Bitcoin’s amazing four year cycle of price boom and bust The best known cryptocurrency, Bitcoin runs on a regular four-year cycle, based on its halvening supply schedule. This cycle mirrors Bitcoin’s halving cycles. These occurrences generally take place roughly every four years and halve the pace of new Bitcoin issuance. In the past, these halvings have been preceded and/or succeeded by tremendous bullish movement in the overall cryptocurrency market. The last halving was in April. If history is any guide, we may be in for a wave of speculator activity in the market in the coming months.
This article closely examines Bitcoin’s cyclical nature. It takes a look at long-term trends, studies the short-term market past performance and looks at the outside forces that may influence its going forward. As a rapidly changing landscape, it’s important for both current and hopeful cryptocurrency investors to have a grasp on these trends.
The Halving Effect
Bitcoin’s four year cycle is mostly influenced by Bitcoin’s halving process. Because the reward for mining new blocks is halved during this event, therefore practically halving the supply of new Bitcoins. Through history, this reduction in supply has created a supply shock, increasing demand and fueling the price appreciation of Bitcoin. The post-halving phase has historically gone on to include 12 to 18 months of bullish performance.
The most recent halving occurred in April. If the past is any indication, the market may soon see a dramatic uptick in Bitcoin accumulation in the lead up to November. This expectation is based on the reality that every prior halving has historically signaled the beginning of strong market upside.
Historical Performance and Future Outlook
Understanding Bitcoin’s past performance will help shed light on its future potential. The cryptocurrency hit an all-time high of $69,000 in November 2021, capping off the top of its last bull cycle. Similar patterns have emerged in past cycles, furthering the idea that Bitcoin is developing a reliable cadence to its market movements.
Realistic expectations Past performance is no indication of future results. The regularity of the four-year cycle suggests that Bitcoin is due for another bull run. Analysts typically extend 12 to 18 months from the most recent halving’s date. This is to inform their calculations of how long the current bullish phase should last.
External Factors and Market Sentiment
External factors, like trade agreements and macroeconomic conditions can affect the price of Bitcoin. And whenever Asia announces a new crypto-friendly trade deal with one of their major, regional rivals, the euphoria in the crypto market is immediately triggered. This excitement usually sets off a speculative wave of trading activity. New potential trade deals may provide Bitcoin the boost of a lifetime. Without support from ongoing trends in the economy, such gains will likely be short-lived.
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Bitcoin’s performance is often compared to that of gold. This year gold has dramatically outperformed Bitcoin so far. On the flip side, new U.S. trade deals would likely shift market sentiment by a lot. This change could lead to a resurgence of interest in Bitcoin and other cryptocurrencies. During these times of bullish growth, almost all top cryptocurrencies have a tendency to surge in unison. This increase demonstrates the height of the market’s bullish optimism.
