Market cycles, or All you should know about the future price of Bitcoin

Bitcoin in 10 years of its existence, has been through 4 of boom and bust. Thus, for 2018 it was buried for 90 times. The regularity is impressive, but it is not accidental. Market cycles drive any market, whether traditional or cryptocurrency. In short, the single market cycle – is the price increase (upward trend or bull market) and a further fall (downtrend or bear market).

The contents

Why the “market cycle”?

The recent market cycle of Bitcoin (2015 – present). Source: hackernoon.com

First, the price rises and falls cyclically. But most importantly, at the core of each cycle are human emotions. Then there is a cyclic movement from fear, uncertainty and doubt to greed, excessive optimism and euphoria. After greed and euphoria at the price of BTC in 20 thousand dollars, the Bitcoin market has significantly turned around. Fear and doubt is particularly well noticeable when the cryptocurrency around $ 4,000 after the old maximum.

Cycle from time to time repeated, and the history of Bitcoin prices confirms this. The following is the tweet, which shows the duration of the ascending and descending trends since 2011.

The duration of the historical uptrend and downtrend BTC (2011-2018):

  • 2011-2012: 48 weeks uptrend;
  • 2012:a 22-week downtrend (-93%).
  • 2012-2013: 72 weeks uptrend;
  • 2013: 12 weeks downtrend (-80%).
  • 2013: 20 weeks uptrend;
  • 2013-2014: 58 weeks downtrend (-86%).
  • 2015-2017: 152 weeks uptrend;
  • 2018: 51 week downtrend (-84 percent and continues).

This statistic sheds light on some interesting properties of the history of prices of the main cryptocurrency.

First, the upward trends or bull markets historically last longer than the previous downtrend.
Secondly, it shows how many percent of the lost Bitcoins in the course of historical downtrend.

Down trend adjust overly optimistic and enthusiastic mindset that had market participants, when they were absorbed by the bullish euphoria at the level of 20 thousand dollars in December 2017. Such downward trends are called bear markets.

The longest bear market in Bitcoin lasted 58 weeks during the 2013-2014. Then the coin dropped to 86 percent. The current bear market of cryptocurrencies lasts 53 weeks, while Bitcoin dropped to 84,5 percent.

In fact, with 84.5 per cent is just the average of Bitcoin correction. So contrary to what you may hear in the media, the fall in the market value of Bitcoin is not unusual.

The current market cycle Bitcoin average

Bitcoin for almost a year going through the long CryptoPhone after an exponential run-up in December 2017, when it reached its historical maximum at the level of 20 thousand. But as already noted, the pullback of the stock market is historically average, when compared with the three previous corrections of Bitcoin. The current correction is a fourth in a row.

Similarly, in the current market cycle of the Bitcoin growth was quite standard when compared with previous market cycles, despite the impressive mind-boggling exponential growth. Below shows the percentage growth of Bitcoin in each market cycle, and the last uptrend and 20 thousand are in bold.

  • 2011-2012: the increase of 312 thousand percent.
  • 2012-2013: growth of 13 thousand per cent.
  • 2013: a rise of 2.2 thousand percent.
  • 2015-2017: an increase of 11 thousand per cent.

Although during the last bullrun Bitcoin grew by 11 thousand per cent, it was only the third largest exponential growth for a short but colorful history of course. In the current market cycle Bitcoin nothing extreme. In fact, it is quite normal by the standards of the total history of Bitcoin prices.

Forecast future trends based on previous market cycles

Historical market data are often used to identify trends and extrapolate these data for potential future trends. Although the historical behavior of prices can be useful for prediction of future trend changes, no market cycle is not an exact copy of the previous one. Each of them is different. Every uptrend gives a different growth; every correction has different scales. While based on historical data about the rollback of Bitcoin, it is possible to speculate how deep will the correction in this downward macro-trends.

Undo history of Bitcoin:

  • 2011-2012: -93%;
  • 2012-2013: -80%;
  • 2013: -86%;
  • 2018: -84,5% at the moment.

If Bitcoin falls 86 percent

In the current market cycle Bitcoin has already dropped to 84,5 percent. Rollback 86 percent would mean a pullback to 2800 dollars. Today BTC is worth $ 3670. To repeat the rollback 2013-2014 86 percent, Bitcoin should fall from the current level of approximately 13 percent. This will be equivalent to a fall of 1.5 percent compared to the historical maximum to 20 thousand. That is 84,5 + 1,5 = 86 percent.

If Bitcoin falls to 93 percent

On the other hand, a pullback from historic highs of 93% would mean that Bitcoin should fall to about $ 1400. To BTC reiterated its biggest at the moment the retracement at the level of 93 per cent in 2012, it should fall from the current level of 57 percent. That is still 8.5 percent from a historic high, because 84,5 + 8,5 = 93 percent.

This episode will be among the “worst” scenarios that you can expect from Bitcoin given the history of its price. At the same time, from the point of view of probability theory rollback to 93% for the least likely scenario for the main cryptocurrency. Whatever it was, is now, based on previous market cycles, you can predict the Bitcoin bottom is in a wide range from 1400 to 2800 dollars.

People are predictably irrational

The data of Bitcoin market cycles can allow us to understand something about what behavior to expect from its price. History usually repeats itself, but with some changes. However, fundamental shifts in human psychology, the underlying market cycles, remain the same.

Market cycles reflect the cycles of human emotion.

From fear to greed, and from greed to fear.

People are predictably irrational. The cyclical nature of the history of Bitcoin prices – proof. The markets will always be irrational. Crowd psychology and human emotions never change. Sooner or later, the cryptocurrency market will begin to get searchers the best deals to cheap to buy the dominant coins and alternate cryptocurrencies. This will give impetus to the beginning of the next bull run cryptocurrency. People will begin to feel the greed and fear of loss of profits.

As a reminder, the current rate of coins can be found in our classroom ranking of cryptocurrencies. More data look at cryptodata.

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