Bitcoin’s Four-Year Market Cycle Remains Intact, Despite Recent Price Surges
Crypto investors are thrilled with Bitcoin’s impressive gains this year, which have seen it rise by 50% in less than two months following the approval of U.S. Bitcoin spot ETFs in January. However, these gains may also be a cause for uncertainty, particularly for traders. Historically, Bitcoin has never broken the highs of a previous bull market top until several months after its “halving” event, which occurs once every four years. However, this year, Bitcoin has surpassed these highs ahead of schedule, leading some to question whether the asset’s long-standing four-year market cycle is still valid.
Julio Moreno, Head of Research at CryptoQuant, believes that the four-year cycle remains intact despite recent developments. He points out that Bitcoin’s price still followed the cycle when it reached its low of $15,500 in November 2022. CryptoQuant relies on Bitcoin’s MVRV ratio as an effective metric for gauging bull and bear markets. The MVRV ratio compares Bitcoin’s market cap to its “realized cap,” which is the total value of all coins at the time they were last sold. A higher MVRV ratio indicates that investors are sitting on more profit and may be more likely to sell their coins, potentially marking a peak in the bull market.
- According to CryptoQuant, the MVRV ratio has not yet passed the threshold of 3.7 that would indicate a cycle top.
In January 2023, valuation metrics suggested that the bull market officially began, aligning with actual price action. A year later, the high demand for Bitcoin led to an early all-time high, largely driven by ETF demand. Moreno explains that the market cycle can be classified into phases: extremely bear, bear, early bull, bull, and overheated bull. Currently, the market remains in the bull phase.
Glassnode, another on-chain analytics provider, has multiple metrics for evaluating cycle extremes. One of these is the MVRV ratio, while others include the rate at which investors are holding onto their Bitcoin (HODLing) and the profit-taking behavior of investors relative to losses (known as the Spent Output Profit Ratio or SOPR). As of March 6, the 90-day moving average for SOPR stood at 1.03, a level not seen since early May 2021.
Despite these metrics indicating potential cycle extremes, James Check, lead analyst at Glassnode, remains highly bullish on Bitcoin’s future. He predicts that Bitcoin could reach $250K during this cycle and describes the current uptrend structure as robust.
Hot Take: Bitcoin’s Market Cycle Remains Intact Amidst Price Surges
Bitcoin’s recent price surges have delighted crypto investors, but they have also raised questions about the asset’s long-standing four-year market cycle. While Bitcoin has broken previous bull market highs ahead of schedule this year, experts believe that the market cycle remains intact. Here are some key points to consider:
- Bitcoin has historically followed a four-year market cycle.
- This year, Bitcoin surpassed previous bull market highs much earlier than expected.
- CryptoQuant’s MVRV ratio indicates that the market has not yet reached a cycle top.
- Valuation metrics suggest that the bull market officially began in January 2023.
- Glassnode’s metrics also point to potential cycle extremes.
- Despite these indicators, analysts remain bullish on Bitcoin’s future.
Ultimately, while Bitcoin’s recent price surges may be cause for uncertainty, the overall consensus is that the four-year market cycle remains intact. Investors and traders should consider these factors when making decisions about their Bitcoin holdings.
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