Analyst Says Bitcoin 4-Year Cycles Are Over, Here’s Why

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As a seasoned crypto investor with over a decade of experience in this volatile market, I have learned to take every prediction and analysis with a grain of salt. However, Justin Bennett’s latest analysis about the potential end of Bitcoin’s four-year cycle has certainly piqued my interest.

According to well-known analyst Justin Bennett, there’s a possibility that the traditional four-year cycle for Bitcoin may have ended temporarily. This means the anticipated increase in its value within this particular market phase might not materialize as expected, and a significant drop in Bitcoin’s price could occur in the near future.

Why The Bitcoin Four-Year Cycle Might Be Over

In a recent post on X (previously Twitter), Bennett put forth the idea that Bitcoin adheres to business cycles, suggesting it could be on the cusp of a fresh era. He pointed out that the primary cryptocurrency has maintained a near-perfect four-year cycle since its inception, experiencing two years of downturn (bear market) followed by two years of growth (bull market).

Instead of continuing the current pattern, he proposed that this trend might shift because Bitcoin tends to align with economic cycles, implying a downturn could mark the end of these four-year cycles. To back up his claim, Bennett pointed out that Bitcoin’s behavior has mirrored the U.S. Purchasing Managers’ Index (PMI) since its inception.

Analyst Says Bitcoin 4-Year Cycles Are Over, Here’s Why

This index assesses an economy’s wellbeing by examining both manufacturing and service industries. As you can see in the graph, Bitcoin’s price tends to increase when the PMI rises and decreases when the index falls. In light of this trend, Bennett predicts that this relationship will persist even during upcoming short-term or long-term economic contractions.

It’s worth noting that the current state of Bitcoin’s cycle might have reached its end, given the impending contraction hinted by recent data. The US PMI is at 47.20, suggesting an economic downturn or contraction. A contraction refers to a period when a country’s economy shrinks, which seems applicable to the current situation in the U.S., as the Federal Reserve grapples with the challenge of reducing inflation without triggering a recession.

It’s important to note that the economic status of the United States has played a significant role in bitcoin’s recent price stability since it hit a record high (ATH) in March. Bitcoin investors have been hesitant due to the concerning signs from US inflation figures and employment reports, which underscore the vulnerability of the American economy.

What This Means For BTC’s Price

As a researcher delving into Bitcoin’s dynamics, I found an interesting observation: while Bitcoin’s price fluctuations seem to mirror business cycles, this doesn’t necessarily mean it won’t continue climbing. However, it’s crucial to comprehend that Bitcoin behaves like a risk asset, significantly influenced by the post-2008 economic climate. Contrary to some crypto analysts’ predictions, Bitcoin doesn’t inherently “rise,” and it doesn’t strictly adhere to a “rainbow chart” or “stock-to-flow model.” Instead, its trajectory is shaped by the ever-evolving economic landscape.

From the analyst’s point of view, there’s been some questioning about optimistic forecasts based on Bitcoin’s halving patterns. Typically, Bitcoin reaches record highs 16 to 18 months following a halving event. However, given Bennett’s hypothesis that this ideal cycle may have ended, we might not see these records broken this time around. This cycle, in particular, has shown signs of deviating from the norm, as Bitcoin achieved a new all-time high before the halving—an occurrence unprecedented in its history.

Currently, as I’m typing this, Bitcoin is being exchanged for approximately $57,900. In the past day, it has dropped nearly 1%, based on information from CoinMarketCap.

Analyst Says Bitcoin 4-Year Cycles Are Over, Here’s Why

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2024-09-13 21:41