Hope, panic, anxiety? Where is Bitcoin in this current market cycle?

01 Mar, 2019 | Updated: 01 Mar, 2019
by David Borman
Analysis
Hope, panic, anxiety? Where is Bitcoin in this current market cycle?

Has Bitcoin bottomed already, or are there still some dark days ahead of us? Chepicap takes a look at the current market cycle to see at which stage we are with Bitcoin and the cryptocurrency market. 

Many investors are familiar with the concept of market cycles. That is the long term, regular ups and downs that come along with most growing markets. Most have probably seen the infamous "Wall Street Cheat Sheet," which lays out in pretty simple terms how these cycles play out. That being the case, let's take a look at where the crypto market may be in our current cycle, and what that means for the coming year.

If you haven't seen it before, this is the well known image outlining, literally, the "psychology of a market cycle." In a nutshell it is showing how growing markets always pass through phases of exponential growth, followed by massive crashes, and periods of consolidation before the whole thing begins again. Keep in mind this image is overly generic and meant only to give the general shape of a cycle, not used as a metric of precision. That being said, let's take a look at the current Bitcoin cycle, starting in mid 2017 and going through today.

Now for comparison, let's look at the cycle that preceeded that, from around 2013 to the beginning of 2017.

Look familiar? Both the current and previous cycles do show the obvious signs of the market psychology being laid down in the cheat sheet. We see in both cases an exponential run-up followed by a slightly more extended crash of at least 80%, which then turns into a valley of consolidation before the next period of growth. It's fairly easy to see the broader trends, and it's pretty obvious we're somewhere near the bottom, but for how much longer?

That is the part that's hard to say. It's somewhat akin to predicting the seasons. Everyone knows spring is coming, but it can be early or late for reasons that are difficult to predict or explain. One of the best indicators for when the prices may start to rise is the sentiment in the community. As of late, there have been some positive sentiments spreading through the crypto sphere.

For example, there is evidence that both retail and institutional investors are stockpiling crypto. These aren't the traders who are moving the market each day, they are the people slowly adding to their portfolios throughout the bear market. It is evidence that many investors have faith in the technology long term.

Bottom in?
Then there is positive sentiment out of the actual development community. One good example is TRON CEO Justin Sun claiming that he feels we have already seen the bottom:

“I think it is already the bottom, and the bear market is over. From now on for three to five years, it is now an absolute low. For this year, I think Bitcoin will fluctuate between $3,000 and $5,000. The opportunities for market breakthroughs this year include the explosion of the DApp ecosystem, the large-scale application of the lightning network, and the three major opportunities for BitTorrent's 100 million users to enter the cryptocurrency market”

This isn't to say he is correct and the bottom is in. There's no way he or anyone could know, but it is a sign of positive sentiment in the market. Stories like these are beginning to increase across all of crypto.

Industry also seems to be getting on board. The recent announcement by Samsung that the new S10 smart phone would include a cryptocurrency wallet definitely turned some heads. Major companies looking to integrate crypto technology into major products clearly shows they have some degree of optimism about the future.

WATCH: Samsung entering Crypto! 4 Facts and Rumors

Of course it is entirely possible we will still be near the bottom for some time. Recently, prominent investor Peter Brandt pointed out that based upon this exact historical data it would be likely for the price to retest the recent lows before we see any real growth.

Read more: Notable investor Peter Brandt believes Bitcoin could retest its lows

Sometimes observations like these are attacked as being negative sentiment, or FUD (Fear, Uncertainty, Doubt), but much of the time it is just educated analysts pointing out we have been here before, and this is what happened.

Now let's look at one last chart that combines both the optimism for the inevitability of the next bull run, as well as the caution that we may have a way to go before we get there:

This chart shows the price of Bitcoin displayed on a log scale, against time that has been denoted with the "halvening events," when the Bitcoin block reward gets reduced by half. As we can see, each halvening seems to coincide with a bear market but does precede the next bull run. If this trend holds however, then we may be in this downtime for a while. We still have months to go until the next halvening and it looks like bull runs can take over a year to form after such an event.

Now this is not an actual target prediction for 2020 or anything of the sort. It is mainly a testament to the idea that while the crypto market is moving normally, we may not see the excitement of 2017 again for a year or two. Many investors may see this as an opportune time to accumulate holdings, while others may wish to wait until signs of the next bull run become more prominent. 

WATCH: Coins BOOMING after Samsung S10 news! $ICX, $ENJ, $BAT PRICE TARGETS!

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