In the first cycle, the price of the cryptocurrency peaked in less than a year. With increasingly long successive cycles, the current one could extend for 600 more days.
The price of Bitcoin began to record evolution in mid-2010. Since that year, this cryptocurrency has experienced successive bubbles, as well as abrupt drops. A recent study by Coin Metrics shows a comparative analysis of four Bitcoin price cycles.
These cycles begin at a local minimum until reaching a maximum point. The first cycle is approximately one year, from mid-2010 to mid-2011. A small group of enthusiasts starting in the trading culture knew about Bitcoin. At the same time, the price rose from a few US cents to about USD 20 in one year.
Then, Coin Metrics looks at the second cycle, ending in early 2014, when Bitcoin reaches the USD 1,000 barrier for the first time. Bitcoin exchange Mt. Gox fueled that bubble and then closed following the theft of 850,000 BTC in February 2014, affecting around 24,000 users.
The last full cycle extends from the beginning of 2015, with Bitcoin barely exceeding USD 200, until December 2017, when it reached an all-time high of almost USD 20,000. According to data from CoinMarketCap, the yield increased by 8,900% in this Bitcoin price cycle.
The current cycle begins with December 2018 low and is in full swing.
It is possible to see that the period that elapses for the first three cycles increases, with a duration of about 1, 2, and 3 years. On the other hand, the current cycle, for which the maximum does not seem to have occurred yet, has had a duration of more than a year and a half, about 600 days.
To be able to compare the four cycles, Coin Metrics represents them together on the same time scale, starting from a common origin. In this way, it is easier to see that the first cycle lasts less than half the second cycle and that the third cycle is longer than the previous one since it extends beyond 1,000 days.
Based on the analysis, historical data do not guarantee that probable patterns will repeat themselves in the future. However, it is possible to observe that each price cycle is longer than the previous one. Besides, the speed of price growth for the first three cycles is lower in each successive cycle.
The current cycle started with a greater push than the previous one, but it is possible to appreciate the effect of the drop that occurred in March. Even so, there was a price recovery fairly close to the curve of the last cycle.
If the current cycle has the same duration as the previous one, it would still take 600 days to reach a maximum. This hypothesis would imply that the current Bitcoin price cycle would end in 2022.
It would be necessary to wait at least a year and a half until the next bubble occurs, which would have a lesser impact on the price.
By Alexander Salazar
