Will history play its hand once more? Bitcoin investors certainly hope so.
On January 20, Bitcoin (BTC 0.35%) reached a record-breaking high of $109,000, prompting many investors to anticipate a further surge in the value of the world’s leading cryptocurrency. However, that hasn’t materialized, and Bitcoin is currently down 22% from its peak.
The silver lining is that Bitcoin has historically shown a strong capability to recover from similar downturns. If historical trends hold true, Bitcoin might be poised for an increase in value as we approach 2025.
The Bitcoin Cycle
The first essential thing to understand about Bitcoin is its tendency to follow distinct four-year cycles. The Bitcoin halving, which occurs every four years, is pivotal to these cycles. Generally, these cycles consist of four phases: an accumulation phase, a growth phase, a bubble phase, and a crash phase.
In the past, the halving event has often acted as a launch pad for Bitcoin to soar in value, moving from the growth phase to the bubble phase. This bubble phase typically spans 12 to 18 months and is when Bitcoin usually sees its most significant gains.
Historical Evidence from Previous Bitcoin Cycles
Consider the bull market cycle from 2020 to 2021. The Bitcoin halving occurred on May 11, 2020, and consequently catalyzed an 18-month rally that saw Bitcoin’s price soar to an all-time high of $69,000 in November 2021.
However, the market cycle that is capturing everyone’s attention right now is the 2015-2017 cycle, which began after the Bitcoin halving in July 2016 and lasted nearly 18 months.
The current Bitcoin market cycle seems to be closely mirroring this historic cycle. In fact, if you were to analyze the price charts from these two market cycles, the similarities would be striking.
And when I say striking, I mean striking. Earlier this year, there was a 92% statistical correlation identified between the two cycles. That correlation has slightly decreased to 91%, but it remains extraordinarily high. Consequently, many cryptocurrency investors are optimistic that Bitcoin will continue on a path reminiscent of its 2017 trend, which saw it rise from about $1,000 to $20,000. This suggests that Bitcoin could be on the verge of another parabolic climb.
Bitcoin / U.S. dollar chart by TradingView
The chart above illustrates that Bitcoin’s rise to the $20,000 mark from July 2016 to December 2017 was not a straight path upward. There were inevitable dips along the way, and there were periods when it seemed a breakout wouldn’t occur. This should provide reassurance to crypto investors concerned about Bitcoin’s current 22% pullback.
It also sheds light on why there was so much excitement surrounding the Bitcoin halving that occurred in April 2024. If you adhere to the concept of historical cycles repeating, this halving should have signaled the beginning of a rally for Bitcoin lasting into 2025.
Will History Repeat Itself?
However, there’s a caveat: Some analysts argue that the Bitcoin bull market may already be over.
According to them, what we are witnessing now isn’t a mere “consolidation” before a significant breakout—this marks the beginning of the end of a brief Bitcoin rally. Keep in mind, the bubble phase lasts between 12 to 18 months, and it has now been 12 months since the April 2024 halving.
Image source: Getty Images.
In light of this, some analysts propose that perhaps the bubble phase didn’t commence with the Bitcoin halving in April 2024. They speculate it might have actually started with the inauguration of President Donald Trump in November 2024. If you calculate 18 months from the election, this might suggest that a Bitcoin rally could persist into 2026.
Moreover, if the White House continues to find innovative ways to bolster the crypto market, it’s possible that the Bitcoin rally could extend into 2027. Some analysts even propose that Trump has disrupted the four-year cycle altogether, leading to a “super cycle” for Bitcoin filled with only favorable outcomes.
Bitcoin Wisdom from Mark Twain
Nonetheless, it’s wise to avoid placing too much reliance on Bitcoin’s past performance as a predictor for its future direction. Historical outcomes don’t guarantee future results, and there’s no absolute law stating that Bitcoin must continue adhering to four-year cycles—even with its unwavering halving schedule.
Mark Twain wisely noted, “History doesn’t repeat itself, but it often rhymes.” Although he wasn’t addressing Bitcoin or the crypto market, this advice can be pertinent when considering the current market landscape. If history does indeed rhyme once more, Bitcoin could be on the verge of setting new all-time highs in 2025.
