Is Bitcoin Naturally Defined By 4 Year Boom And Bust Cycles

[Hydrogen]

A brief timeline of crypto history.

2013  Bitcoin reaches a new all time high. Then crashes as silk road is shut down. Ross Ulbricht is arrested. And china bans financial institutions from buying or selling bitcoin.

2017  Bitcoin reaches a new all time high. Then crashes amidst allegations of bitfinex and tether market manipulation of btc. And china reportedly bans cryptocurrency exchanges.

2021  Bitcoin reaches a new all time high. Then crashes. The first event in the crash is attributed to chinese crypto miners being forced to shut down from alleged electricity shortages caused by coal power plant outage.

Based on the above, might it be fair to expect another bitcoin all time high, followed by a crash in 2025?

Will bitcoin naturally be defined by 4 year boom and bust cycles.

Due to its rewards halving being based around approximate 4 year cycles?

[jackg]

We're closer to 3 years from the last crash at the moment though..

I think the bullish parts of the cycles start to increase in time as we go along too (you're attributing a lot to China, I heard nothing memorable of them banning anything in 2017 - probabky fud).

The big crash also was probably 2018 last time? January had a massive red candle while december closed green.

[The Sceptical Chymist]

Based on the above, might it be fair to expect another bitcoin all time high, followed by a crash in 2025?

Maybe, but this could also be a case of seeing a pattern where one doesn't exist--and keep in mind that you've only got three data points here.  Plus bitcoin has tended to be quite unpredictable, so it wouldn't surprise me in the least if this 4-year cycle hypothesis doesn't turn out to be true.  If it were true, it would be an easy way to make money since you'd know when the market is going to peak--and I don't believe there's any way to make easy money like that.

Nor am I sure that any of this has to do with the halvings.  This time around I'm almost certain that Elon Musk's actions affected bitcoin's price significantly, whether it was his words or him selling it.  I'd also point out that as of right now it's far too early to call off the bull market.  It's only been just over a month since bitcoin hit its ATH, and while its value has been almost cut in half since then, there's a decent chance (IMO) that it could rebound.  I'd say we'll have a better picture of any emerging trend in a month or two.

[Poker Player]

Maybe, but this could also be a case of seeing a pattern where one doesn't exist--and keep in mind that you've only got three data points here.  Plus bitcoin has tended to be quite unpredictable, so it wouldn't surprise me in the least if this 4-year cycle hypothesis doesn't turn out to be true.  If it were true, it would be an easy way to make money since you'd know when the market is going to peak--and I don't believe there's any way to make easy money like that.

In reality, patterns are human constructs that we use to understand reality, but not something that exists. In this case, we see a certain regularity three times in the past and assume it will be the same in the future, but there is no guarantee that the pattern cannot change. Although in this case, it is not just a few isolated numbers and graphs, the reduction in supply due to halvings seems to support this trend to a certain extent. So we can assume that this will be the trend in the future, even if it does not follow a deterministic pattern and may change.

[SFR10]

Based on the above, might it be fair to expect another bitcoin all time high, followed by a crash in 2025?

In theory, maybe ^{[great points but not sure about their accuracies]} but in reality, past events might never happen again.

Will bitcoin naturally be defined by 4 year boom and bust cycles.

Due to its rewards halving being based around approximate 4 year cycles?

That might be a contributing factor but I'm sure there were and there will be other things that would affect its ^[market] behavior in the future and that could lead to different results.
This might come in handy: BTCitcoin's historical corrections from all-time highs
^{- Also posted by @bitmover.}

[avikz]

Most probably yes! I mean that's what the trend is currently showing us! After 2017's dream run, bitcoin crashed to 3k level in 2018 and then after 3 years, we crossed 60k level. So if we do the trend analysis, that's the exact picture we will see!

But I doubt bitcoin will ever reach to 3k level again. As the ATH is increasing its limit, the bottom should also increase its position. So it's safe to assume that the next ATH will be even bigger than 60k and most likely to happen around 2025.

[Kong Hey Pakboy]

Most probably yes! I mean that's what the trend is currently showing us! After 2017's dream run, bitcoin crashed to 3k level in 2018 and then after 3 years, we crossed 60k level. So if we do the trend analysis, that's the exact picture we will see!

But I doubt bitcoin will ever reach to 3k level again. As the ATH is increasing its limit, the bottom should also increase its position. So it's safe to assume that the next ATH will be even bigger than 60k and most likely to happen around 2025.

The 2020-2021 trend a bit different though, 2018 crash happened in January while the crash this year is still debatable since the prices are still that high, I would say that this year with more institutional investors and mainstream appeal, I would say that this is a different trend.

[bryant.coleman]

Being a cryptocurrency investor since 2012, I guess I have more knowledge when compared to most of the other posters about what happened in 2013/14 and 2017/18. At this point, it will be interesting to analyze what caused the crash in 2018. China had zero contribution to the 2018 dip. What happened was that many of the shitcoins got pumped by 100x or 200x in 2017, due to the overall hype. And after a certain point, the promoters of many of these shitcoins dumped their coins and made the exit. Some of the most infamous cryptocurrency scams (such as PlusToken and OneCoin) also took place during the 2017/18 period. These scams triggered the correction of 2018, which was further exacerbated by various other factors.

[paxmao]

Only partially in my opinion. The price of bitcoin is all about supply and demand, and has the peculiarity that very little bitcoin moves in one day compared to the stores available in the accounts that are known to be active.

If you look at the 4 year cycle, you will be looking at the supply side, so you would be missing half of the equation and ignoring the reserves of bitcoin. So, yes the 4 year cycle is short of a self-fulfilled prophecy, but it would mean nothing if it were not for the traction that bitcoin is getting among a wider owner´s base than ever before, and for the investments that are being done through traditional funds and others.

[davis196]

Definitely yes!
What else do you expect from a financial asset that has a limited supply and really unstable demand.
The BTC market is going between FOMO and FUD.There's no stability.
This boom and bust cycle is a great advantage for all the crypto whales,investors and gamblers and a big obstacle towards mass Bitcoin adoption.Small businesses want a stable price,in order to accept BTC payments.Spending a currency,that will become way more valuable tomorrow is nonsense.

[buharikx31]

Personally I think we would see this cycle come again several times, but it definitelly cannot be for so long happening, but yes definitelly people are waiting for next halving to buy in some tokens and another bull period to happen.
I expect that to be not that pereodical and maybe in a future it would be as a Forex index market more stable and not that volatile

[Lucius]

I would not end the story with 2021 so easily by saying that we have reached absolute ATH and that the scenario from 2013 or 2018 is now repeated. For such a conclusion, we should still wait until the end of this year - although we will find out before that, but we will still be able to say that all those who claim that we have entered the bear market, which by them should last until 2024/25, are right or not.

Although this is not just about halving exclusively, it is still a constant that everyone is counting on, and this was no exception this time either. However this year ends, halving 2024 is likely to produce similar effects as in the past - of course if nothing happens in the meantime that would make halving meaningless.

[Kittygalore]

Nope, I don't think so, the prices are going strong this year despite the drop from 60k to 40k. I think that this year is going to be a little bit different than the other previous year, this might be the cycle breaker.

[RealMalatesta]

Only partially in my opinion. The price of bitcoin is all about supply and demand, and has the peculiarity that very little bitcoin moves in one day compared to the stores available in the accounts that are known to be active.

If you look at the 4 year cycle, you will be looking at the supply side, so you would be missing half of the equation and ignoring the reserves of bitcoin. So, yes the 4 year cycle is short of a self-fulfilled prophecy, but it would mean nothing if it were not for the traction that bitcoin is getting among a wider owner´s base than ever before, and for the investments that are being done through traditional funds and others.

The fact is that supply and demand but the reality is that there are cycles and that is why there is a chance we could end up with the same 4 year cycle over and over again. That supply and demand gets impacted by something else all the time, Elon writes and changes the price, mt.gox was probably the first news and that got it down and ever since that one the price changed a ton as well and that is why there was a big up and down probably at least once a year.

So long story short there is a factual basis on this, sure it is still supply and demand and that is changed constantly as well and that is why we are not really worried that much about the supply and demand when there is a fall because we know that every fall is followed by an increase and every increase is followed by a fall.

[Mauser]

I am not sure if 4 years are correct, but it might be. I noticed that financial crisis tend to happen in 10years intervals. But the finance market is much more regulated. For bitcoins and other cryptos it should probably occur more often. One important thing is also the bitcoin having process happens every 4 years. So maybe in the year of having we see higher prices which will then drop afterwards in the next years. But one good thing is that the long term trend is upwards.

[just_Alice]

Though it is said "Once an accident, twice a coincidence, three times a pattern", strange as it may sound..might it be just a coincidence this time? I just don't see any logical explanation behind these 4-year periods. But what isn't a coincidence is China's involvement in all this. Honestly, up until now, I didn't realize that they were going against crypto all along.
And regarding halving, though it is known that Bitcoin price naturally goes up after each halving, we can see that in all these years the real surge in price was caused rather by something political, social, than technical.

[wahyu wida]

I am not sure if 4 years are correct, but it might be. I noticed that financial crisis tend to happen in 10years intervals. But the finance market is much more regulated. For bitcoins and other cryptos it should probably occur more often. One important thing is also the bitcoin having process happens every 4 years. So maybe in the year of having we see higher prices which will then drop afterwards in the next years. But one good thing is that the long term trend is upwards.

maybe it just happened to happen, but this habit can be used as a reference in a four-year cycle, and after this means, should we be careful because there will be a decline similar to starting in 2018? I think anything can happen, the most important thing is we have to trade safely at all times

[jrrsparkles]

Surprisingly China involved in all the incidents.

Until now it was 4 year per cycle but lest time we are much sooner than 4 year so probably the next cycle of ATH will be in 2024 middle or towards the end.

[Darker45]

This looks interesting, but, honestly, I don't think there is something more to this than mere coincidence. I mean, those things that you mentioned which apparently played a major role in the price movements of Bitcoin didn't take place following a schedule. In no way anybody could have predicted those events to happen. They just happened.

Also, I think it is hard for one to create a technical prediction or a time frame for the price of Bitcoin using fundamentals.

[Wexnident]

Well, history speaks for itself so I suppose so. Every 4 years does limit the current supply of its Bitcoinhence affecting the market, but honestly, I hardly doubt it's the main reason for the boom and bust of Bitcoin for those cycles. It's more like the situations where Bitcoin goes boom just happen to be in a cycle of 4 years, with those 4 years being a buffer for the boom in the end.

But hey, in the end, this IS Bitcoin we are talking about. I wouldn't entirely be surprised if it suddenly changes its cycle all of a sudden. Ideally, it wouldn't be good to completely base the movement on the 4-year cycles, BUT it is good to take it into account and make decisions using it as a part only.