We Could Be Entering Uncharted Territory With Bitcoin
And just in an instant, the bitcoin market has become bullish again. But, if you have been paying attention, you will already know that situation has been slowly brewing up, building up to a point that it couldn't be held back any further. Of course, Terra buying billions of spot Bitcoin to use as collateral for their stablecoin, UST, certainly sped the process. Bitcoin has not only been involved in nearly every macro news event happening around the world throughout the last year, but in many cases has been the center-point of it.
Look back to last year when the US wanted to pass the infrastructure bill, but was held up due to disagreements of crypto revisions in the bill. Politicians quickly found out how many people care about bitcoin and other cryptocurrencies, and knew it was a power to be reckoned with. Soon after, we began to see many more politicians begin to use crypto as one of their main talking points, in hopes of getting more votes and funding. Of course bitcoin has also been right in the middle of the whole Canada trucker situation, and even the Russia-Ukraine situation as well. A few years ago, even the most bullish of bitcoiners couldn't have imagined that just one of these huge situations involving bitcoin would take place; let alone all three within a few months of each other.
But that isn't the point of today's article, as I have already discussed that at length. Today, especially with bitcoin's recovery to bullish territory, we need to discuss how bitcoin could be in uncharted territory. And if this does happen, we have to throw everything we know about bitcoin's past price action out the window. Things could become parabolic very quickly.
The first thing that you need to know is that bitcoin's past performance is in no way any indication of what will actually happen in the future. But after enough time has passed, it can be used to have a somewhat general idea of what may or may not happen. In the past bitcoin's price has for the most part stuck strictly to a 4 year cycle that centered around the bitcoin halving cycle that also takes place approximately every 4 years. Generally the price will reach its bottom 12-18 months before the halving and slowly recover up until that point. And the price will spike greatly starting roughly around 6 months after the halving, lasting for a full year before cycle repeats itself. We have never seen bitcoin reach a new high outside of that bullish time window after the halving. This is why the idea of trying to sell your bitcoin near the bullish price peak and wait for prices to bottom out has been popular throughout the space. For the most part in the past, if you had the patience it usually worked out and could have multiplied your bitcoin holdings greatly.
There are a few risks that do come with attempting this though. The first is that it can be very difficult, and perhaps impossible for most people to try and time the market peak or bottom. Causing them to potentially lose out on bitcoin or cash. The other possibility is that there is not guarantee that the price will drop down or plummet like it has in the past. Maybe what we have been going through the last few months was bitcoin's bear market? Look back to the end of 2020 when bitcoin was quickly marching towards its previous all-time high price of $20k. There were countless people who were convinced that BTC wouldn't be able to move above that price obstacle and would instead be heavily rejected downwards. But instead, bitcoin smashed through that price point and never looked back. That situation was different though, as it was timed exactly during the expected bull cycle for bitcoin.
While instead, bitcoin should currently have already seen its blow-off-the top price moment, and be plunging towards a multi-year bear cycle. But instead, while still quite a ways off, are marching towards making a new all-time high. Something that has never happened during those "expected bear" years. And so if bitcoin is able to make a new all-time high price this year, that means that we have to throw those 4 year cycle expectations out of the window. Anything could happen. When traders and people are investing banking on that four year cycle, and are instead trying to gobble up as much bitcoin as humanly possible, and also taking into account the next bitcoin halving is only 2 years away. That is when things start to become very interesting.
I'm of the belief that if this were to happen this year, because it would be so unexpected. The rush and euphoria that would come to bitcoin would also be the highest that we have ever seen. It could cause prices to go parabolic and be the thing that causes that greatest transfer of wealth that we have talking about for ages.
The thing is this; nothing is guaranteed in bitcoin, investing or life. While those bitcoin 4 year cycles have worked out well in the past, to a certain extent they have already been broken. The world is clearly very different than it was 2 years ago, and what we thought we knew, we are now in the dark on. It will be exciting to watch though. I will add this; if bitcoin is to reach a new all-time high this year and go parabolic, the price will get crazy very quickly. Which is something I will touch upon in a future article. Be vigilant out there. Continue stacking SATS, and find ways to maximize your portfolio accumulation. Because we are heading into uncharted waters.
How about you? Do you see bitcoin breaking the 4-year cycle this year? If so, how high could bitcoin's price go?
As always, thank you for reading!
It would be interesting to see if bitcoin breaks the cycle, I think it is possible!