simply put
A well-known analyst has released the latest Bitcoin (BTC) cycle spiral chart.
According to him, the cryptocurrency market is currently in the early stages of a bull market – which will last for another 1.5 years.
Each phase of the four-year cycle is accompanied by a recurring psychological state among investors.
As long as the halving has an impact on Bitcoin price, miner activity, and investor psychology, the Bitcoin cycle narrative will continue to repeat itself. In my opinion on the BTC cycle, a well-known analyst released the latest version of the spiral chart, which perfectly illustrates the cycle phases of the 4-year cycle.
The Bitcoin cycle involves both the BTC price and the on-chain data and psychology of short-term investors. Repeating fractals once again skew the expectations of crypto newbies that “this time it’s different.”
3 Phases of Every Bitcoin Cycle
Well-known analyst @theratinalroot tweeted an updated version of his Bitcoin spiral chart yesterday. He briefly described the rather complex fractal structure:
"The four-year cycle has arrived! Each cycle consists of 3 phases."
The idea behind this innovative graphical representation of Bitcoin’s historical price is the Bitcoin Cycle Hypothesis. This statement is well known in the cryptocurrency market and is based on the halving event that occurs approximately every 4 years.
However, according to analysts, each of Bitcoin’s three historical cycles to date has been completed within three cycle phases. Interestingly, @theratinalroot didn’t take into account the first genesis cycle, he said, because “it’s not very interesting because it’s a bit of an anomaly because Bitcoin had no price data for the first year.” So, every 4 years of Bitcoin The three phases of the currency cycle are as follows:
A mature bull market lasts for about one year. Historically it was triggered by the BTC halving. On the chart, this is Q1 (top right). This phase ended with Bitcoin’s all-time high (ATH). At the same time, he emphasized that sometimes it may be a double top (such as 2013 and 2021), and sometimes it may be a single top (such as 2017 and possible 2025).
The bear market lasts for about 1 year. This was preceded by euphoria and an “explosive peak” in Bitcoin prices. This is the second quarter of the chart. On average, Bitcoin loses 80% of its value at this stage of the cycle, with the entire downtrend ending in 2 to 3 capitulation events. The vast majority of investors have lost hope here.
The early bull market lasts for about 2 years. This is the left half of the chart. After BTC falls sharply and reaches a macro price bottom, it will go through a long accumulation phase with the price slowly rising. During this period, Bitcoin generally rose, but the rise was very slow and saw multiple corrections.
Bitcoin’s Spiral Fractal
Analysts say Bitcoin is currently in the third phase of its cycle. Operational from approximately early 2023. It will last until at least the next halving. According to the latest data from BuyBitcoinWorldwide, it is expected to be held on April 17, 2024.
An interesting graphical representation of the chart above highlights the fractal similarities between Bitcoin cycles. These are not only related to the timing and regularity of repeated phases, but also to the profits and psychology of investors in the cryptocurrency market.
First, @theratinalroot colored the chart on a scale from dark green to dark red. The former indicates market participants' maximum profits, while the latter indicates their maximum losses. This data is based on the on-chain STH Cost Basis Z-Score indicator, which roughly describes the short-term investment status of market participants. Their behavior best reflects repeating patterns in BTC price action.
The analyst then also released a slightly different version of the chart. He assigns successive phases of Bitcoin’s 4-year cycle to investor psychology stages. These express the dominant sentiment among market participants at each stage of the cycle.
Therefore, it turns out that fractal similarities between Bitcoin cycles occur not only in the prices of the largest cryptocurrencies. But perhaps most important is the psychology of market participants. The spiral cycle describes the changes brought about by the Bitcoin price halving and also reflects the prevailing sentiment that overwhelms investors.
Of course, there's nothing revealing about the juxtaposition of price action and investor psychology. Because it has been operating in traditional financial markets for decades.
Additionally, the psychological stages included in the Bitcoin Spiral chart align with those highlighted in the classic Wall Street Cheat Sheet: The Psychology of Market Cycles. However, the key difference lies in the mature traditional asset markets. Cycles are harder to identify and often last longer than 4 years.
BTC Price Prediction: Will Reach $60,000 by the End of 2024
The analyst concluded his discussion with a Bitcoin price prediction for the end of 2024. He believes that BTC price could return to the $69,000 ATH area within the next 1.5 years. He noted that the early stages of the bull market have resulted in ATH recovering around 30% of its losses so far – from $15,000 to $30,000. In contrast, the remaining 70% should be made up by the end of 2024.
At the same time, he predicts that before and after the halving in April 2024, the price of BTC will fluctuate around US$40,000. Furthermore, its price should hover between $50,000 and $60,000 by the second half of 2024.
Despite these moderately bullish Bitcoin price predictions, analysts advise caution and caution about events that could cause the Bitcoin cycle to deviate from its usual rhythm. He said the early approval of BlackRock’s spot Bitcoin EFT could accelerate the upside phase.
On the other hand, he cited lingering concerns about a global economic recession. If this happens, it will inevitably affect the cycle of Bitcoin and even the entire cryptocurrency market. However, the consequences will be difficult to predict:
"Since Bitcoin has no history of going into recessions, it's difficult to predict exactly how it will react. If it remains correlated to the S&P 500, a recession could temporarily trigger turmoil."