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Half Way Through The 4 Year Bitcoin Cycle
Bitcoin has historically followed a familiar four-year cycle. Now, two years into the current cycle, investors are closely watching patterns and market indicators for insights into what the next two years may hold. This article dives into the anatomy of Bitcoin’s four-year cycle, past market behavior, and future possibilities.
The 4 Year Cycle
Bitcoin’s four-year cycle is partly influenced by the scheduled halving events, which reduce the block reward miners receive by 50% every four years. This halving decreases the supply of new Bitcoin entering the market, often creating supply-demand pressures that can push prices higher.
This can be clearly visualized by the Stock-to-Flow Model, which compares the existing BTC in circulation to its inflationary rate, and models a ‘fair-value’ based on comparable hard assets such as Gold and Silver.
Currently, we’re midway through this cycle, meaning we are potentially entering a period of exponential gains as the typical one year catch-up phase following the halving progresses.
A Look Back at 2022
Two years ago, Bitcoin faced a severe crash amid a series of corporate implosions. November 2022 marked the downfall of FTX, as rumors of insolvency triggered massive sell-offs. The domino effect was brutal, as other crypto institutions, such as BlockFi, 3AC, Celsius, and Voyager Digital, also went under.
Bitcoin’s price tumbled from around $20,000 to $15,000, mirroring the broader market panic and leaving investors worried about Bitcoin’s survival. However, true to form, Bitcoin rallied again, climbing back up fivefold from the 2022 lows. Investors who weathered the storm were rewarded, and this rebound supports the argument that Bitcoin’s cyclical nature remains intact.
Similar Sentiment
In addition to price patterns, investor sentiment also follows a predictable rhythm across each cycle. Analyzing the Net Unrealized Profit and Loss (NUPL), a metric showing unrealized gains and losses in the market, suggests that emotions like euphoria, fear, and capitulation repeat regularly. Bitcoin investors typically face intense feelings of fear or pessimism during each bear market, only to shift back toward optimism and euphoria as prices recover and rise. Currently, we’re once again entering the ‘Belief’ stage following our early cycle runup and subsequent consolidation.
The Global Liquidity Cycle
The global money supply and cyclical liquidity, as measured by Global M2 YoY vs BTC, has also followed a four-year cycle. For instance, M2 liquidity bottomed out in 2015 and 2018, just as Bitcoin hit lows. In 2022, M2 again hit a low point, perfectly aligning with Bitcoin’s bear market bottom. Following these periods of economic contraction, we see fiscal expansion across central banks and governments everywhere, which leads to more favorable conditions for Bitcoin price appreciation.
Familiar Patterns
Historical price analysis suggests that Bitcoin’s current trajectory is strikingly similar to previous cycles. From its lows, Bitcoin usually takes around 24-26 months to break past previous highs. In the last cycle, it took 26 months; in this cycle, Bitcoin’s price is on a similar upward trajectory after 24 months. Bitcoin has historically peaked about 35 months after its lows. If this pattern holds, we may see significant price increases through October 2025, after which another bear market could set in.
Following the anticipated peak, history suggests Bitcoin would enter a bear phase in 2026, lasting roughly one year until the next cycle begins anew. These patterns aren’t a guarantee but provide a roadmap that Bitcoin has adhered to in previous cycles. They offer a potential framework for investors to anticipate and adapt to the market.
Conclusion
Despite challenges, Bitcoin’s four-year cycle has endured, largely due to its supply schedule, global liquidity, and investor psychology. As such, the four-year cycle remains a valuable tool for investors to interpret potential price movements in Bitcoin and our base case for the rest of this cycle. However, relying solely on this cycle could be shortsighted. By incorporating on-chain metrics, liquidity analysis, and real-time investor sentiment, data-driven approaches can help investors respond effectively to changing conditions.
For a more in-depth look into this topic, check out a recent YouTube video here: The 4 Year Bitcoin Cycle – Half Way Done?
Bitcoin’s Four-Year Rhythm: Mid-Cycle Insights and What Investors Should Expect
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Don’t Lose Sight Of The Bitcoin Mission
Now that Trump has been elected, Bitcoin enthusiasts and companies alike are more optimistic about the future of Bitcoin in the United States. We can clearly see this reflected in the price of bitcoin, which continues to reach new all-time highs in the wake of the election.
While it’s exciting for to watch US Bitcoiners breathe something of a collective sigh of relief as bitcoin’s price pumps (which is important), it’s also essential to recognize that we that if we don’t stay vigilant and lose our ability to transact privately and as anonymously as possible with bitcoin, as some are rightfully suggesting could easily happen, then we will have failed in our mission.
Former presidential advisor Pippa Malmgren on the legalization of Bitcoin:
“If you make crypto and Bitcoin legal […] you can’t hold them anonymously, you have to declare them.”
“You’re not going to be able to escape the reach of the US Government. […] And because we’re in… pic.twitter.com/aVeZBKodQ4
— L0la L33tz (@L0laL33tz) November 8, 2024
While it seems that the Trump administration will be kinder to the Bitcoin and broader crypto industry than the Biden administration was, we still have little idea of what the regulatory details will look like under the incoming administration. Plus, the judge in the Tornado Cash case recently posited that the Bank Secrecy Act (BSA) doesn’t require control of funds (private keys) for money transmission, which means that we may soon see legal precedent that sets the stage for much greater AML/KYC requirements for Bitcoin users.
Main points of the @TornadoCash ruling (so far):
(1) BSA doesn’t require control for money transmission
(2) 2019 guidance doesn’t have broad control requirement for money transmission, and “total independent control” is merely one part of a four-factor test specific to the… https://t.co/1rnB2SCVpA— Zack Shapiro (@zackbshapiro) September 26, 2024
If we don’t support efforts to legally defend our right to transact peer-to-peer without having to provide identifying information, then we’ll have lost one of Bitcoin’s core value propositions.
So, by all means, celebrate the fact that the incoming administration supports things like Bitcoin mining in the US and the right to hold your private keys, but stay vigilant in regards to what both the administration and the courts say about the need to provide identifying information to use bitcoin — and get ready to push back.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Fighting for transaction privacy needs to remain at the core of why we’re here.
Crypto News
Democrats Must Embrace Bitcoin To Survive
I, like many of you, am processing the results of the recent U.S. election in which Donald Trump won handily both the electoral college and popular vote. As pundits discuss, left mainstream media personalities mourn, and yes many Trump supporters cheer ecstatically, as a progressive Bitcoiner it’s entirely clear to me: If the Democratic Party wants a future in America, it must embrace Bitcoin.
Let me explain what I mean. Not only do I think is it imperative for the party to embrace Bitcoin if it wants to survive, but after this decisive Trump victory, I think many within the party, and those independent voters who dip in and out of voting for democratic candidates, are looking to make a drastic change and go back to the drawing board.
Bernie is back, and he has something to say.
It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them.
While the Democratic leadership defends the status quo, the American people are angry and want change.
And they’re right. pic.twitter.com/lM2gSJmQFL
— Bernie Sanders (@BernieSanders) November 6, 2024
Now that Biden’s term is coming to a close, and Harris conceded the race in defeat, Bernie isn’t mincing words with his criticism of the democratic party and priorities. “It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them.” Many within the party, and former Bernie supporters who perhaps are not in the party or supportive any longer, have been beating this drum for a while: Democrats favor coastal elites, who opine about progressive politics and “wokism” intellectually, while paying lip-service (and patronizing various other minority groups) to working class americans. After losing to Donald Trump twice, many democrats, progressives, and certainly independent and democratic american voters are wondering, where do we go from here?
Trump is a tour de force. A charismatic figure that has truly altered the course of American politics in ways the GOP, strategists, journalists, and the political establishment never thought was possible. The democratic party has been struggling to come up with answers against Trump and MAGA populism after 2016. While mainstream media may continue to cast his victories as the product of racism, sexism, or other beliefs steeped in identity politics, the same they did in 2016, many within the party are accepting that the strategies around identity politics, anti-Trump, and some moral high ground are decisively ineffective.
While we all will be analyzing data, voter profiles, trends, etc over the next several months, many journalists, including some quite influential progressive leaning media outlets including Pod Save America, Breaking Points, and beyond conceded that the Democratic Party must return to being the party of working people and focus on the economy and inflation, which was one of the most important issues for voters at the polls this year. The Democratic party period from 2016-present has focused heavily on identity politics, what many deem as “wokism” and more, which I wouldn’t discredit out right. Much of this is important. But, the weight and prioritization of these issues over economic and other hardships Americans face has been the issue. Many democrats and progressive knew this, but now we have data and election results to prove that it is not a winning strategy for the party, particularly in the presidential election.
Being a progressive and Bitcoiner is quite a unique position to be in, and it’s helped me analyze the world and predict certain trends and outcomes in interesting ways that often times bitcoiners, or progressives outside of the bitcoin bubble, miss. In fact, I’m not alone. Many of the outspoken progressives and left-leaning folks in the bitcoin space were former Bernie bros, inspired by Occupy Wall Street and other populist economic messages around wealth inequality, corporate capture in America, Big Bank bailouts and the 2008 Global Financial Crisis. Many of us have been turned off by the party’s pivot away from these battles, even to the point where Senator Elizabeth Warren has been working with and funded heavily by Big Banks, not to mention her and many others extreme hostile takes against the revolutionary technology born in the wake of the Global Financial Crisis: Bitcoin.
Here’s my take: Not only must the Democrats embrace Bitcoin to have a political future in America–I think many current and former members would be much more open to it. Rep. Ro Khanna is one leading example of a progressive democrat who understands where the Democratic Party has been losing ground to the Republicans on economic issues and Bitcoin. At the Bitcoin conference in Nashville this past summer, Rep Khanna stated, “Being against Bitcoin is like being against cell phones or the laptop, or semi conductors, it’s a technology.” Bitcoin is for freedom.”
Bitcoin advocates and campaign funding played a huge part in this year’s presidential election. While most democrats and the Harris campaign chose to mainly ignore Bitcoin and the industry, with some neutral or vague support of technology mentioned here and there, after a hostile four years under the Biden administration, this appears to be an error they couldn’t afford to make. Many progressives and democrats may continue to speak out against the industry and the campaign financing and superpacs that brought in Big Crypto Money (which campaign financing and then bitcoin the technology are two different things), but it’s an issue that can no longer be ignored, and almost weekly seems to be growing more and more bi-partisan (including ownership of Bitcoin in America, shown to be exceptionally broad and diverse across the political spectrum from a recent survey conducted by Colin Brown, Troy Cross, and Andrew Perkins).
Donald Trump and the GOP have used and garnered the single issue crypto voters in big ways. Campaign promises include protecting the right to self-custody, a U.S. Bitcoin Strategic Reserve, to support the crypto and bitcoin mining industries, Free Ross, and more. We’ll see if he makes good on these promises, and it’s unclear how big of an impact Trump’s pro-crypto positions had on the election outcome, but it’s not negligible. And if anything, it also symbolized what we saw was very important for American voters– a big shift from the current administration, and big promises regarding the economy and economic prosperity for America.
As the Democrats head back to the drawing board to determine the future of the party and their priorities, many are ready to go big, unburdened by what has been (sorry, had to) with the Hilary, Biden, Harris neo-liberal coalitions. And there’s one good place to start–the economy, stupid! Affordability, inflation, and hope in a brighter economic future for middle class and working families are winning priorities and what Americans at the end of the day show up in huge numbers to vote for. Bitcoin has a significant role to play in this approach and messaging, as an inflation hedge, incredible savings technology for working families, censorship resistant payments (should progressive activists find themselves in positions to need resistance money against Donald Trump’s authoritarian policies), and beyond. If the Democrats are serious about getting back to some of their roots as the party of working class people, including an olive branch to former independent and Bernie supports who are passionate about fighting for financial freedom and a better living for working class Americans, Occupy, and beyond, they will find Bitcoin is an incredible tool to that end. With Bitcoin there is no barrier to ownership, no middleman, not broker or bank you must use or be “accredited” by
Permissionless, freedom money. Can this be a rallying cry for the next chapter in the progressive movement and for Democrats to utilize on the campaign trail? It almost seems inevitable…a when, not an if…that the Democratic party capitulates to Bitcoin and the American people’s demands, or face extinction. Myself, Margot Paez, and others from The Progressive Bitcoiner will certainly be here to advocate for a rebirthing of the progressive movement, powered by Bitcoin.
This is a guest post by Trey Walsh. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
If the Democratic Party is to have a future in US politics, it must embrace Bitcoin going forward.
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