Doc's Daily Commentary
Mind Of Mav
Is The 4-Year Cycle For Bitcoin Dead?
Most people who are interested in crypto are probably familiar with the idea of a 4-year cycle based on Bitcoin’s halving dates. You’ve probably also heard (especially recently) about the lengthening cycles. But are you familiar with the concept of microcycles replacing 4-year cycles? I heard about it recently and thought it was really interesting… especially as it can have a pretty significant impact on how to trade crypto in 2022.
The 4-year cycle
This pattern is commonly known in the crypto space. Approximately every 4 years (or more specifically – after 210,000 blocks are mined) the amount of Bitcoin awarded to the miners drops by 50%. This makes Bitcoin scarcer and therefore more valuable. In the past, Bitcoin reached its market cycle peak approximately 12-18 months after the halving, then crashed and then started picking up value in anticipation for the next halving.
The lengthening cycles
If we look closer at the dates of the halvings and the market cycle peaks and bottoms, we can observe that each cycle is actually getting longer and the ‘4 year cycle’ is only a very loose timeframe.
The chart below is a great illustration of lengthening cycles. Please note that this chart shows ROI on a logarithmic scale.
Microcycles
This leads me to the idea of microcycles. Of course, each market cycle contains some smaller cycles within itself but as the cycles are getting longer, there seems to be a pattern emerging in the current cycle.
Jan-Feb – end of current re-accumulation phase
Feb-Mar – parabolic rise to a new ATH (80k+)
Mar-May – rounded peak going as high as 90-100k
May-Jul – re-accumulation phase around 60k level
Then the pattern may repeat once again in the second half of the year or we may have a parabolic run-up and a blow-off top once retail FOMO kicks in above 100k.
This is of course just speculation but I think it has some merit. While I’m not keen on swing trading Bitcoin during the cycle, I’m planning to use this pattern to trade lower cap altcoins.
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