Bitcoin’s cycles of price have fascinated investors and analysts for years. By comparing the current trend with past cycles we can get a sense of what the future holds.
Compare Bitcoin Cycles
It’s important to start by looking at how Bitcoin has performed since hitting its recent cycle low. When we look at the data it becomes clear that Bitcoin’s price (black line), is following patterns very similar to those of previous bull cycles. The price of Bitcoin has been stagnant for a while, but there have been some similarities between this current cycle and those from 2015-2018 (purple) or 2018-2022(blue).
In terms of gains in percentage, we’re at a similar place to the cycles from 2018 and 2015. This comparison is only a small part of the story. The price action does not tell us the whole story. We need to dig deeper into the investor behavior, and look at other metrics which shape the Bitcoin markets.
Investor Behavior
A key metric to help us understand investor behavior is the MVRV Z-Score. This ratio is a comparison of Bitcoin’s market price today to the original Bitcoin. “realized price” The average cost of Bitcoins on the network is represented by the (or “cost basis”), which measures the price that all Bitcoins were acquired. Z-Score standardizes raw MVRV for BTC volatility data to eliminate extreme outliers.
By analyzing metrics like this, rather than focusing solely on price movements, we can see similarities and patterns in the current cycle compared to past cycles, both in terms of dollar movement and investor sentiment.
Correlating Motions
We use the API of Bitcoin Magazine Pro to gain a deeper understanding about how this cycle compares with the previous cycles. The correlation is less pronounced in the Genesis cycle. By excluding it and comparing only MVRV and price data between Bitcoin’s low closing prices and its high points during our current and three previous cycles, there are clear correlations.
The 2011-2013 Cycle, which is characterized by a double peak, has a high correlation of 87% with current prices. This ratio shows an 82% correlation. It means that Bitcoin is not the only thing behaving in a similar way. Investor behavior is also very similar.
The 2015-2017 Cycle is the most similar in terms of pricing, with a correlation rate of 89% to our current cycle. MVRV has a slightly lower ratio, suggesting that investor behaviour may be different, even though prices follow similar paths.
2019 to 2021 Cycle : Although this cycle is positive, it has the lowest correlation with the current trend, which indicates that market patterns may have changed since a couple of years ago.
Do we face another double peak?
A strong correlation is evident between the cycles of 2011-2013. Bitcoin reached a new record high twice during that time period before the bear market began. We could see significant price changes in the next few weeks if Bitcoin continues to follow this pattern. The similarities between the current cycle, and the previous price action fractal are immediately apparent after standardizing returns.
Bitcoin has experienced the same thing in both instances: a sudden rise up to a high followed by a period of long-term consolidation. In the event that history repeats, we may see an explosive price rise in the near future, possibly reaching $140,000 by the end of this year, when taking into account diminishing returns.
Patterns of Investor Behavior
One of the most important metrics to consider is the Value Days Destroyed (VDD). This indicator weights BTC moves by the volume and time that has passed since its last transfer, and multiplies it by price. The result is a measure of long-term investor behavior and profit taking.
VDD’s initial surge is similar to what we saw in the double-peak cycle of 2013. The run up as BTC reached a new record high in the first half of this year, followed by a period of consolidation could lead to new highs if we continue this cycle pattern.
A More Realistic Scenario
Bitcoin is a growing asset. We’ve experienced longer cycles, and fewer returns on our most recent two cycles. It’s more likely, therefore, that BTC will follow the cycle where we see the most correlation between price and volume.
Figure 6: A fractal from the 2017 cycle is superimposed on current prices.
Bitcoin’s 2015-2017 trend could lead to new record highs in 2024. However, the increase would probably be much slower and less sustained. In this scenario, the price will be around $90,000-$100,000. This is predicted for early 2025. We could then see a continuous increase throughout the entire year with a possible market peak at late 2025.
You can also read our conclusion.
The historical data indicates that we are approaching a crucial turning point. Bitcoin’s outlook remains positive, whether we look at the double-peak cycles of 2011-2013 and 2015-2017 or the more gradual but still steady growth from 2015. Monitor key metrics such as the MVRV Ratio and Value days Destroyed to get a better idea of where the markets are headed. Comparing correlations between previous cycles can give you a more accurate picture.
Investors should be prepared for significant price movement and possible new all-time heights as soon as possible.
Here is a video that will give you a closer look at this subject. Comparing Bitcoin Bull Runs: Which Cycle Are We Following
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Source: bitcoinmagazine.com
