The Bitcoin Cycles Hypothesis Confirmed: Long-Term Holders Provide Key Clues
The Bitcoin cycles hypothesis is confirmed and driven by the halving event that occurs every 4 years, cutting the miner’s BTC reward in half. Long-term holders (LTHs) of Bitcoin exhibit cyclical behavior that provides valuable insights into the cryptocurrency’s cycle.
Key Points:
- The behavior of LTHs gives clues about the stage of the Bitcoin cycle.
- Cost Basis and Market Value to Realized Value (MVRV) are two on-chain indicators that repeat the pattern of previous cycles.
- The cost basis of LTHs is forming a plateau, similar to previous cycles.
- During the plateau period, the BTC price periodically drops below the LTH cost basis, indicating capitulation and unrealized losses.
- The MVRV for LTHs has reached the oversold area, historically the best time to buy BTC.
Observations:
The cost basis chart shows a plateau in the cost basis of LTHs, with relatively constant values for about 3 years. After this period, the cost basis sharply increases for about 1 year and stabilizes during the next bear market. The 90-day change of the cost basis indicates the accumulation period between bull markets.
The MVRV metric for LTHs is also repeating the pattern from previous cycles. It has reached the oversold green area, historically the best time to buy BTC. Although the MVRV is currently at a safe level, a re-test of the green area in the future is possible.
Hot Take:
The behavior of LTHs suggests the start of a long-term bull market in Bitcoin. Both the cost basis and MVRV for LTHs support the cyclical nature of Bitcoin and the potential for an impending bull market.
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