Bitcoin’s Consistent Four-Year Cycle
There has been ongoing speculation about what could trigger the next bull run in the cryptocurrency market. Kevin Kelly, co-founder of Delphi Digital, has now shared his thoughts on the matter. In a recent Twitter thread, Kelly pointed out the consistency of past crypto market cycles and how they could impact the market moving forward.
Kelly argued that contrary to popular belief, the crypto market is “quite cyclical” and exhibits consistency in certain metrics that mark the beginning and end of a particular cycle. To illustrate his point, he used Bitcoin as a reference point. Kelly highlighted that Bitcoin typically follows a four-year cycle with patterns that repeat themselves consistently. This cycle involves Bitcoin reaching a new all-time high (representing the peak of a bull run), followed by an 80% decline a year later (bear market). It then takes two more years to recover to its previous high (the start of another bull run), before rallying for another year to reach a new all-time high.
Based on this cycle, it can be inferred that Bitcoin is currently in the recovery stage. This is because it experienced an 80% decline at the end of last year when it was trading around $16,900. Since the beginning of 2023, Bitcoin has not closed any month below $20,000. Furthermore, Bitcoin’s price is currently attempting to break the $30,000 resistance level, which could potentially spark the next rally in its quest to recover its previous high of around $68,000 reached in November 2021.
Another important metric that Kelly highlighted is Bitcoin’s halving. He noted that the last two halvings occurred about 18 months after BTC bottomed and seven months before it hit a new all-time high. If Bitcoin continues to follow its usual patterns, Kelly believes it could reach a new all-time high by the fourth quarter of 2024.
ISM Index Could Determine Next Bull Run
Kelly also drew a correlation between the Bitcoin market and the Institute of Supply Management (ISM) manufacturing index. The ISM index tracks monthly changes in economic activity within the manufacturing sector in the US.
Interestingly, BTC price peaks have reportedly occurred around the same time the ISM shows signs of topping out. Active addresses, transaction volumes, and fees on the Bitcoin network have all peaked alongside tops in the ISM index. As the ISM index recovers, so does Bitcoin.
Kelly further highlighted that the ISM index is nearing the final stages of its two-year downtrend, which could suggest that the next bull run is also approaching.
Image source: iStock, chart from Tradingview.com
