Bitcoin Market Cycles; a Déjà Vu Bull Run

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Bitcoin’s price moved slightly higher after a week of bleeding that saw the digital coin losing more than 30% of its value to wipe off billions of dollars for traders and investors on Monday 24. The digital currency regained the $39k level following Tesla’s CEO Elon Musk and Microstrategy CEO Michael Saylor’s tweet about their meeting with North American bitcoin miners to promote sustainability.

This latest uptrend in price has only echoed what bitcoin enthusiasts have long expressed; recovery is inevitable, and the correction is healthy and needed for the market to set a new all-time high. Historically, market capitulations in bitcoin are indicators of solid bullish reversals, which might be the suitable catalyst we need to propel us to an all-time high we’ve never seen before.

While Bitcoin struggles to break through the $40,000 level resistance, getting above the $42k- $43k would be the sweet spot that gets the bull run firmly back on track. Thankfully, it appears that BTC has found a local bottom around $28k — $31k, with indicators suggesting that the worst of pullback may soon be over. However, looking at the overall picture, the 20k support is crucial.

Why this is different from other Corrections

While many people reference this cycle as a double peak cycle, some skeptics believe the current bull run is similar to 2017, and others believe the 2013 bull run is more aligned with the current trend.

In the last two months, we’ve seen the price of bitcoin consolidating, while on-chain analytics and historical precedent suggest that bitcoin price is set to break the $60,000 resistance and go parabolic for the rest of the year.

Bitcoin halving is another indicator that we might not be done with the bull yet. Halving is such a massive deal for bitcoin, and it happens roughly every four years, or after 210 000 blocks are mined. The halving event has a significant impact on the market because it is programmed to cut half the inflation rate by halving the miners’ block reward. After such halving, the bitcoin price soared a few months after, then followed an upward trend.

After the first halving in November 2012, the price rose from $11 a month before halving to $12. And in November of 2013 increased above $1,000. Likewise, bitcoin halving in July 2016 saw the price move went up to $650 from $576, and a year later, it broke its first record and reached $2526 by July 2017.

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From 2016 to 2020, 12.50 bitcoins were released per one block every 10 minutes to miners. After the 2020 halving, only 6.25 bitcoins are released per block, resulting in an immediately lower bitcoin production rate.

Another reason why this bull run is different is the emergence of new players in the field. We are seeing a surge in institutional investors who support the digital coin. With Tesla setting the precedence, it’s no more news that more companies and funds start including a little bit of bitcoin on their balance sheet.

One of the latest significant players to make a serious move into crypto is Morgan Stanley. The company, on March 17, announced that it is ready to offer its wealth management clients access to digital assets. Business intelligence firm MicroStrategy said it bought about $15 million worth of bitcoin on March 12, bringing the company’s total holdings to 91,326 units, with an estimated value of around $5.3 billion.

Presently, we see an increase in market demand from businesses adopting a digital currency as they become aware of the advantages of blockchain technology.

What’s Next?

There is still a lot of bitcoin being bought and sold, and as such, it is expected that volatility will remain relatively high as the market moves around and bitcoin finds its bottom.

Because of its volatility, there are still debates by central bank regulators and financial crime investigators across the globe concerning giving bitcoin legal tender status. However, each passing day in which regulators tone down their previous skepticism will improve the legitimacy of bitcoin and push it closer towards mass-market adoption.

It is also possible that we could be seeing a similar pattern close to what we had in 2013. A scenario where price comes down after its initial parabolic run consolidates for a while and then continues to make a new all-time high later in the year.


Bitcoin Market Cycles; a Déjà Vu Bull Run was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.