An alternative Bitcoin Price Cycle Theory :)

[d5000]

There is this widely popular theory that Bitcoin price movements are driven by halvings. And that around each halving we see 2-3 years of rising prices, and then afterwards a deep bear market which begins approximately 1,5 years after the halving. Which would be (approximately) now.

In 2013-17 and 2017-21 at a first glance there seemed to be a surprising regularity (both tops and bottoms near the end of the year, bear markets of about 12-14 months and there ), and many think that this confirms the theory of "halving driven cycles".

But that has not be the single truth. Here are some alternative explanations for the price cycles we witnessed until now:

1. 2013 bull market

- This bull market in my opinion was indeed driven by Bitcoin's supply economics. Until 2012, you could mine with unexpensive hardware. From the 2012 halving on, you had to buy dedicated ASICs. The only alternative was to buy.
- Sorry, no alternative explanation there. Other than the rising interest, and perhaps an Al Gore speech where he mentioned Bitcoin.

2. 2014-15 bear market

- The obvious catalyst here for me was, apart from a very bubblish late 2013, the MtGox insolvency. MtGox was HUGE back then. Even a Tether collapse today would not be even close to what that meant back then, as basically everybody was trading at MtGox and many had most of their coins on that exchange.

3. 2015-17 bull

Here I have three explanations which both can have be contributed:

- The altcoin and ICO boom, fueled mainly by Ethereum. It led to a massive increase of attention to the whole crypto sector, and of course also Bitcoin.
- From 2016 on, the appearance of Lightning. Bitcoin's scaling problems were already talked about back then, and Lightning offered the first working decentralized second layer.
- And finally the resolution of the Segwit war, which brought predictability.

4. 2018 bear

- I blame here mostly the disappointment about altcoins after the ICO bubble.
- Also, the excesses of the 2017 rally called for a correction.

This bear market was also quite short: from mid-December 2017 to November 2018, less than a year.

5. 2019-21 bull

This was a quite "strange" bull market. First, prices came already close to ATH level in 2019. It almost looked like 2018 was only a short dip. But an intermediate bear (2019-20) culminated in COVID. But also 2021 was atypical, with a 50% crash before the final cyclic ATH.

What made the wind turn again?

- First, the general recovery after COVID. Bitcoin reaching $10,000 again relatively fast brought positive sentiment again. And also people were more at home and had more time to experiment with things like Bitcoin (and altcoins).
- But then we witnessed the richest person of the world entering Bitcoin. Yes, I think the main catalyst for the late 2020/early 2021 movements was Elon Musk.
- Finally, El Salvador saved the 4 year cycle. Probably without the legal tender announcement the high of 2021 would have been recorded in May.
- In-between, we had the China Mining Ban. Perhaps the most dangerous moment in Bitcoin's recent history.

6. 2021-22 bear

This one was quite obvious I think. 2022 was a year of hacks and exchange failures. The main ones:

- Terra/Luna in early 2022
- FTX in late 2022
- In addition, perhaps the 2022 general openings after COVID contributed to less interest in cryptocurrencies. Also the NFT market, which was a tool for mass adoption, mostly collapsed in this year.
- Also there may have been late effects of the China ban in 2021 (Chinese miners selling their holdings) which made start the bear market already in that year.

7 2022-25? bull

- We have again a quite obvious explanation for the movements after 2023: The US ETFs. They were talked about since at leat mid-2023, and became the main topic in 2024.
- Then in 2024 the crypto announcements of Donald Trump. First time such a highly ranked politician of a powerful nation "discovered" Bitcoiners as potential voters.


As you can see, for each major price movement there were quite obvious reasons. I believe these explanation could have modified the supply/demand equation for Bitcoin much more than the tiny effect of the last halvings. Miners have less than 1% participation in the Bitcoin market. And thus, the 4 years between 2013 and 2017 and 2021 could be pure coincidence.

What do you think? Challenge this assumption

[adultcrypto]

- Then in 2024 the crypto announcements of Donald Trump. First time such a highly ranked politician of a powerful nation "discovered" Bitcoiners as potential voters.

Do you think Donald Trump leaned towards bitcoin just for the votes? If your answer is a yes, then you have a point because the US government have not bought a single bitcoin after he made those fine speeches, although there is no record of them selling also. We will not also forget the fact that his declarations also embolden other countries to start thinking towards bitcoin which is good in general.

As you can see, for each major price movement there were quite obvious reasons. I believe these explanation could have modified the supply/demand equation for Bitcoin much more than the tiny effect of the last halvings. Miners have less than 1% participation in the Bitcoin market. And thus, the 4 years between 2013 and 2017 and 2021 could be pure coincidence.

What do you think? Challenge this assumption

The ETF approvals that made bitcoin reach a new ATH before the halving changed everything for bitcoin. The moment that happened, it became obvious that we are out of the 4 years cycle into a new cycle which have not fully been defined and I think we will begin to understand in couple of years ahead.

[d5000]

Do you think Donald Trump leaned towards bitcoin just for the votes?

Mainly yes, and I think this is the major explanation why Bitcoiners were so euphoric about it: that was the first time they were taken seriously as a voter group. Even the supporters of his contender Harris had to start (unsuccessfully) a crypto-related campaign platform.

There were previous promises by politicians of smaller parties in smaller countries, but never a competitive presidential candidate in the country with the highest GDP in the world (and I think there was also no previous instance of a competitive candidate in any first world country).

However, I think he also saw and opportunity for personal profits of his family and some of his business partners, as we have seen with the activities of his sons.

The ETF approvals that made bitcoin reach a new ATH before the halving changed everything for bitcoin. The moment that happened, it became obvious that we are out of the 4 years cycle into a new cycle which have not fully been defined and I think we will begin to understand in couple of years ahead.

This may be true, mainly for one reason: it has become clear that Bitcoin is here to stay, if even big investment firms are heavily interested in it.

The "Bitcoin is dead" narrative which was so powerful in past bear markets thus will not be easy to sustain. While bear markets will still exist and I guess some of them will also be quite deep, they perhaps will not be that "existential" in nature, i.e. much more people will look for dip buying opportunities than in previous bears where everybody avoided the "falling knife" and some sold even with 80% loss.

[Mr Reporter]

What made the wind turn again?

- First, the general recovery after COVID. Bitcoin reaching $10,000 again relatively fast brought positive sentiment again. And also people were more at home and had more time to experiment with things like Bitcoin (and altcoins).
- But then we witnessed the richest person of the world entering Bitcoin. Yes, I think the main catalyst for the late 2020/early 2021 movements was Elon Musk.
- Finally, El Salvador saved the 4 year cycle. Probably without the legal tender announcement the high of 2021 would have been recorded in May.
- In-between, we had the China Mining Ban. Perhaps the most dangerous moment in Bitcoin's recent history.

Well I think the the 2019-2021 period was not really clean halving cycles honestly speaking it was a perfect storms of multiple unpredictable catalysts layered on top of the halving driven supply shock. 2019 was a really a mini bull from $3k>$13k, this was a Fed stopped rate hikes and signaled easier liquidity.

On june then Facebook Libra announced which it was a massive demand shock that year so many Facebook users where exposed to crypto this was really a game changer then, which in that same week BTC ripped to $7k to $13k.

The Covid crash (march 2020) this was a very brutal single day event in the crypto history then this was an existential stress test.
Liquidity disappeared everywhere.
Bitcoin dumped to $3,800.

This cash was really a crash and catastrophic but the recovery was even more powerful which BTC recovered to $10k on a fast.

The halving set the conditions.
COVID liquidity + Elon + ETF + El Salvador were the catalysts.
China mining ban was the disruptor.

As you can see, for each major price movement there were quite obvious reasons. I believe these explanation could have modified the supply/demand equation for Bitcoin much more than the tiny effect of the last halvings. Miners have less than 1% participation in the Bitcoin market. And thus, the 4 years between 2013 and 2017 and 2021 could be pure coincidence.

What do you think? Challenge this assumption

Well I think if I could get this correctly from what challenged and made assumptions, are:

  - Major price moves had obvious external reasons.

  - These reasons impacted supply/demand far more than halvings.

  - Miners are 1% of market volume, so halving effect is tiny.

  - Ignoring that Bitcoin’s liquid float is very small.

  - Treating supply shocks and demand shocks as unrelated.

  - Ignoring miner economic cycles tied directly to halvings.

 - Relying on coincidence to explain three perfect cycles

[Mrbluntzy]

Right from after I started studying the bear and bull cycle of Bitcoin in the past years down to now, I cease to completely agree in the general popular theory that says Bitcoin price is only driven by halving and the supply/demand principles, I also concluded that there are more factors that acts as catalyst to either drive the price higher during bull cycle or the catalyst drives price down more than expected during bear cycle.

    After reading your post, I think I agree with the cycle theory that you have lined out on this post. From my research, I just see that during every cycle, Bitcoin price is not only driven by one factor, there are some events that usually plays out which will either cause Bitcoin price to shoot up if it's a bull cycle, and if it's a bear cycle too another negative event would play out which causes Bitcoin price to also dip very bad or just small dip depending on the volume of the bad event. These events are not just negligible coincidence but these events are usually very significant events that will definitely have an impact on the price of Bitcoin.

    I especially took note of the Bitcoin's bull and bear cycles from 2019 - 2025, there were significant factors [which you already mentioned them all, I will on mention covid19, the crash of Luna and US Bitcoin ETF] that has acted as catalyst to activate and deactivate the price of Bitcoin those cycle. Since we are speculating a bear market after this bull cycle, I'm waiting to see if the cycle have actually changed or maybe if something is going come up and cause a big crash.

[retaur]

Wed already crashed quite a bit by the time FTX had become insolvent. I think a lot of news similar to that are because someone had decided to do something that does well in a bull market that doesn't correspond well to a bear market. Around that time (I think) it felt fairly well known that FTX had a large amount of the circulating supply of Solana and were heavily invested in that network, anyone wanting to attack them merely needed to fiddle with Solana.

KYC and AML checks also ramped up in 2021 and a lot of exchanges stopped releasing funds if you couldn't provide a payslip or utility bill (which seemed to exclude mobile phone bills and tax returns).

There's always news that coincides with price movements but most of the bad news comes after a drop and not while it's initially falling. I think those stories make scared bulls that have had their hopes snubbed even more fearful though and increases volatility further.

[philipma1957]

I have no challenge for you I agree to a large enough degree.

THIS IS WHY I AM BUYING DIP DIP DIP DIP AND MORE DIP.

[coolcoinz]

3. 2015-17 bull

Here I have three explanations which both can have be contributed:

- The altcoin and ICO boom, fueled mainly by Ethereum. It led to a massive increase of attention to the whole crypto sector, and of course also Bitcoin.
- From 2016 on, the appearance of Lightning. Bitcoin's scaling problems were already talked about back then, and Lightning offered the first working decentralized second layer.
- And finally the resolution of the Segwit war, which brought predictability.

I know a bit about that bear market and IMO the main culprit was futures. In 2018 for the first time Wall Street got involved and futures allowed people to manipulate the market like never before.
How? Futures market allowed people who were bearish on bitcoin to bet fiat money on the price of the asset they never wanted to touch (usually because they were too afraid to hold it, did not trust exchanges after Mt.Gox, couldn't get the necessary agreements, banks wouldn't let them transfer money to btc exchange and so on. At that point the price was already overheated 20x the previous ATH from 2013, so the obvious move is to short the shit out of it, and they did.
CME futures begun trading on 17 December. Guess when the ATH was

[d5000]

Well I think the the 2019-2021 period was not really clean halving cycles honestly speaking it was a perfect storms of multiple unpredictable catalysts layered on top of the halving driven supply shock.

I agree this cycle was particularly complex. But I think the 2019 rally more or less confirmed that the halving had not really incidence in this cycle. Probably if the COVID dip didn't happen the 2017 ATH of ~20k would have been broken in early 2020, before the halving.

Well I think if I could get this correctly from what challenged and made assumptions, are:

  - Major price moves had obvious external reasons.

Mostly yes. Only that there is also an important "internal" reason: profit taking after extreme FOMO. So the first phase of the bear markets (early 2018, and early 2022) in my opinion were predictable due to the FOMO before, but they could have been reverted if the "major external reason" (e.g. Terra/Luna, ICO bubble burst, COVID) didn't happen.

There's always news that coincides with price movements but most of the bad news comes after a drop and not while it's initially falling.

I agree that the initial dip indeed is often related to profit taking and previous overheating. But 30% dips (typical early bears) can be easily reverted if the sentiment turns positive again. However, if there is a streak of bad news, like it occurred in 2022 for example, then the "dip fishers" will not be strong enough to revert the bearish tendency and it can deepen to a 75-85% drawdown.

I know a bit about that bear market and IMO the main culprit was futures. In 2018 for the first time Wall Street got involved and futures allowed people to manipulate the market like never before.

Good point. I think the futures and later ETFs indeed made speculative shorts easier and may have contributed to some strong price jumps and crashes. However they can only amplify a general tendency that already started. I don't know if the 2017 rally had continued if the futures hadn't started to trade near the ATH, but I guess it wouldn't have been long until a big profit taking wave would have emerged.

So I think the futures strengthened the initial profit taking induced dip, but then the catalyst for the further drawdown in 2018 were probably related to the collapse of the altcoin wave ("the mother of all altseasons"), which peaked in early 2018 but was totally unsustainable, fueled by many ICO scams.

[As-Soon-As]

Bitcoin has finished its four-year cycle, and we are entering a new cycle. It is normal for the price of Bitcoin to dump a little, there is no way that the price of Bitcoin will only rise. The success of investors lies in pumping and dumping, because investors will take advantage of this dumping opportunity, but the current Bitcoin price decline is temporary, but the Bitcoin price will rise again. So it is normal for the price of Bitcoin to dump a little before entering a new cycle, but we should not panic about it.
It has been proven that every time the bull run ends, the price of Bitcoin has dumped before entering a new cycle.

[Hypnotizer]

1. 2013 bull market

- This bull market in my opinion was indeed driven by Bitcoin's supply economics. Until 2012, you could mine with unexpensive hardware. From the 2012 halving on, you had to buy dedicated ASICs. The only alternative was to buy
 - Sorry, no alternative explanation there. Other than the rising interest, and perhaps an Al Gore speech where he mentioned Bitcoin.

I might not agree with your second assumption here, because there were other alternative explanations that you might have missed like the Cyprus Financial crisis in 2013 and the new interest from speculative investors.

The Cyprus financial crisis happen in 2013 and the Cyprus government imposed a one-time levy on bank deposit and the Cyprus government also seized around 47.5% of all bank deposits above €100,000. This event might have lead to the more interest in using bitcoin as a store of value and the increase in mainstream attention which might have also influenced the 2013 bull market.

[davis196]

I agree with all the things mentioned in your forum thread, but you forgot the most important factor. The money printing machine owned by the Federal Reserve. The amount of US dollars in circulation had increased a lot in the last 10 years. The stimulus checks issued by the Biden administration also had an impact over the BTC price. The current Bitcoin market became very dependent of the news coming from the Federal Reserve. If the Federal Reserve cuts the interest rates, the BTC price pumps and if there's interest rate cut, the BTC price drops.
Some experts are talking about a correlation between Bitcoin/crypto and NASDAQ. Maybe the Bitcoin "price cycle era" has come to an end.

[8rch7]

6. 2021-22 bear

This one was quite obvious I think. 2022 was a year of hacks and exchange failures. The main ones:

- Terra/Luna in early 2022
- FTX in late 2022
- In addition, perhaps the 2022 general openings after COVID contributed to less interest in cryptocurrencies. Also the NFT market, which was a tool for mass adoption, mostly collapsed in this year.
- Also there may have been late effects of the China ban in 2021 (Chinese miners selling their holdings) which made start the bear market already in that year.

I remember well with this moment how million user loss their money after investing at Luna and USTC as Luna stable coins network, offering interested return of APY around 20% make many people including my friend in Indonesia all in staking USTC but sadly price of Luna stable coins dump drastically. I can't believing how possibility Luna coins have break out higher price above $100 suddenly become shit coins and drop drastically with thousand percent loss from user keep holding Luna coins.

Covid pandemic era at 2019 make us have difficult position beside bad economic condition and cryptocurrency not running as well as for bitcoin or several top altcoin can't break yet to higher price. So for 2025 I believe full bullish indeed have one month left but still get opportunity for bitcoin break out.

[letteredhub]

What do you think? Challenge this assumption

We are all learning new things in this space everyday, so i really careless about on challenging the assumption since it's a very critical one that adds to knowledge, but...

Question I have in mind is why is it that these tiny effects at several distinct times had to occur in a way that it reflects in the idea of the "widely popular theory that bitcoin price movements are driven by halvings",  because this causes can't be said to be a coincidence if they have to have happened more than ones, even though the events that causes the bears and bulls markets in the specific years shown out in the OP could be marked to be inherently different.

[d5000]

The current Bitcoin market became very dependent of the news coming from the Federal Reserve. If the Federal Reserve cuts the interest rates, the BTC price pumps and if there's interest rate cut, the BTC price drops.

Yes, that's true but it's a relatively new phenomenon, and thus only relevant for the current cycle, at most for the last stretch of the 2017-21 cycle. As far as I remember interest rate fluctuations did not impact the Bitcoin price movements before ca. 2020. It's when Bitcoin became traded by "the Wall Street guys" when it began to correlate with the same indicators stock traders commonly look at.

The correlation to stocks is a bit bumpy and a lot of Bitcoin-internal factors still play a role, as seen in this chart. We see relatively high correlation rates for 2020-22 and 2025, but 2023 and 2024 (dominated by the "ETF approval hype" and the "MtGox payout FUD") the correlation was low, as it was in general before 2020.

So I agree that this is a factor we have to look at for the near future. It could however be a phenomenon of the current phase Bitcoin is in, dominated by institutional investors who still have not "decoupled" their Bitcoin trading strategy from their stock/ETF trading strategy it seems.

It's possible that in the coming years we see another change and Bitcoin could align more with gold, becoming independent from stock markets again. This would however mean another change in the traders' demographics: from the dominance of Wall Street speculative traders to those investing for the long term, which can be both institutions (the famous "Bitcoin Treasuries") or individuals saving money. As I wrote numerous times this would probably need a further reduction of Bitcoin's volatility in bear markets, now most people and institutions are probably still too scared for long term BTC investment, even if this is slowly changing but the number e.g. of companies holding BTC is still tiny.

[coolcoinz]

IMO miners had a large impact on the price in 2013 and 2016/17. Maybe they weren't the main catalyst but a very significant one. I remember reading about the amount of $ in BTC entering the market each month from miners selling and this used to be a significant amount. Also, in bull markets miners tend to hold coins. There are charts showing when miners sell and when they hold coins.
This is probably a turning year when people are scared of the coming bear market, but the data doesn't fully support the bear market cycle theory.
There was no large price increase, the last bull market where miners really were the catalyst was IMO 2017, since then we had 2 halvings and the total supply went from 16m BTC to 20m. Even this number shows how influential miners used to be when there were millions to be mined and 20% of the supply left for grabs, while now it's only 5% and half of that is going to be mined in the next 3 years.

So what are we expecting from miners next year? That they will increase the circulating supply by less than 1%? This is not going to decide the price especially when you compare that number to exchange volume.

If I were to give one main reason as to why we're falling it would be the US economy. I'd even say that it's those idiots that run the US who are doing it.
Trump constantly threatening other countries with tariffs.
The FED crashing markets by extending the hiking cycle. Powell threatening not to cut rates in December...
Also, this was the year of wars. Israel, Russia, Ukraine, Iran...

IMO the crash has very little to do with bitcoin and its cycles.

[Beparanf]

Each cycle has different catalysts for bull market to start. I believe the assumption of having this pattern using the early years of Bitcoin as reference makes it a self fulfilling prophecy that’s why crypto user always find something that they can use as catalyst to start the bull run cycle.

Being optimistic and using this pattern such as bitcoin rainbow chart makes Bitcoin growth steady in the long run due to being optimistic that makes holder to hold more.