Where Are We In The Bitcoin Market Cycle?

This blog will summarize previous market cycles for bitcoin, with the aim of understanding whether the current price action is unusual or whether this is simply how a bull market tends to evolve.

Disclaimers

At this point, it's worth making a few disclaimers. Firstly, that past performance does not predict future performance. Secondly, the sample of market cycles is limited: We'll only really look at 2014-2017 and 2018-2021 as a comparison for the 2023- cycle. Bitcoin's earliest price action can barely be described as a market cycle, since the new digital asset was so small, liquidity was so poor, and there were so few exchanges (especially before mid-2010) that it's unrepresentative.

Lastly, the macro environment is very different today. Bitcoin's first 12 years coincided with a period of unprecedented monetary expansion, with QE and ultra-low interest rates making risk assets highly attractive. Today, that's no longer the case.

With all that in mind, let's take a look at how the current market cycle compares with the last two.

Overview Of Previous Cycles

In each case, we'll define the market cycle as starting from the bear market low, and finishing at the next low. We'll use data from Bitfinex for continuity, since it has been a popular exchange from the early days of bitcoin, being founded in 2012.

2014-2017

• BTC came off its all-time high of almost $1,200 in w/c November 25, 2013, to bottom after a bear market that lasted over a year at around $166, w/c January 12, 2015.
• Price action was relatively slow. The prior all-time high was only broken w/c February 20, 2017, 110 weeks later.
• The bull market peak of $20,000 came w/c December 11, 2017, 152 weeks after the last bear market low.
• The next bear market low came almost exactly one year later.

2018-2021

• Bitcoin began its next market cycle in the week of December 10, 2018, when it bottomed at $3,200.
• An initial surge took the price to almost $14,000 (a 4x move) in 28 weeks. A cool-off period of over a year followed, and included the COVID-induced crash in March 2020.
• BTC broke the prior all-time high of $20,000 105 weeks after the bear market low, in w/c December 14, 2020.
• The high of $69,000 was almost a year later and 152 weeks after the bear market low, w/c November 8, 2021.
• The bear market ended just over a year later, w/c November 21, 2022, at $15,500.

Both of the prior market cycles have therefore fallen into a similar pattern, with almost exactly 2 years between BTC putting in a low and breaking its last ATH, and another year to the peak after that. From peak to trough lasts another year.

2022-??

Hope and disappointment are characteristic of a new cycle, and the current market is no different.

• The last cycle bottomed w/c November 21, 2022, at $15,500.
• 40 weeks later, we are still in the early stages of the new cycle.
• An initial run-up to a high of $31,000 took just 20 weeks, and then the local high of $32,000 took another 13 weeks.

Should the same pattern as the prior two cycles play out, this initial move is not particularly important. It is likely to be another year or more before BTC challenges its last ATH.

Simply in terms of key resistance (which in this instance lies in the $30k range):

• In the 2014-2017 cycle, it took 71 weeks for BTC to decisively crack the old $500 support/resistance level.
• In the 2018-2021 cycle, it took 21 weeks to take out the old $6k resistance.

Conclusion: Neither Here Nor There

Bitcoin's present price action shows similarities with both prior major market cycles, and does not currently display anything out of the ordinary in terms of the timing of significant moves. The initial fast run-up parallels 2019, though not 2015, but differs from 2015 in that key resistance has not been broken.

Assuming a similar path to both previous cycles, BTC is unlikely to challenge the prior high of $69,000 until well into 2024, at the earliest. However, macroeconomic conditions, high inflation and interest rate decisions, and the fact that crypto is now attracting institutional interest, all introduce new factors that further complicate the picture.

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