Bitcoin’s price cycles have long been a source of intrigue for investors and analysts alike. We can gain insight into potential price movements by comparing current trends to previous cycles, especially as Bitcoin appears to be reaching the end of its consolidation period. Many wonder if the next step up is just around the corner.
Compare Bitcoin cycles
To begin with, it is crucial to look at it how Bitcoin has performed since hitting the recent cycle low. As we examine the data, a clear picture is starting to form: Bitcoin’s current price action (black line) is showing patterns similar to previous bull cycles. Although it has been a choppy consolidation period, with prices relatively stagnant, there are important similarities when comparing this cycle to those in 2015-2018 (purple line) and 2018-2022 (blue line).
Where we are now, in terms of percentage gains, is comparable to the 2018 and 2015 cycles. However, this comparison only scratches the surface. Price action alone doesn’t tell the full story, so we need to dig deeper into investor behavior and other metrics shaping the Bitcoin market.
Investor behavior
An important measure that gives us insight into investor behavior is the MVRV Z score. This ratio compares the current market price of Bitcoin to the “realized price” (or cost basis), which represents the average price at which all Bitcoin on the network was collected. The Z-Score then simply standardizes the raw MVRV data for BTC volatility to eliminate extreme outliers.
By analyzing numbers like these, rather than focusing purely on price action, we can see patterns and similarities in our current cycle to previous ones, not only in the movements of the dollar, but also in the habits and sentiment of investors.
Correlated movements
To better understand how the current cycle ties into the previous one, we turn to data from Bitcoin Magazine Pro, which provides deep insights through its API. If we disregard our Genesis cycle, as there is little correlation, and if we isolate the price and MVRV data from Bitcoin’s closing lows to the highs in our current and previous three cycles, we can see clear correlations .
Cycle from 2011 to 2013: This cycle, characterized by its double peak, shows a strong correlation of 87% with the current price action. The MVRV ratio also shows a high correlation of 82%, which means that not only does the price of Bitcoin behave in the same way, but so does investor behavior in terms of buying and selling.
2015 to 2017 Cycle: This cycle is actually the closest in price action, with an 89% correlation to our current cycle. However, the MVRV ratio is slightly lower, suggesting that while prices may follow a similar path, investor behavior may be slightly different.
Cycle from 2018 to 2021: This most recent cycle, while positive, has the lowest correlation with current trends, indicating that the market may not be following the same patterns as it was a few years ago.
Are we facing a new double peak?
The strong correlation with the 2011-2013 cycle is particularly remarkable. During that period, Bitcoin experienced a double peak, with the price rising to new all-time highs twice before entering a prolonged bear market. If Bitcoin follows this pattern, we could be on the verge of significant price movements in the coming weeks. Once we overlay this period’s price action fractal onto our current cycle and standardize the returns, the similarities are immediately noticeable.
In both cases, Bitcoin had a rapid run-up to a new high, followed by a long, choppy period of consolidation. If history repeats itself, we could soon see a huge price increase, possibly reaching around $140,000 before the end of the year, taking into account diminishing returns.
Patterns in investor behavior
Another valuable metric to investigate is the Value days destroyed (VDD). This metric weights BTC movements based on the amount moved and the time since the last transfer and multiplies this value by the price to provide insight into long-term investor behavior, especially profit taking.
In the current cycle, VDD has shown an initial peak similar to the red peaks seen during the 2013 double peak. This run-up, as BTC hit a new all-time high earlier this year, before a continued consolidation period could see us quickly reaching new highs again if this double peak cycle pattern continues.
A more realistic scenario
As Bitcoin has grown and matured as an asset, we have seen longer cycles and diminishing returns in our two most recent cycles compared to our first two. Therefore, BTC is probably more likely to follow the cycle where we see the strongest correlation in price action.
Figure 6: Overlaying a fractal of the 2017 cycle on our current price action.
If Bitcoin follows the 2015-2017 pattern, we could still see new all-time highs before the end of 2024, but the rally would likely be slower and more sustained. This scenario predicts a price target of around $90,000 to $100,000 in early 2025. After that, we could see continued growth throughout the year, with a potential market peak in late 2025, although a peak of $1.2 million may be achievable if we follow this pattern exactly would be. optimistic!
Conclusion
Historical data shows that we are approaching a crucial turning point. Whether we follow the explosive double peak cycle of 2011-2013 or the slower but steady rise of 2015-2017, the outlook for Bitcoin remains bullish. Monitoring key metrics such as the MVRV ratio and Value Days Destroyed will provide further clues as to where the market is headed, and comparing correlations to our previous cycles will give us better insights into what may be coming next.
With Bitcoin primed for a breakout, whether in the coming weeks or in 2025, and if BTC follows anything like the patterns of any of our previous cycles, investors should prepare for significant price action and potential new ones sooner rather than later record highs.
For a more in-depth look at this topic, watch a recent YouTube video here: Comparing Bitcoin Bull Runs: Which Cycle Are We Following?