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Bitcoin, the only digital asset, has shown remarkable regularity in its market cycles for over a decade. These cycles, characterized by recurring patterns and clear technical indicators, offer investors valuable insights into potential future developments. In this article, we analyze the historical data and interpret the latest developments to better understand current and future market movements.
A look at historical cycles
Since 2013, clear market cycles can be observed in Bitcoin. Each of these cycles was characterized by two phases in which the price crossed an important technical line. This line, which typically lies at an RSI value of around 87, played a central role in all past cycles.
- 2013 cycle: Bitcoin crossed the line twice. After the second breakthrough, the price reached its all-time high at the time.
- 2017 cycle: The same pattern was repeated. The price rose again to the market high after the second breakthrough.
- 2021 Cycle: In this cycle, too, the second breakthrough was the signal for the high. What was striking here was that it was a double high.
In the current cycle, Bitcoin has already crossed the line once. Should the pattern persist, a second breakthrough could be an indicator of the next market high. This consistency in cycles is remarkable and provides clear reference points for market analysis.
Breaking through technical barriers
A key milestone in the current cycle was breaking through the previous all-time high in 2021. This was around $69,000 and had established itself as a line of resistance for hundreds of days. Breaking through this level represents a potential buy signal, as previous resistance often becomes support.
However, there are also risks: if Bitcoin does not hold this support line in the next six months, a correction could stop the upward movement. The focus here is on the zone around $70,000, which is considered a critical area for the further course.
Importance of the RSI and bearish divergences
An important technical indicator is the Relative Strength Index (RSI), which measures the momentum of a price movement. In the current cycle, an RSI value of 88 is crucial. This value must be exceeded to confirm a continuation of the upward trend.
Should it fail to do so and the price makes a higher high while the RSI stays lower, it would signal a bearish divergence. Such a divergence is a classic warning sign of a potential trend reversal and could indicate an impending downward movement. Investors should watch the RSI closely over the next few months to make informed decisions.
Stochastic RSI – A rare signal
The stochastic RSI, another technical indicator, provides rare but valuable signals. On a weekly basis, this indicator typically occurs only twice a year. In the past, such an RSI cross often led to the biggest price movements:
- Previous signal in the current cycle: At a price of around $53,000, the stochastic RSI showed a buy signal, whereupon the price rose sharply.
- Historical significance: Such signals often mark the transitions from bear markets to bull markets. A comparable signal in the past led to a doubling of the price to over $100,000.
The latest signal indicates that Bitcoin is once again on the verge of a significant movement. However, investors should keep an eye on the long-term development so as not to be influenced by short-term fluctuations.
“Green-Red-Red” pattern
One of the most distinctive patterns in Bitcoin cycles is the “Green-Red-Red” pattern. This pattern has been observed repeatedly in the last three cycles. It consists of three phases:
1. Green phase: This signals the bottom of the bear market.
2. First red phase: This occurs after the first significant price movement and indicates that the bull market has begun.
3. Second red phase: This marks the transition to the peak phase of the cycle.
Bitcoin Halving Cycles | Cycle Bottom to Previous ATH by kyer on TradingView.com
Historical data shows that it takes about 250 to 300 days from the second red phase to the market high. In the current cycle, Bitcoin has just reached the second red phase. If the pattern repeats, the next high could occur in mid-2025.
Temporal patterns and future forecasts
The temporal analysis of past cycles shows a remarkable consistency:
- 2017: From the second red signal to the high, about 250 days passed.
- 2021: The period was again about 250 days, with an additional double high.
- 2024/2025: Should the pattern continue, the next high could be between 250 and 300 days after the second red phase. This would point to the middle of 2025.
This prediction offers valuable orientation, but is not a guarantee. External factors such as regulation or macroeconomics can influence market developments.
Long-term strategies for investors
The analysis of these cycles offers valuable insights for the development of investment strategies. Investors should focus on proven cryptocurrencies and base their decisions on long-term indicators.
A key point is the timing of purchases and sales:
- purchases during bear market bottoms, such as in the green phase, have historically yielded high returns.
- Sales during the peak phase, such as in 2025, could maximize potential gains.
However, it is important to avoid emotions and not be guided by short-term price movements or hype.
Conclusion: a cycle with potential
The current developments in Bitcoin suggest that the historical patterns could prove true again. Investors who keep an eye on technical indicators and cyclical patterns have the opportunity to make informed decisions and benefit from the impending movements. Nevertheless, the market remains volatile and a diversified strategy is essential to minimize risk.
Author
Ed Prinz serves as the chairman of the most reputable non-profit organization in Austria specializing in blockchain technology. DLT Austria is actively involved in educating and promoting the value and use cases of distributed ledger technology. This is done through educational events, meetups, workshops, and open discussion panels, all in volunteer collaboration with leading industry players.
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Disclaimer
This is my personal opinion and not financial advice.
For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor you trust. No guarantees or promises of profits are made in this article. All statements in this and other articles are my personal opinion.
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