The Bitcoin market cycle refers to the repeating pattern of price movements over time, usually aligned with the four-year “halving” cycle of Bitcoin.
A halving is when the reward for mining new Bitcoin blocks is cut in half, which reduces the rate at which new Bitcoin is introduced into circulation. This reduction in supply typically sparks market reactions, affecting price and demand.
Bitcoin’s Market Cycle
Here’s a breakdown of the usual stages of the Bitcoin market cycle:
1. Accumulation Phase:
– This is when Bitcoin prices are relatively low, and smart investors begin to accumulate or buy Bitcoin at a discount.
– This phase often occurs after a market crash or downturn.
– Sentiment is usually low, and many people think the price won’t rise soon.
2. Uptrend (Bull Market) Phase:
– As the halving nears or just after it happens, supply decreases, and demand begins to increase, causing prices to rise.
– During this phase, Bitcoin’s price sees significant gains as more investors and institutions enter the market.
– The sentiment is positive, and media attention often drives more new buyers in, further driving the price up.
3. Euphoria Phase:
– At this point, Bitcoin may hit new all-time highs, and the market gets overexcited.
– FOMO (Fear of Missing Out) kicks in, with a lot of retail investors rushing to buy Bitcoin at high prices.
– Many altcoins (other cryptocurrencies) also see large price increases.
– However, at some point, the market becomes overbought, and prices reach unsustainable levels.
4. Correction Phase (Bear Market):
– After the peak, a market correction or downturn follows as early investors begin taking profits, which leads to selling pressure.
– Prices can fall drastically, sometimes by 50% or more.
– Sentiment shifts from euphoria to fear and panic, and people start exiting the market.
– This phase can last for months or even over a year.
5. Capitulation Phase:
– Many investors who bought near the peak sell at a loss.
– Prices often bottom out in this phase, and pessimism is at its highest.
– However, this phase can set the stage for the next accumulation cycle as prices stabilize and early buyers start accumulating again.
6. Reaccumulation Phase:
– After the bear market, a period of stabilization occurs where prices fluctuate within a range.
– Savvy investors begin accumulating again, preparing for the next bull market cycle.
The Four-Year Halving Cycle:
Since Bitcoin’s halving happens roughly every four years, this event is seen as a key trigger for each market cycle.
Historically, Bitcoin has seen major bull runs after each halving as the decrease in supply tends to push prices higher over time.
While these phases are based on historical trends, it’s important to note that cryptocurrency markets are volatile, and the future cycle may not perfectly align with the past. However, understanding these phases can help investors better navigate Bitcoin’s market behavior.
Positive Signal on Bitcoin
Bitcoin (BTC) has gone up about 9% this week, showing that the bulls (buyers) are stepping in strong. Although there’s some resistance around the $69,000 level, buyers aren’t in a rush to sell, which means they’re expecting the rally to keep going.
QCP Capital shared with its Telegram followers that the rise in U.S. stocks and the weakening Japanese yen are likely to fuel a more risk-friendly mood leading up to the U.S. elections. This could drive riskier assets like Bitcoin higher, fitting with their “Uptober” outlook.
Another positive factor for Bitcoin is that the U.S. Securities and Exchange Commission (SEC) has approved options listings for Bitcoin exchange-traded funds (ETFs) on the New York Stock Exchange and Chicago Board Options Exchange. Experts think that the introduction of these options will boost liquidity in Bitcoin markets.
Bitcoin’s strength is also spilling over to major altcoins, which are showing signs of breaking out. Let’s check out the top 5 cryptocurrencies that look strong on the charts.
Many signs are suggesting that Bitcoin (BTC) could soon hit $70K, based on technical market data and prediction market betting. Inflows into U.S. Bitcoin ETFs have been strong, with a massive $458.5 million flowing in just on Wednesday alone.
Bitcoin demand is picking back up after being pretty quiet since May, with a spike of 177,000 BTC in apparent demand last week. This happened right before a 5% rally, pushing Bitcoin to over $67,800, the highest price in ten weeks, according to analysts at CryptoQuant, led by Julio Moreno.
Moreno explained that for Bitcoin to hit a new all-time high, this demand needs to keep growing. In previous cases, demand peaked between 490,000 and 550,000 BTC, so there’s still room for prices to rise.
Spot ETFs in the U.S. have been consistently buying, with an average of nearly 9,000 BTC coming in daily during the first quarter of 2024, driving Bitcoin’s price to new heights. Data from SoSoValue showed another big inflow day for U.S. BTC ETFs on Wednesday, with $458.5 million coming in, and Blackrock’s IBIT leading the charge with $393.4 million.
Editor: Lydicius