Originally published on: January 17, 2023
Bitcoin’s price has a history of following a four-year cycle, consisting of bull and bear trends occurring at consistent intervals. Recent data indicates that Bitcoin’s 2020-2021 cycle is aligning with past patterns, pointing to a potential price bottom.
Independent analyst Horn Harris found that the time between the bottom-to-top and top-to-bottom of Bitcoin’s price cycles has remained consistent since 2015, at 152 weeks and 52 weeks, respectively. This trend has held true even in 2013, with a bear market lasting 58 weeks.
In the current cycle, Bitcoin’s recent 30% price surge was triggered by prevailing negative sentiment in the market, much like the catalyst in 2019. While conditions have evolved, the lack of positive sentiment and an increase in short positions led to a rally that caught many investors off guard.
However, there are some differences in the current cycle. Unlike previous cycles, large Bitcoin holders have not significantly participated in the recent rally, raising concerns about its sustainability.
Historically, Bitcoin bottoms have been followed by significant price increases, with the potential for a new peak in October 2025 if history repeats itself. The recent price rally suggests that the bottom may have been reached, but further confirmation from on-chain indicators is needed.
On-chain metrics like Bitcoin’s realized price and Spend Output Profit Ratio (SOPR) provide insights into investor behavior. Bitcoin’s realized price currently sits at $19,715, indicating a potential bullish trend if the price remains above this level. The SOPR indicator also suggests a bullish reversal if the price closes above $21,200.
Miners, who were significant sellers in 2022, are now showing signs of accumulation as the Hash Ribbon indicator signals a buy opportunity. As long as Bitcoin’s price remains above $20,000, miners are expected to accumulate rather than sell their holdings.
While similarities with past cycles and positive on-chain signals support a bullish outlook, caution is advised as whale buying remains muted, and the price hovers near key levels. With support around the realized price of $19,715, investors should stay vigilant and monitor on-chain data for further insights.
