Is Bitcoin's 4 year cycle only coincidence? (This could be actually good news.)

[d5000]

Many Bitcoiners seem to take it for a "given" that Bitcoin's price moves in 4-year cycles ending with an ATH:

• First cycle: 2009-13 - with ATH ~$1100

• Second cycle: 2013-17 - with ATH ~$19600
• Third cycle: 2017-21 - with ATH ~$69000
• Fourth cycle: 2021-25 - ATH: $???

There seems to be also a widespread acceptance that in the cycle there has to be a bear market with drastic price reduction (75%-93%).

But what if this all is only a coincidence? Let's analyze the arguments for this assumption. I already will say that I'm myself not sure which is the correct answer. So maybe we come closer in the discussion.


1) First argument in favour of the "coincidence hypothesis": There were actually only two complete 4 year cycles.

The argument is based mainly on the fact that 2009-2013 cannot be viewed as a single cycle, it was at least 2, perhaps 3 cycles. At least the high in 2011 ($32) followed by an extreme bear market with a very pronounced low ($2) should be viewed as a separate cycle.

I think there are even reasons to assume that in 2013 we had a separate cycle too: The April high ($260) could have been seen as an important top too, if we take into account that the price then lowered over 80% in a few months to a low of $50.

We could counter this argument saying that the market was immature back then and thus wild swings were normal. But I think we still can't say that 2009-13 was really a "cycle" like 2013-17 and 2017-21 were. There was, for example, no real crypto winter, perhaps late 2011/early 2012 but it was much shorter than in other occasions.

And the 2021-XXXX cycle has probably not ended still. We don't know if the high will be in 2024, 25 or even later ... it could even be a Supercycle.

2) Second argument: Above all the bear markets were driven, in several occasions, by external factors and news.

This is actually the strongest argument for the "coincidence" hypothesis, I think.

Let's analyze first the most obvious case: the coronavirus pandemic in 2020-22. I think it was obvious that this event caused the crash in March 2020, which looked like a clear anomaly in the chart. But let's look further. In 2019, the price had actually come very close to the 2017 high. If the Covid crash didn't happen, it is quite likely that in early to mid 2020 already a new ATH could have been recorded - perhaps before the halving event. Maybe the top of this cycle could also already happened much earlier, perhaps even still in 2020, or in early 2021.

So the second cycle could have already been in reality a 3 or 3.5 year cycle if Covid did not happen.

But there's more.

The deep 2015 crypto winter was very likely caused by the MtGox insolvency. We have to first realize what MtGox was in this era. MtGox was the only really relevant Bitcoin exchange. Yes, there was Bitstamp, BTC-E and some Chinese exchanges. But they had a very small market share. MtGox was completely dominant. And thus, I guess a large part of the then-Bitcoiners lost money in this insolvency.

We could thus assume that the 2014-2015 crypto winter could have been much less deep in "normal conditions" without such a catastrophic event. And that could, again, have caused an early recovery of the price, with perhaps an ATH already in late 2015 or 2016. Or even earlier. We don't know and never will.


Okay, so there are mainly two arguments for the "coincidence hyptothesis". But why could this actually be good news? You could think now that this might be even bad: we couldn't be sure that there's a predictable event like the halvings which is followed by a bull market ...

My theory: It could be good news because it means that it's not necessarily a "given" that Bitcoin has to crash as deep as it did in the past. So it's perhaps likely that future bear markets could be shorter and much less pronounced.

If people understood that many bear markets were caused by external influences, this would already perhaps reduce the amount of panic in downward phases. I've already mentioned MtGox. But there's more: The 2022 crash could have been much less deep if neither Terra/Luna nor the FTX insolvency happened. And there was also the Ukraine war which brought deep uncertainty into the markets.

Even if you don't agree, I think it's a fact that there is no "natural" force that drives Bitcoin prices down 70-80% or more in bear markets. In my opinion it's a combination of these "bad news" events, people panicking, and whales and speculators making profits shorting Bitcoin when they think a panic could occur. Like yesterday. There could be natural phases where the interest in Bitcoin dwindles, but that would probably not justify such deep crashes. BTC could behave more like other assets like big cap stocks, with occasional 20-30% crashes/bear markets but not much more.


What do you think? I'm still undecided, but I think the "coincidence hypothesis" is worthy to be discussed.

[1715272957]

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[1715272957]

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[FatFork]

This is interesting analysis! The 4-year cycle theory for Bitcoin's price is definitely a popular one, but I think it's smart to look at other perspectives too.  Just because something held true in the past doesn't mean it'll keep being accurate all the time. I agree that the early days of Bitcoin were pretty rampant and hard to predict, so maybe that activity doesn't perfectly line up with the 4-year cycle timeline we see now.  Plus there's all kinds of stuff like pandemics, hacks, politics that can crash prices even if the cycle theory is real and  could be both things play a role.  The cycles drive overall trends but big external events trigger unpredictable swings.  No one really knows for sure I guess.  We'll just have to wait and see if the cycles hold up over decades or if random chaos and headlines win out in the end.

[virasog]

This is interesting analysis! The 4-year cycle theory for Bitcoin's price is definitely a popular one, but I think it's smart to look at other perspectives too.  Just because something held true in the past doesn't mean it'll keep being accurate all the time. I agree that the early days of Bitcoin were pretty rampant and hard to predict, so maybe that activity doesn't perfectly line up with the 4-year cycle timeline we see now.  Plus there's all kinds of stuff like pandemics, hacks, politics that can crash prices even if the cycle theory is real and  could be both things play a role.  The cycles drive overall trends but big external events trigger unpredictable swings.  No one really knows for sure I guess.  We'll just have to wait and see if the cycles hold up over decades or if random chaos and headlines win out in the end.

Well, we need to realize that Bitcoin 4-year cycle of bear and bull markets is not driven by the news events. We try to link that because of certain events and fundamental good and bad news, the market experiences this phase and therefore we are not sure it if will be repeated again or not.

I would tell you that this Bitcoin 4 years cycle is because of the Halving event where the supply cuts in half and the demand keeps on increasing and this results in a parabolic bull market. This happened in the past and it will happen in the future too. So as long as there is halving, we will experience this 4 year's bitcoin cycle. It does not matter if there is pandemic in the world or lots of Geopolitical tensions, the bitcoin halving is independent of these factors.

[d5000]

I would tell you that this Bitcoin 4 years cycle is because of the Halving event where the supply cuts in half and the demand keeps on increasing

So after the halving in a few days, there will be only 10.5 million Bitcoins left? (This would be the case if I took the highlighted part literally.)

I agree that the halving-driven cycles assumption is the most popular theory. And I also don't want to ruin the halving party.

But is this theory correct? Think about how many Bitcoins are actually sold by miners every day, and how many Bitcoins are sold by traders, short- or mid-term-hodlers taking profit or cutting losses, or panicking, ETF managing companies selling outflows (GBTC for example), and so on. The second group makes up actually about 99.8%+ and miners only 0,1 to 0,2%.[1] After the halving in 2024, miners' share in sold coins will go down to 0,05 to 0,1%.

Also think about the bull-bear cycles in general: There's often a large part of the bull market actually before the halving. The current bull market started in November 2022, at $15.000. Far away from any halving.

So I think the halving theory at least can be challenged, which is what I'm doing with this post. I actually think halvings have a small incidence, but it's less with every cycle. The 2012 halving indeed had quite a big incidence though in my opinion, because it ended basically the "free" bitcoin mining with the home PC.

What has incidence indeed is that miners's supply in comparison to the already mined coins is reducing. But that can only be a reason (together with what we call "adoption") for the long term price trend, it can't really explain the bull/bear cycle.

[1] To do the math: In the last 24 hours about 700000 coins were sold on exchanges. Miners sell 900 coins per 24 hours. That's 0.128%.

[hatshepsut93]

But is this theory correct? Think about how many Bitcoins are actually sold by miners every day, and how many Bitcoins are sold by traders, short- or mid-term-hodlers taking profit or cutting losses, or panicking, ETF managing companies selling outflows (GBTC for example), and so on. The second group makes up actually about 99.8%+ and miners only 0,1 to 0,2%.[1] After the halving in 2024, miners' share in sold coins will go down to 0,05 to 0,1%.

This is why the halvening cycles should logically just stop - halvening does not affect the selling pressure anymore, it doesn't change the balance of supply and demand like it did in the first halvening eras.

So it could mean that the next cycles, maybe even the recent one too are driven by pure speculation - price goes up because traders expect it go up and invest, then when they see that the price got very high and stopped growing, they rush to take profits while they can and cause a crash - and with the crash the mood changes to bearish for quite some time. But this too can't go on forever, because when the pattern becomes recognized by everyone, traders will trade against this pattern, since it would be more profitable, and thus will ruin the pattern.

[d5000]

So it could mean that the next cycles, maybe even the recent one too are driven by pure speculation - price goes up because traders expect it go up and invest, then when they see that the price got very high and stopped growing, they rush to take profits while they can and cause a crash - and with the crash the mood changes to bearish for quite some time.

This is also the assumption I have: speculation mixed with events, and the halving being one of these events. Basically I think in the last 2-3 cycles the following chain reaction could have happened:

- Phase 1: Depression. Some smart traders accumulate once the price stabilizes around a low.
- Phase 2: These traders detect an event which could stimulate demand, and start to amplify theories about this in social media and/or media outlets in the case of bigger whales. The halving being one of them, ETFs and other "adoption"-related news are other such reasons. Bull begins to roar, but still insiders are the majority, large "retail" sectors are still not showing attention.
- Phase 3: Retail joins the bull market as they see the price goes up. The reason for the uptrend now doesn't matter anymore. FOMO is winning over rational explanations. (In my opinion we are already in this phase but still early, despite the recent dumps - these are mainly relatively small corrections.)
- Phase 4: Whales begin to sell, and retail soon joins just when prices begin to plunge. Bear market begins until most of those wanting to sell are out and depression arrives.

While this can be said about all bubbles (Elliot wave model is for example based on these assumptions), Bitcoin market has some specific characteristics:

- The halving as a bullish event. Halvings always occured during bull markets and the bull market continued then. Even if it was a coincidence, and demand/supply equation is not fundamentally touched by the halving, those saying that "halving is bullish" have empirical reasons for their assumption, so they can successfully "sell" it as a bullish event. So we could still see a pump each 4 years even if the "cycles" are already a thing of the past.
- Bitcoin-related events, like exchange insolvencies, new ETFs etc. These can amplify or reduce the influence of the general "wave pattern". See my theory about MtGox above.
- Interconnection with altcoin and NFT markets. These are retail-driven markets, so they obey rules about "trends" and "fads". A waning fad can influence the crypto market as a whole negatively (2018's ICO collapse?), but if there is hope again, it can influence BTC price positively (2019 recovery?). It's possible, for example, that the Ordinals wave contributed to the growth of BTC in 2023.
- The fact that Bitcoin is considered a risky asset. So it's vulnerable to events like wars (we're seeing that now) but also to interest rate changes.

But this too can't go on forever, because when the pattern becomes recognized by everyone, traders will trade against this pattern, since it would be more profitable, and thus will ruin the pattern.

Yes, this is quite interesting, it would be logical but it seems no bigger trader group has really challenged the 4-year cycle until this point (Again, it were only 2 complete cycles though). However I think there are good reasons that the current cycle could be shorter, i.e. with a maximum in late 2024 or early 2025 already, and not late 2025 like the "established theory" says.

There were however some "false truths" challenged, for example that Bitcoin never falls below a previous ATH (broken in 2022, probably because of a combination of Terra/Luna and FTX).

[philipma1957]

This cycle is not so much a 1/2

12.5 + .5 = 13 coins dropped to 6.25 + .5 = 6.75 which is maybe 45%

but now

6.25+ .75 = 7 coins drops to 3.125+ .75 = 3.875 this drop is maybe 38%

so the ½ ing is a .62 or a .65

I agree we are watching a shift in the four year cycle 🔄

[EarnOnVictor]

-snip-
What do you think? I'm still undecided, but I think the "coincidence hypothesis" is worthy to be discussed.

Without mincing words, I've always noticed that Bitcoin gained the cycle popularity for two main reasons, which are; 1. Through halving (the main scarcity plan with the economics of limited supply and high demand originally planned by Satoshi) and 2. The tradition attracted by halving.

Owning to number 1, Bitcoin was never planned to move in cycles, it is just coincidental as it was only planned to be scarce. The scarcity could be evenly achieved without translating into a cycle and would have just helped it grow. And initially, Bitcoin never behaved so hugely as it later did afterwards, the performance was gradual based on how gradually it was attracting investors' attention. But the fact that people buy and dump it depending on how it behaved before and after halving made it naturally create some kind of cycle, a tradition that now translates to the periodic cycle as we see it now.

In other words, the halving is so important here, it becomes the cause to attract investors at some specific time (pump/FOMO). After a while that the effect of the halving has been effectively weighed in the market, people start dumping Bitcoin again due to FUD and the fear of losing back their gains. At this point, it will attract little or not investment which will overall lead to massive dump. This two scenario become the tradition as Bitcoin gain more popularity and more people adopt it. They now embrace this as a reality which I do not think will ever change unless something serious forces the change.

However, I don't think that can be good if this cycle changes.

[davis196]

First cycle: 2009-13 - with ATH ~$1100
Second cycle: 2013-17 - with ATH ~$19600
Third cycle: 2017-21 - with ATH ~$First cycle: 2009-13 - with ATH ~$1100
Second cycle: 2013-17 - with ATH ~$19600
Third cycle: 2017-21 - with ATH ~$69000
Fourth cycle: 2021-25 - ATH: $???

Why the question marks after the fourth cycle? The Bitcoin ATH price already broke the 69000 USD mark and reached 73K USD. I guess that the 73K USD ATH price level could be destroyed by a higher ATH after several months, but this is just a possibility.
It's weird that we faced a price correction in the middle of March, and right now(the middle of April) we are facing another price correction.
Is this a coincidence or a pattern? I don't know how big are going to be the future price drops, but we can't be sure that the future bear markets will be modest in comparison to the old bear markets. Bitcoin will always remain volatile and I'm sure that the Bitcoin price will always move in a rather unpredictable way, leaving most of the BTC traders surprised in the short term.

[jossiel]

My theory: It could be good news because it means that it's not necessarily a "given" that Bitcoin has to crash as deep as it did in the past. So it's perhaps likely that future bear markets could be shorter and much less pronounced.

If people understood that many bear markets were caused by external influences, this would already perhaps reduce the amount of panic in downward phases. I've already mentioned MtGox. But there's more: The 2022 crash could have been much less deep if neither Terra/Luna nor the FTX insolvency happened. And there was also the Ukraine war which brought deep uncertainty into the markets.

I'd support you with this theory, why? Because if we go back just a few years back on 2021, the narrative and cycle was truly different at that time. So, knowingly 2021 was the bull run and should be followed by a terrible bear market on 2022 but did we felt that? I don't think so, it's totally different and far from expected bear and slump market on that year, we didn't even felt that it was one.

Even if you don't agree, I think it's a fact that there is no "natural" force that drives Bitcoin prices down 70-80% or more in bear markets. In my opinion it's a combination of these "bad news" events, people panicking, and whales and speculators making profits shorting Bitcoin when they think a panic could occur. Like yesterday. There could be natural phases where the interest in Bitcoin dwindles, but that would probably not justify such deep crashes. BTC could behave more like other assets like big cap stocks, with occasional 20-30% crashes/bear markets but not much more.

IMO that we're like back in the narrative and fundamentals on 2016-2017 where not just all about the craze of ICOs but also driven by the bad news.

We've got a better cycle this one because drivers like halving + etfs are more enthusiastic than of the past. 2022 bear's lowest was around $16k and it was just 4.2x away from the ATH of $69k of 2021.

[d5000]

I agree we are watching a shift in the four year cycle 🔄

But you still think the "halving-driven cycle" theory as a whole holds, it seems

But the fact that people buy and dump it depending on how it behaved before and after halving made it naturally create some kind of cycle, a tradition that now translates to the periodic cycle as we see it now. [...] In other words, the halving is so important here, it becomes the cause to attract investors at some specific time (pump/FOMO).

I agree here. I think from 2016 onwards it was this effect largely which has driven the post-halving rally: In 2013 it worked, so in 2016-17 it would work again. And 2020 again, even in the middle of a pandemic. This "tradition" to buy/invest (and feeling bullish) if a halving is in sight could be actually more important than the reduced miner supply at the markets.

After a while that the effect of the halving has been effectively weighed in the market, people start dumping Bitcoin again due to FUD and the fear of losing back their gains. At this point, it will attract little or not investment which will overall lead to massive dump. [...] I do not think will ever change unless something serious forces the change.

I disagree partly with the last sentence. Knowing this pattern could just make it also attractive to trade against it. I feel we're seeing this already, the bull market seems to be in a much more advanced stage in 2024 than it was at 2020's and 2016's halvings. So actually the big dump could come earlier and earlier. This is also why I'm expecting a local high in late 2024 or early 2025, and not late 2025 (like if the cycles were exactly 4 years long). This however woud not be something "serious", but something rather natural. It also does still not invalidate the "halving-driven cycle theory".

However, I don't think that can be good if this cycle changes.

Want to elaborate on that? Do you fear less speculative capital inflow in later bull markets if the market becomes more unpredictable?

Why the question marks after the fourth cycle? The Bitcoin ATH price already broke the 69000 USD mark and reached 73K USD. I guess that the 73K USD ATH price level could be destroyed by a higher ATH after several months, but this is just a possibility.

Because I'm referring to the "final cycle ATH", and of course we don't know if we have reached it already. If the cycle lasts until 2025 like predicted by the "4-year theory", then we would expect a higher "final cycle ATH" somewhen in the next 1-2 years.

So, knowingly 2021 was the bull run and should be followed by a terrible bear market on 2022 but did we felt that? I don't think so, it's totally different and far from expected bear and slump market on that year, we didn't even felt that it was one.

Sure? What about the Terra/Luna drop, the FTX insolvency? The +75% price drop (very close to the previous drops around ~80%)? I believe that this was a quite "normal" bear market, much like the previous ones - and had also a similar extension (about exactly a year, even a couple of weeks longer than the 2017-18 bear).
What was a bit different is that in 2022 the attention level on Bitcoin and crypto in general remained relatively high, even if the price evolution was catastrophic like in previous bear markets. So crypto seemed a little bit less "dead" in the crypto winter (although the Bitcoin Obituaries got some new entries, even by an European Central Bank official ). But it were mainly negative events driving this attention, plus the NFT adoption in non-crypto sectors.

[hatshepsut93]

But this too can't go on forever, because when the pattern becomes recognized by everyone, traders will trade against this pattern, since it would be more profitable, and thus will ruin the pattern.

Yes, this is quite interesting, it would be logical but it seems no bigger trader group has really challenged the 4-year cycle until this point (Again, it were only 2 complete cycles though). However I think there are good reasons that the current cycle could be shorter, i.e. with a maximum in late 2024 or early 2025 already, and not late 2025 like the "established theory" says.

There were however some "false truths" challenged, for example that Bitcoin never falls below a previous ATH (broken in 2022, probably because of a combination of Terra/Luna and FTX).

Basically, if everyone knows that Bitcoin will rise high and then crash fast, there's an incetive to sell shortly before the expected peak, or when the price just started crashing. This expectation makes going up quite hard the higher the price gets, because only short-term traders are buying at that point, and are ready to sell when they get 10-20% gains.

Also the market will eventually realize that the public price peak goals are way over exaggerated. I remember in 2017 when the price was crossing $20k everyone though that it's just the beggining and $100k will happen soon. In 2021 all the big name influencers were predicting $200k, $300k and even higher. The same happens today - people like Saylor again predict six figures, and a lot of investors would likely patiently wait for them and miss the opportunity to take profits at the actual peak.
 

[OgNasty]

Supply and demand is pretty much undefeated and that’s what the four year cycle is. There’s always newbies to the market and they probably dismiss the four year cycle initially similarly to how you have tried to. This is why as Bitcoin gains adoption, we still see the cycle. Eventually we may reach a point where the block reward doesn’t matter much, but for now it is everything.

[philipma1957]

I agree we are watching a shift in the four year cycle 🔄

But you still think the "halving-driven cycle" theory as a whole holds, it seems

.

<big ass snip>


I seem to see two patterns the so called four year cycle

the mempool getting flooded.

they are different patterns and they are changing.

first ½ ing meant nothing industry was tiny no one gave a shit.

but in nov 2013 1200 plus a coin woke people up. 10 million coins at 1200 a coin was decent money.

I would argue that was the first bull run that gathered attention.

https://mempool.jhoenicke.de/#BTC,all,weight

the mempool never meant any thing til 2017

I would argue this was the second bullrun

and the 2021 was a wild up down double top which kind of was 2x sabatoged by china when they shut down the hash rate and the first exchange fail happened. then of course the second crash happened in the fall of 2021.

so four year cycles are meh 2013 2017 2021 seems like it but not really.

give me a minute to post the mempool over the last 7 years.







notice the crowding the last 1 ⅓ years this alters the damage the ½ ing does to mining.

and in 4 days the new ½ ing makes it easier to manipulate fees since the rewards are less. a pool will not lose 6.25 coins trying to jack fees up by doing 2 things.
A)ordinals
B) under hashing for 1 week of the 2 week epoch time

this will effectively end the ½ down turn income for miners at this ½ ing or the next one.

which means even if you are not correct (now) you are headed to being perfectly correct in 1 week or 4 years and a week or truly 8 years.

I think we have seen glimpses of you calling it being true some of the time  ( I am reffing to four year cycle is an illusion concept)

I am Sure that it will be far more true in under 8 years.

[d5000]

Also the market will eventually realize that the public price peak goals are way over exaggerated. I remember in 2017 when the price was crossing $20k everyone though that it's just the beggining and $100k will happen soon. In 2021 all the big name influencers were predicting $200k, $300k and even higher.

This could also happen the other way around, although it's less popular to buy into a falling knife I remember for example in 2022 when FTX crashed many were talking about $8000 or even $5000. This never happened. Same in 2018 when people were talking about sub-1000 prices.

In the Spanish subforum we found out that if you bought at less than 31% from the previous ATH then you would always have made profit in less than one year. This is the thread but unfortunately the graphs are on Imgur so they are not shown.

An user named virginorange has made some nice stats about points where -- if the 4 year cycle theory holds still true -- there are good points to enter or leave the market, or to increase or decrease you position - his post is more focused on an "improved DCA strategy", not so much on "go all in" and "go all out".

In theory if people realized this and followed strategies based on these investigations, this should be lowering the volatility constantly, and at one moment both peaks and lows should be less than 50% away, so even the deepest crypto winter would look like what's now still called a "correction". In theory this should level out the cycle completely eventually, because news-driven dumps and pumps would be more important than the "cyclic" component.

(line break here because what follows is a bit more general, not only an answer to you)

But my argument is that actually we could already be close to this point where the cyclic element (whatever is its cause) becomes less important than news-driven movements. Imagine again: if neither Terra/Luna (a very special case, a dubious altcoin project invested massively in BTC which had to sell its entire holdings) nor FTX (a case with a little higher probability, at least if the CEX market doesn't improve) nor the Ukraine war (also a quite low-probability event) happened, would then the price have lost 75% or more in the 2021-22 bear? This bear market had probably also cyclic components but perhaps a large part of the negative trend was news-driven.

The most significant non-cyclic crash was Covid, a very-low-probability event, but where BTC lost more than 75% of the previous peak (2019 high of ~$14500) too. The China miner ban in 2021, something which could be more common, had 50% crash as a consequence. This means that at least to the downside, cyclic (75%-85% crashes) and major non-cyclic movements (50%-75%) are already getting close to each other.

And the crucial question remains, this is also the answer to @OgNasty: Are the halving-driven rallies a result of the reduced miner supply? Or ar they a psychologic effect, "because halvings are bullish"? Again, with miners only comprising 0,1-0,5% of the total daily sold supply the second answer could be actually true.

[EarnOnVictor]

After a while that the effect of the halving has been effectively weighed in the market, people start dumping Bitcoin again due to FUD and the fear of losing back their gains. At this point, it will attract little or not investment which will overall lead to massive dump. [...] I do not think will ever change unless something serious forces the change.

I disagree partly with the last sentence. Knowing this pattern could just make it also attractive to trade against it. I feel we're seeing this already, the bull market seems to be in a much more advanced stage in 2024 than it was at 2020's and 2016's halvings. So actually the big dump could come earlier and earlier. This is also why I'm expecting a local high in late 2024 or early 2025, and not late 2025 (like if the cycles were exactly 4 years long). This however woud not be something "serious", but something rather natural. It also does still not invalidate the "halving-driven cycle theory".

I thought differently when I read the disagreeing part, not knowing that you disagreed because you still believe in the cycle as usual. This, I also believe in, perhaps you did not get what I tried to state there. We all believe in the cycle of Bitcoin caused by some tradition that people have now gotten used to, I will never dispute that. Also, I have the same mindful speculation as yours where the bull run might end in the first half of 2025 max. Anything in extension is what I am not interested in.

That aside, what birthed my last statement was some kind of changes in the situation where, for instance, the ETF saga (a force) has changed the narrative and Bitcoin is hovering close to the ATH of the former cycle. Don't you think anything unforeseen is still possible due to that? This is my plight. It was just a reflection of a concern that Bitcoin has never achieved what it achieved now in the previous histories of the initial cycles. This means that unplanned external forces could cause a change even if we do not pray for that. So that we can continue to easily predict the Bitcoin cycle as usual.
 

However, I don't think that can be good if this cycle changes.

Want to elaborate on that? Do you fear less speculative capital inflow in later bull markets if the market becomes more unpredictable?

Well, if that is the right word, Yes, I fear low capital inflow which is against the expectation of the majority. Nevertheless, anything I say is mere speculation and concern since I do not know the exact thing Bitcoin will do in the future. My insightful thought is that FOMO was experienced last year and I believe the huge investors that people expect would pump Bitcoin know the principle of striking an asset at a low price and the risk of buying at high levels. So, why wait till after halving if they are still interested?

[philipma1957]

Well whether the ½ really makes the cycles 🔄 the reality is they will have less effect in 2024 2028 2032

if they drive the cycles. if they do not drive the cycles 🔄 they never had effect.

the next two choices of what drives cycles are high fees clogged mempool. and possible release of frozen stale coins down the road.  all of the above and a new super good lightning network are mechanical mechanisms. Think pick ax vs 1000 gallon sluice machines for gold. They are supply action items.

Traders are going to trade. BTC is tradable 24/7/365 pretty much worldwide.

I would argue there are multiple groups of  investors.

traders:
Short term
Mid term
Long term

dca and hodl
buy the dip and hodl
miners

They have different goals and methods.

Lack of clear concise regulations do not exist. this attracts speculators. Short term traders are happy with ups and down.

It is possible btc may just stay in slots like 55-75k for months on end maybe years on end.

[bittraffic]

There will always be outside forces that will bring the price down and it almost sounds like it's a plan even in 2018, the China ban and Google and Facebook ads were banned. And they almost happen every after a big bull run. Coincidence or not but just kind of repeats every time. It's an endless seesaw of the price but there is always a reason to also go up such as Halving.

If the FISA bill for example is approved, this could cause a massive dump also.

[coolcoinz]

Because I'm referring to the "final cycle ATH", and of course we don't know if we have reached it already. If the cycle lasts until 2025 like predicted by the "4-year theory", then we would expect a higher "final cycle ATH" somewhen in the next 1-2 years.

I'm 99% sure it wasn't the final ATH. The bull run before the halving was mainly ETFs and they aren't done. I'm sure they will have more inflows than outflows in the next year

The way I see it, cycles are still in play, but they're going to be influenced by the fact that people know they're there. In 2013 it was a new thing, nobody knew what was going to happen. In 2017 there were already 2 fractions, one that knew it will pump and the other one that thought something might go wrong within the protocol, miners could be in trouble due to increased cost of mining and all that FUD. Now we have enough data from the previous cycles to know it's going to decrease inflationary supply coming from miners without putting them at risk in any way, which in the long run will make the price go higher. The only unknown is how long we'll have to wait for that, but something tells me it's going to happen sooner than the last time. Most likely not in mid 2025, like the last time but at least 6 months earlier.

[jossiel]

So, knowingly 2021 was the bull run and should be followed by a terrible bear market on 2022 but did we felt that? I don't think so, it's totally different and far from expected bear and slump market on that year, we didn't even felt that it was one.

Sure? What about the Terra/Luna drop, the FTX insolvency? The +75% price drop (very close to the previous drops around ~80%)? I believe that this was a quite "normal" bear market, much like the previous ones - and had also a similar extension (about exactly a year, even a couple of weeks longer than the 2017-18 bear).
What was a bit different is that in 2022 the attention level on Bitcoin and crypto in general remained relatively high, even if the price evolution was catastrophic like in previous bear markets. So crypto seemed a little bit less "dead" in the crypto winter (although the Bitcoin Obituaries got some new entries, even by an European Central Bank official ). But it were mainly negative events driving this attention, plus the NFT adoption in non-crypto sectors.

You're right that the attention for Bitcoin at that time was high and it was incomparable way back on 2018 bear market. I think also the price that was quite higher than 2018 was a factor as well that we don't feel bad that much on 2022.

IMO, it was like really a common bear market but it's not that a lot to be feared of. Yeah, there goes those news that have signaled the bear market but it was a different feeling for me.

In conclusion, we might see the next bear market to be not that scary at all but there might be a lot of drops and negative news again but if I've felt less aggressive and not scared for the 2022 bear, it could be less by 2026 or so.

[d5000]

this will effectively end the ½ down turn income for miners at this ½ ing or the next one.

which means even if you are not correct (now) you are headed to being perfectly correct in 1 week or 4 years and a week or truly 8 years.

I think I get what you mean: that if transaction fees will also be a more significant part of the coins miners are selling, this will level out changes by halvings, and mempool congestion thus could indicate a turn to bearish conditions. (Or do I interpret the idea with the congested mempool wrong?)

In the case we do not only look at rewards but also at transaction fees, I think we could also look at other related indicator: miners' BTC reserves. It seems they were selling more coins that they are holding for the last 6 months at least. According to the article it's about 20.000 BTC they sold in excess in the last 6 months, preparing for the halving accumulating fiat reserves (probably partly to diversify into other related areas like colocation, cloud, AI etc. if mining income gets too low). That's much less than the rewards (900 per day = 163000) but it's more than transaction fees (on average 4% of miner income, i.e. about 30-50 BTC/day).

As the incentives for the behaviour are quite logical for me, we could assume that this will occur at each halving from now on: in the previous months, miners could sell at least about as much as they get by transaction fees in addition to the amount of rewards and fees they get for found blocks. This would mean selling pressure actually before the halving and perhaps in the days immediately after it, but when difficulty has re-accomodated after halvings, I expect them to reduce these sales.

In the end this could mean that, if we sustain the "miner supply dictates price" theory, the the period before halvings (which were bullish in all "cycles" until now) could even become bearish over time, while the period in the middle of the halving cycle when miners accumulate most, most bullish conditions should be found.

That aside, what birthed my last statement was some kind of changes in the situation where, for instance, the ETF saga (a force) has changed the narrative and Bitcoin is hovering close to the ATH of the former cycle. Don't you think anything unforeseen is still possible due to that? This is my plight. It was just a reflection of a concern that Bitcoin has never achieved what it achieved now in the previous histories of the initial cycles. This means that unplanned external forces could cause a change even if we do not pray for that. So that we can continue to easily predict the Bitcoin cycle as usual.

Ah, okay. I think I agree here.

In general it's not that I'm agreeing to the 4-year-cycle theory (I tend to do not, but am still unsure), but I try to discuss different assumptions - I also don't believe in a "purely event-driven price". My general assumption is that Bitcoin currently behaves like trends/fads in lifestyle, i.e. there are periods with high and others with low interest in it, and that is one of the main influences for the price.

My insightful thought is that FOMO was experienced last year and I believe the huge investors that people expect would pump Bitcoin know the principle of striking an asset at a low price and the risk of buying at high levels. So, why wait till after halving if they are still interested?

This means that a part of the pump people were expecting "after" the halving this time came "before", due to the ETF approval. I can agree to that too.

[philipma1957]

this will effectively end the ½ down turn income for miners at this ½ ing or the next one.

which means even if you are not correct (now) you are headed to being perfectly correct in 1 week or 4 years and a week or truly 8 years.

I think I get what you mean: that if transaction fees will also be a more significant part of the coins miners are selling, this will level out changes by halvings, and mempool congestion thus could indicate a turn to bearish conditions. (Or do I interpret the idea with the congested mempool wrong?)

In the case we do not only look at rewards but also at transaction fees, I think we could also look at other related indicator: miners' BTC reserves. It seems they were selling more coins that they are holding for the last 6 months at least. According to the article it's about 20.000 BTC they sold in excess in the last 6 months, preparing for the halving accumulating fiat reserves (probably partly to diversify into other related areas like colocation, cloud, AI etc. if mining income gets too low). That's much less than the rewards (900 per day = 163000) but it's more than transaction fees (on average 4% of miner income, i.e. about 30-50 BTC/day).

As the incentives for the behaviour are quite logical for me, we could assume that this will occur at each halving from now on: in the previous months, miners could sell at least about as much as they get by transaction fees in addition to the amount of rewards and fees they get for found blocks. This would mean selling pressure actually before the halving and perhaps in the days immediately after it, but when difficulty has re-accomodated after halvings, I expect them to reduce these sales.

In the end this could mean that, if we sustain the "miner supply dictates price" theory, the the period before halvings (which were bullish in all "cycles" until now) could even become bearish over time, while the period in the middle of the halving cycle when miners accumulate most, most bullish conditions should be found.

< big snip>


Yeah that is close.

BTC could get price slotted for periods of time that reach out and beyond four year cycles.

gold from 1992 to 2003 stayed in a 200-400 dollar slot.

I could see some big players try to do this with BTC.

I do agree we don’t really do 4 year cycles 🔄

I don’t count 2009-2013.

I count 2013 to 2017
and 2017 to 2021

but 2021 on does not fit it is more like 2009 to 2013  with a few peaks and valleys

[virginorange]

TL;DR I guess we will have weaker and irregular cycles in the future

Cycles will remain
Everything moves in cycles: You have the business cycle, the long term and short term debt cycle, even my kid's emotions have cycles. The usage of leverage supports volatility. Leverage is not only financial (CFDs or futures) but you also have operational leverage. Multiple companies have more volatile fee revenue than salary expenses, therefore some companies in the crypto space tend to break (become insolvent) during a downturn.

Cycle duration of 4 years unlikely
The Bitcoin ecosystem supply comes not only from miners (sell block reward, buy electricity), but also exchanges (sell trading fees, pay salaries) and ETFs (Fees). Additionally the police gets their hands on Bitcoin from time to time and sells. Then we have the Bitcoin owners, who will sell for major purchases especially after accumulating high unrealized gains. Thanks to saving in Bitcoin some people may marry, buy a house and start a family. They will then sell some of their Bitcoin for their wedding, their down payment or their kids education.
I think the halving may already be overrated, but going forward I expect the halving to have almost no impact on the price. I expect the main impact will be central bank liquidity, regulation and time.
Since I still believe in a cyclical nature of markets / humans, how long can a cycle be? We still need some time to go from overvaluation to undervaluation, so I would guess a cycle will be still between 3 and 6 years or at least between 2 and 8 years.

Cycles will become weaker

We can observe:
- lower realized daily price volatility
- lower realized daily price volatility relative to stocks
- lower option implied volatility
- less extreme cycles above trend



We can't observe less extreme cycles below trend, which might be due to extraordinary events like FTX or Luna.

Lower volatility around in combination with a unchanged Bitcoin price trend would be definitely good news for most. Not only would this stabilize your assets, but also lead to more inflows into Bitcoin. Less volatility means higher allocation for most investors, which in return increases the price of Bitcoin.

Weaker cycles endangers timing the cycle.
During the last cycles we saw 1000+ days overvaluation and trend close to e^⁻0.9.





I suggested Bitcoin to be expensive at Trendprice+750 days, Bitcoin to be cheap at Trend*e^-0.5. This gives some reasonable stability for lower Bitcoin cycle volatility during the next cycle.

The yield from timing the cycle (blue arrow) is already declining:

What do we learn?
1.) We can see that the red lines have a declining slope. You get better 1-year forward returns by buying bitcoin cheaply. This makes sense as the mean of the cycle reverses around the trend. It is still interesting to see this result on a time horizon of only 12 months, not 2 or 4 years. 1st orange arrow
2.) We can see that the red line (2010-2013) is the highest, the red line (2014-2017) is lower, the red line (2018-2021) is even slightly lower and the last line (2022-March 2023) is even lower. As time goes on, you can expect less return on your bitcoin investment for the same level of overvaluation relative to the trend. This makes sense as the price trend of bitcoin flattens out. 2nd orange arrow
3.) We can see the red lines crossing the x-axis at lower and lower values. 2nd orange arrow 2010-2013 we cross at 1.5, 2014-2021 at 0.6 and recently at 0. Buying relatively expensive bitcoin (trend +0 to trend +1.5) in 2010-2013 still gave you positive returns, recently buying only slightly expensive bitcoin gave you negative returns. 3rd blue arrow
4.) In our four charts we see 2 grey lines. We can see 2 different trend lines for each 4y cycle. One trend is on the way to the top. The second trend is on the way from the top to the bottom. Obviously you can get a better return the way up vs. on the way down. Unfortunately, it is only partly tradable:



Falling from the green peaks, we could assume that we are on the way down. Excessive overvaluation can be traded. At the yellow tops, however, we could have assume in real time that we were still climbing to a green top. Only in hindsight we would have realized we missed the yellow top. Since we can't tell the yellow tops in real time moderate overvaluation is not tradable.

Looking at our most recent dot plot, we can see that the red line crosses 0/0. Does only the cycle matter now? Bitcoin price trend growth is declining. Maybe it is declining much quicker than the cycle? Is trading the Bitcoin cycle more important than holding Bitcoin? The answer is no.



It is true that the yield from owning Bitcoin (red arrow) declines faster (from 1200% to 300%) than the yield from trading the cycle (blue arrow, 350% to 200% to 100%) and therefore the cycle matters relatively more. However the return from just holding Bitcoin is still much higher than the yield from timing the Bitcoin cycle. The main take away is: trading the cycle can juice your returns, but the most imposant decision is buying Bitcoin at all.

The red line crosses 0/0, not because the cycle dominates the returns, but because it represents a bear market. Therefore the line is naturally lower than a bull market line (see: what can we learn #4, the two grey lines).

Benefiting from cycles is difficult
Benefiting from cycles looks good on paper. However during a economic downturn you might become unemployed, or have difficulties rolling over your debt, due having lower net worth or more restrictive loan decisions. Imagine a recession with lower house prices, lowering the amount you can refinance. In this case you would be forced to liquidate other assets.

[d5000]

Thank you for your detailed answer, @virginorange!

Cycles will remain

The big question is: what could be the "trigger" of the cyclic behaviour in Bitcoin if it's not the halving anymore? You already gave a partial answer:

I expect the main impact will be central bank liquidity, regulation and time.
Since I still believe in a cyclical nature of markets / humans, how long can a cycle be? We still need some time to go from overvaluation to undervaluation, so I would guess a cycle will be still between 3 and 6 years or at least between 2 and 8 years.

I've already mentioned somewhere else that it could be possible that this behaviour is similar like fads work in the consumer goods market, which would be probably what you call "time". So basically it could be based on the collective attention Bitcoin gets at a specific point in time. Fads can't be constant, they need to "sleep" eventually, but they can always come back again.

The halving could have been in this case not only a psychological trigger (and, in the first occurrances, a trigger due to the decreased new supply provided by miners), but also the media attention could have triggered part of the increased attention, and thus the increase of new users and investors, leading to the post-halving rallies we've seen in the past.

Then, like you wrote, it's possible that above all downward movements are amplified due to service provider (e.g. exchange) insolvencies. Terra/Luna for example also probably collapsed due to a chain effect in the bear market, even it was a questionable product from the start.

It is possible that at least these "volatility amplifications" could reduce if the markets for these services mature further. It could be interesting to generate a timeline how many exchanges collapsed per year, multiplying the number with the market share they had. Also stricter regulations for exchange reserves could contribute on that, but FTX (and cases like Wirecard in Germany) showed how even regulated companies can collapse due to bad intentions of the company owners and/or managers. So we shouldn't rely on regulation alone. The "learning effect" of customers to not put that many funds in exchanges and centralized wallet providers is in my opinion more important. The declining BTC exchange balances are perhaps an indicator for that, however measured in USD they're still growing.

There could be also an influence on "real economy" cycles on Bitcoin's cycles. While I was aware of the likely influence in 2021, I wasn't that aware about the 2018 bear being influenced by a real economy factor. Central bank decisions (interest rate) are for sure important.

In general, however, these points you've mentioned are mostly influencing "investor" sentiment, i.e. of people wanting to profit from Bitcoin. If Bitcoin wants to establish itself for the long term, however, eventually people must realize that Bitcoin also provides value if its price does not grow anymore. Thus I'm so focused on the "currency usage" aspect in this thread (and several others), i.e. in usage for payments and low-risk/low-reward saving. We probably have some time for that to occur still.