growth.

But yes, I do think that the effects of what you've described will trump.

Given a larger market cap it is way harder to have FOMO affect the markets in a substantial way (or at least, in a way close to 2017 and 2013).

That's a 4 years long term holding, which I think we need to wait for more before it's going to wait for another FOMO, if nothings going to have positive changes. However, the large market cap needs to establish a good position until further hype initiated. When you project the possible timeline would be at 2021, base in my own opinion.

[pooya87]

But..what if the market psychology has changed since 2017.
Ever since the 2017 boom a lot of people around the world have known about Bitcoin. Sure the vast majority didn't buy any, but a significant amount of people have known about Bitcoin since 2017, they know it shoots up and then crashes. Many of them still don't even realize it has done this plenty of times before 2017, they still think 2017 was THE big bubble and now its crashed and that's that for Bitcoin. People tend to be fear focused investors when it comes to Bitcoin and so most people haven't invested in Bitcoin because they just assume it will crash again (funny example: I had a coworker a year ago, when Bitcoin was sitting at the bottom, tell me he would surely buy Bitcoin once it crashes...needless to say I looked at him strangely as I made another purchase at the bottom) - they focus on the crashes not the gains or the overall uptrend picture.

first of all i do believe that bitcoin price doesn't go up because of some arbitrary cycle and definitely not because of what some people think. instead it continues to go up because as the adoption grows the demand for this scarce currency increases. and that causes this type of cycles as there is a big adoption that leads to a big rise and since that causes a bubble in this small market, it is naturally followed by a bear run.

as for your theory it sounds to me to be THE reason for seeing an even bigger rise. in other words your theory may be correct but your conclusion is not.
the same reasons you mentioned (people knowing what happened in the past) is the reason why they do FOMO in the future. they have seen such cycles where price goes from $11 to $1200 or from $150 to $20000 or in other words 11000% and 13000% rise in 3 years and they have already seen the start of the same cycle yet another time ($3200 to $13000). it would be logical for them to jump on board so that they won't miss yet another cycle. so we could see a much bigger bubble this time, maybe 50000% rise ($1.6 million).
i know $1.6 million sounds big right now but $20k was also looking big when price was $150 so was $1200 when it was $11 and so w as $11 when price was $0.01

[hatshepsut93]

Because Bitcoin is well known in the world now, people will be less likely to engage in extreme FOMO when the price is shooting up because they now expect it to crash at any point, leading to smaller boom/bust cycles that take place over a quicker time period.

I can think of many reasons why Bitcoin will break its 4-year cycle pattern, and it might already be happening as the last years bull run wasn't fitting this model.
As any asset matures, volatility is expected to decrease, since liquidity of the market increases and uncertainty decreases. I think this is already slowly happening, I remember seeing a metric called Bitcoin's volatility index, and it's lower than it was in early days.

Next, big market movements are often unexpected, so it's quite possible that the post-halvening bull run will get delayed, or we'll have to go through another short bear market before it.

Also, halvenings are becoming less impactful, the supply is getting closer and closer to its cap, despite the fact that this point will only be reached in 2140, we will come very close to it in 2030's. So, there will be less and less reason to be bullish about halvenings if they aren't as impactful as in early days.

[thecodebear]

But..what if the market psychology has changed since 2017.
Ever since the 2017 boom a lot of people around the world have known about Bitcoin. Sure the vast majority didn't buy any, but a significant amount of people have known about Bitcoin since 2017, they know it shoots up and then crashes. Many of them still don't even realize it has done this plenty of times before 2017, they still think 2017 was THE big bubble and now its crashed and that's that for Bitcoin. People tend to be fear focused investors when it comes to Bitcoin and so most people haven't invested in Bitcoin because they just assume it will crash again (funny example: I had a coworker a year ago, when Bitcoin was sitting at the bottom, tell me he would surely buy Bitcoin once it crashes...needless to say I looked at him strangely as I made another purchase at the bottom) - they focus on the crashes not the gains or the overall uptrend picture.

first of all i do believe that bitcoin price doesn't go up because of some arbitrary cycle and definitely not because of what some people think. instead it continues to go up because as the adoption grows the demand for this scarce currency increases. and that causes this type of cycles as there is a big adoption that leads to a big rise and since that causes a bubble in this small market, it is naturally followed by a bear run.

as for your theory it sounds to me to be THE reason for seeing an even bigger rise. in other words your theory may be correct but your conclusion is not.
the same reasons you mentioned (people knowing what happened in the past) is the reason why they do FOMO in the future. they have seen such cycles where price goes from $11 to $1200 or from $150 to $20000 or in other words 11000% and 13000% rise in 3 years and they have already seen the start of the same cycle yet another time ($3200 to $13000). it would be logical for them to jump on board so that they won't miss yet another cycle. so we could see a much bigger bubble this time, maybe 50000% rise ($1.6 million).
i know $1.6 million sounds big right now but $20k was also looking big when price was $150 so was $1200 when it was $11 and so w as $11 when price was $0.01

Answer to First paragraph:
What you are describing is FOMO. The cycles aren't arbitrary, they are created by FOMO and fear. No where did I say the cycles are created arbitrarily or because of what some people think. The giant booms and busts of the cycles are FOMO and fear. But of course those things are driven by by what people think/feel - "oh my god I gotta get in now I'll make a ton of money" or "oh no I'm losing money I gotta sell it all now!"

Answer to Second paragraph:
I think you're missing the point that the average person views bitcoin as "it always crashes". People buy into FOMO because they see a skyrocketing price and they don't know any better. Most people who buy into it late in the bull market and then end up losing money as it crashes are doing so because they just found out about Bitcoin and they hear how everyone is making money and so they jump in. What I'm saying is that after 2017, for the first time, a very significant amount of the internet-going population has already heard of bitcoin and while they know it goes up a ton they are skeptical and their general view of bitcoin is "it always crashes", not "it always makes people tons of money", even though the long term results support the latter statement.

These people who simply have heard of bitcoin and know a little bit about it, who could consist of the new money in the future, don't know intricate details of bitcoin or its price history. Most of them think it was just a single bubble that occurred in 2017 and now it is crashing down. Also they don't focus on the huge gains, as you do above, they focus on the huge crashes. They focus on how people who bought into the FOMO then watched the price crash 80% and suffer huge losses. That's what they focus on. Because anybody who focuses on the huge gains of bitcoin is already in Bitcoin! Because if you understand Bitcoin's potential for such massive gains you're already gonna be owning bitcoin! Of course more and more of these people will get a more proper understanding of Bitcoin in time, but in terms of new money buying into FOMO this new money thinks "bitcoin always crashes" now that they know what Bitcoin is thanks to 2017/2018. So it is very possible they will gradually come in on succeeding smaller cycles rather than all piling in on one big 4 year cycle. And it is very possible because they view bitcoin as always crashing, that new money will get in and out quicker than before, counting themselves lucky for not getting caught in a crash, making smaller shorter cycles where the FOMO doesn't allow the price to build up nearly as much as previously.