THE BTC16 YEAR CYCLE, AND ITS CORRELATION
Everyone has heard about the 4-year cycle that Bitcoin is going through, but have you ever thought of the idea that Bitcoin might be going through a bigger cycle? And could this bigger cycle reflect the way humans adopt new technologies? And is it possible we have seen something similar before with another technology like the internet? In this article, we will be diving into a new theory that suggests that Bitcoin is moving through a larger 16-year cycle which can help us predict the direction of the Bitcoin price in the coming years.
THE REGULAR 4 YEAR CYCLE
Bitcoin tends to go through 4-year cycles which are divided into 2 parts, the uptrend and the downtrend. A regular 4-year cycle consists of a 3-year uptrend followed by a 1-year downtrend also known as a bear market. So far Bitcoin has completed 4-year cycles and they’ve shown incredible accuracy which catches the attention of the market participants.
HOW TO SPOT A TOP
One of the best indicators a Bitcoin trader can use are the Bitcoin funding rates. The funding rates are showing basically whether the majority of the market participants on derivative markets are shorting or longing for Bitcoin. I’ve found this indicator very useful to spot a top in the Bitcoin price as in a healthy bull market when the funding rates are negative, the price tends to trend up. In a bear market, when the funding is positive, the price tends to decline. So we can use this metric to spot which market conditions the market is trading in and if anything has changed. One of the first signals when Bitcoin entered a bear market in 2022 was that the price of Bitcoin was declining with negative funding rates, and that does generally not happen in a healthy bull market.
FURTHER CONSIDERATIONS
There are more factors at play here that influence the price of Bitcoin other than these cycles. The fact that the Federal Reserve started to print huge amounts of money in 2020, really spiked the risk appetite for many investors to look for a safe haven like the financial markets and Bitcoin. It’s very clear that the moment the Federal Reserve started to inject money into the economy, the price of Bitcoin and the financial markets started to go up until the money printer halted again in 2022 and the price of Bitcoin entered a 1-year declining phase. These fundamental changes in the economy will most likely have an impact on Bitcoin and the way these cycles could unfold.
Jeroen van Lange introduces his novel theory on Bitcoin market cycles, and what most people could be getting wrong.
