The current time is September 17, 2023. Let me first state the conclusion: the Bitcoin bull market in 24-25 years will be different from any previous bull market.
I would like to share my views from two perspectives. One is what guiding significance the Bitcoin halving trends over the years have for the future, and the other is the possible impact of the Federal Reserve’s monetary policy over the years on the next Bitcoin peak.
Part 1: Bitcoin halving trends over the years
Bitcoin halving occurs every four years, and the exact date is uncertain. At present, the next halving will be on May 9, 2024, which is 319 days away. Let's review the past halving cycles.
The first halving occurred in November 2012. The lowest point occurred 357 days before and the highest point occurred 371 days after. The total duration was 735 days. The highest increase from the beginning of the halving was 104 times.
The second halving occurred in July 2016. The lowest point occurred 546 days before, and the highest point occurred 518 days after. The total duration was 1071 days. The highest increase from the beginning of the halving was 40 times.
The third halving occurred in May 2020. The lowest point occurred 518 days before and the highest point occurred 546 days after. The total duration was 1,071 days. The highest increase from the beginning of the halving was 7.5 times.
The similarities can be seen in:
There always seems to be a lowest point before each halving, and it always occurs within 1-1.5 years;
The high point after the halving occurs in 1-1.5 years;
Before the halving, there are basically opportunities for a second or even multiple bottoming out, with different intervals between bottoming out;
There is basically a bull market before the halving, with the increase from 6 times at the beginning to 4 times, and then to 3.5 times;
Once the halving begins, there will be no chance of a second bottom, and the price will continue to rise.
There are some differences:
Not every halving cycle has a double top at the top;
As the volume grows, the increase after each halving is getting lower and lower, from 100 times at the beginning to 7.5 times recently;
The slope of each rise is getting lower and lower (63°-48°-31°), and the overall trend seems to be moving towards a round top.
History often does not repeat itself simply. If history really repeats itself mindlessly according to such a simple rhyme, what can we do now?
First, based on past history, we can make the following assumptions:
Around 15,000 is the lowest point before this halving cycle. If there is a new low in the future, it will only be around this point, possibly around 18,000 (assuming 15,000 is the bottom, the bottoming behavior occurs near the neckline of the bottom area);
There is a high probability that there will be a bull market before each halving cycle. We seem to be experiencing such a market at present. If the increase from the bottom to the top of the bull market does not exceed 3.4 times, if it is around 2-2.5 times this time, then the top of this bull market will be between 30,000 and 37,500.
The rising slope of each halving cycle continues to decline. If it follows the historical decrease of about 16 degrees, then the next highest price should be around 65,000, and the highest will not exceed the highest point of the previous rise. The overall cycle increase is about 1.5 times from May 2024 to March 2025.
If the upward slope is set at 15°, then the highest price at the top of the bull market before the halving is approximately between 31,500 and 33,000.
So if history really repeats itself in a simple rhyme, the following conclusions can be drawn from the operation point of view:
The current price is not far from the top of the bull market predicted before the halving;
If you miss out on Bitcoin at 15,000, there is a high probability that you will have another chance to buy it;
Facing the next halving, if Bitcoin is the target, the increase will not be too high, and may be near the previous high.
A double dip could occur in the first quarter of next year, around the time of the Russian election;
This article is presented from the perspective of looking for a sword on a boat, but compared with the previous one, the current macro background is very different.
Bitcoin was born out of the US subprime mortgage crisis. Since then, the US has continued to print money, ushering in a bull market in the US stock market that has lasted for more than a decade. The S&P 500 has risen 6.5 times since its low point in 2009. Compared with before, there are still many uncertainties:
The macroeconomic situation is not clear, and the potential impact of China's short-term reserve requirement ratio and interest rate cuts has not yet emerged;
The international situation has changed suddenly, and the war between Russia and Ukraine is still going on;
The US has not stopped raising interest rates. Although it has stopped raising interest rates now, it is expected that there will be two more rate hikes this year.
It is still unknown whether the US real estate market can land smoothly, and the banking crisis is still going on;
As the size of the cryptocurrency market grows, the increase in each round becomes smaller and smaller;
After the entry of institutions in 2020, the correlation with the Nasdaq has become increasingly higher. Some people even regard Bitcoin as a technology stock in the U.S. stock market. However, when Bitcoin is put in the context of the U.S. stock market cycle, even with the massive money injection in 2020, the increase does not seem to be high.
It is difficult to predict the future. We always move forward with a mindset of crossing the river by feeling the stones. Looking back at past cycles, the bull market in the cryptocurrency circle is always inseparable from the three elements of policy + liquidity + narrative. Currently, none of these three elements are met. In this regard, for those who want to achieve class transition through the cryptocurrency circle, they must have a rich knowledge system and respond to the market with a long-term perspective. It is not advisable to look for a sword on a boat, and living a long life is the hard truth.
This article only expands from the dimension of halving cycle. There will be opportunities to continue exploring from the perspectives of on-chain data, narratives of each round and performance of copycats in the future. Even if it is a case of cutting the feet to find the sword, there are always some similar influencing factors that are worth referring to. Compared with most markets, this market still has huge room for imagination.
When facing the next round of market conditions, based on past experience, we don’t have much to refer to.
In terms of time, first, it took about 20 months from the start of interest rate cuts to the low point after the bursting of the Internet bubble, and second, it took about 18 months after the subprime mortgage crisis. If an extreme black swan event occurs next year and the Federal Reserve begins to cut interest rates urgently, it is completely possible to have a rebound, after all, there is a halving narrative, but whether it means a reversal may still need to be considered carefully. Assuming that a black swan event occurs in February next year and it rebounds to around 18,000, then the bottom will most likely be in the fourth quarter of 25 years, and the price at that time may be lower than 15,000, but this does not mean that you can hold it for a long time, because the big cycle is different, so it cannot be generalized, but if you want to hold it for 10-20 years, there is a high probability that there will be no problem, because for ordinary people, the most difficult thing is the time cost.
Timing, stock selection, and allocation are the basic order of investment. Whether you can make money depends on faith, not research. This faith includes the faith in stock selection, but also the faith in timing. Making a fortune in life depends on Kondratieff waves. Taking a long-term perspective does not mean that we should waste our time in a futile way, but maintain a prudent attitude, know the truth and the reason, observe our position and understand our behavior from a broader perspective.
