Bitcoin investors are hopeful that historical patterns will once again favor their investments, as they frequently have in the past. On January 20, Bitcoin reached a new all-time high of $109,000, prompting many investors to anticipate further significant gains. However, the cryptocurrency has since declined by 22% from its peak. Despite this drop, Bitcoin has a history of rebounding from similar downturns, suggesting potential for a future rise in value later in 2025.
Bitcoin is known to operate in distinct four-year cycles. These cycles are largely influenced by the Bitcoin halving, an event occurring once every four years. Typically, these cycles comprise four phases: accumulation, growth, bubble, and crash. Historically, the halving event has marked the transition from growth to the bubble phase, during which Bitcoin experiences its most substantial increases in value—a period that can last between 12 and 18 months.
The 2020-2021 Bitcoin bull market exemplifies this cycle. The halving on May 11, 2020, initiated an 18-month rally, culminating in Bitcoin’s price reaching a then-record high of $69,000 by November 2021. Investors are particularly interested in the 2015-2017 market cycle, which began with the July 2016 halving and similarly lasted nearly 18 months. The current market cycle appears to mirror this previous cycle, exhibiting a 91% statistical correlation between the two, down slightly from an earlier 92%. This similarity has bolstered investor confidence that Bitcoin might follow a trajectory akin to its 2017 journey, rising from approximately $1,000 to $20,000, potentially indicating an imminent parabolic growth.
The trajectory from July 2016 to December 2017 was not linear, with Bitcoin experiencing pullbacks and periods of stagnation that suggested a breakout might not occur. This historical context can reassure investors concerned about the current 22% decline, reinforcing the excitement surrounding the April 2024 Bitcoin halving. If historical cycles continue, this halving could mark the beginning of a rally extending into 2025.
As speculation continues, some analysts argue that the current Bitcoin rally may already be concluding, viewing the current situation not as a consolidation before a major breakout, but rather as the decline of a brief rally. It has been 12 months since the April 2024 halving, implying the bubble phase, typically lasting 12 to 18 months, may be ending.
Other analysts propose that the bubble phase may have commenced with President Donald Trump’s election in November 2024, suggesting that a rally could continue until 2026 or beyond, especially if further government support for the crypto market materializes. This has led some to speculate that Trump has disrupted the traditional four-year cycle, potentially ushering in an unprecedented “super cycle.”
Investors are advised to exercise caution in relying solely on Bitcoin’s historical patterns for future predictions, as past performance does not guarantee future results, and the assumption of a continued four-year cycle is uncertain. Mark Twain’s observation that “history doesn’t repeat itself, but it often rhymes” provides a useful perspective on the market’s potential. Should history rhyme once more, Bitcoin may achieve new record highs in 2025.
