The 4 year Bitcoin cycle
Adoption cycles of Bitcoin
Not many people know about the Bitcoin cycle. I wonder why? Maybe because they don’t do enough research or maybe because people just don’t care. Either way not learning about this may cost many people potential gains or losses. For me personally, it is very interesting how Bitcoin is following 4-year cycles and it is growing naturally.
Let’s start with the reasons why Bitcoin is behaving in this way. Why it is the only one following the adoption wave so closely. And it all comes down to its characteristics. It may be digital but it is inspired by God’s design of Gold while adding much more logical characteristics. Thus giving it the opportunity to be Sound money. This is the reason for many people around the world to buy Bitcoin. But of course, its implementations are much bigger and the potential is obviously very big.
We can see when we live through the Bitcoin 4-year cycle it gets more and more adoption around the world. It is getting more and more recognized while fundamentals are becoming stronger and stronger.
The 4-year Bitcoin cycle
The last 4-year cycle was from the end of 2014 to the end of 2018. We can divide this 4-year cycle in two – 3 years of a bull market and 1 year of a bear market. Before explaining the cycle we need to include the human psychology factor. As people are greedy and many get involved in this industry only because of the price movement which occurs during the end of the bull market.
The first 2 years
This is the bull market for which we are talking. Usually, in the beginning, it starts slow and people don’t believe that this is a true rally. Thus many people miss the perfect buying opportunity because of fear. They fear that it may go to zero, but those who have done their research and understood bitcoin don’t think like that. This is why you need to learn about the 4 year Bitcoin cycle. So you don’t get caught in the extreme FEAR or FOMO and miss opportunities or lose money because of ignorance.
While starting slowing in the first year in the second we usually see slow movement to the upside. Of course, in the long term, it looks small but in the short term, the movements can look quite big. This is why we need to keep the right perspective.
The Bitcoin halving
Every 4 years, we have Bitcoin halving. Which means that we will have fewer Bitcoins coming in creation through mining. The current inflation of Bitcoin is 3.74% per annum and after the next halving, the inflation will become 1.80%. Thus becoming lower than the central-banks target for the FIAT currencies. This acts as a shock to the supply of Bitcoin thus it is likely for us to see the price rising. Nothing is certain so don’t take it as a hard point as we don’t know how things will develop in a year.
The last year of the Bull cycle
This is the year where everybody is excited and we have many new people getting involved. This is the year which you need to be careful and considering exiting the market. Thus taking profits at the top when the majority of the new investors will buy. Just as it happened in 2017 – a parabolic bull run for the half of the year with the last two months being incredible. It is obvious if you know the market and has done your research. Otherwise, you are most likely to be blinded thinking that we truly are going to the moon.
The last year is the one where everybody looks at the price and this is the only thing that they can think of. Nothing of true value is being built at that time and due to many new people getting involved, you are bound to have bad people involved in the industry too. Creating scam projects and ripping people off their money. At the end of the third year, at the end of the bull cycle, it is very likely to be packed with bad projects and scams. This is the moment for you to be searching for an exit. Of course, don’t take this as financial advice as it is not. It is just a personal opinion based on research and personal experience.
During the last half of the third year, we are going to see the exchange’s volume blowing through the roof. Get ready to see Binance/Bitmex/PrimeXBT etc… setting new records for daily volume alongside the other big exchanges and trading platforms.
The Bear market – The last year of the 4-year cycle
The last year is the most severe one, it is the one that you either short the market or just wait. It is the year where you should have already have exited. During this year we witness prices falling by almost 90% in the big cryptocurrencies and many badly managed projects and scams die. Money is lost all over the place and people capitulate, especially at the end of the bear market. What we see is Bitcoin and other cryptocurrencies being ridiculed and said that they will die off.
But at the same time, during the same year, we see a lot of things being built, a lot of progressions when you don’t check the price every day. During this period we also see more adoption, more and more people and companies start to accept Bitcoin and maybe other altcoins as payment methods. Thus driving the industry ahead.
After the worst has ended we see the start of the new cycle and at the same time disbelief.
Thanks to Bob Loukas for the inspiration for this article. Here is a link to his video for the 4-year cycles.
He is explaining the 4-year cycle in a more technical way and makes it even easier to be understood. Here is a link to his channel full of educational videos for Bitcoin.
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