Where are we in this Bitcoin bull cycle?
Considering that this bull cycle started on November 9, 2022, when Bitcoin bottomed out after the FTX collapse, the cryptocurrency’s performance so far has been consistent with what we’ve seen in previous cycles. Based on these metrics, Bitcoin is on track for nearly 700 days of a bull market. Historically, we’ve looked at the 2015-2018 cycle, which lasted about 1050 days, and the 2018-2022 cycle, which lasted about 1280 days. If Bitcoin is in line with the four-year cycles, we can assume that we’re already past the halfway point of this current cycle.
In the 2015-2018 cycle, it was from this point onwards that Bitcoin really began to soar, rising from $800 to over $2.8k between January and July 2017. Eventually, the price reached nearly $20k by the end of that year, marking an all-time high that lasted three years.
Comparing to the most recent cycle between 2018 and 2022, Bitcoin is currently charting a fairly similar path, with a return of 278% so far, compared to 244% at the same point in the previous cycle. Should the bull market structure hold, it would indicate that we have more room for growth in the coming months, especially if price action continues to follow the cyclical patterns observed previously.
Several factors support the prospect that this bull cycle will have more momentum. First, the macroeconomic environment is becoming more favorable, with expectations of a bearish interest rate cycle, which historically benefits risk assets such as Bitcoin. In addition, the 2024 US presidential election could serve as an additional catalyst for the market, especially if crypto-friendly candidates gain traction.
The recent approval of Bitcoin and Ethereum ETFs by the SEC is also a significant factor that could stimulate institutional demand for cryptocurrencies, facilitating the influx of liquidity into the market. Finally, by broadening the scope of our analysis to include the overall recovery in cryptocurrency prices since the FTX collapse, coupled with increasing institutional adoption, we are confident that we could see a further upward leg in the coming months.
What Else Happened This Week?
US Vice President Kamala Harris recently took a seven-point lead over Donald Trump on Polymarket, currently the largest prediction market for various events. Less than a month ago, before President Joe Biden dropped out of the race and endorsed Harris, Trump’s odds were as high as 72%. This shift in odds is significant, especially for the crypto market, which is closely tied to the regulatory and economic policy expectations of the incoming administration.
For the crypto market, Harris' rise in the electoral odds brings a scenario of uncertainty and potential volatility. If Harris continues to gain ground, this may indicate a lower probability of policies that favor the regulation of crypto assets, following the line of the current Democratic administration, which may generate major corrections in the market, based on expectations of greater government control and less regulatory clarity.
Market Analysis
Last week, the crypto market faced a sharp drop, triggered by weak US jobs data that reignited fears of a possible American recession. However, this drop was partially mitigated by positive jobless claims numbers released later that showed a decrease in claims and helped ease recession fears.
With the market still reeling from this volatility, all eyes are now on the upcoming Consumer Price Index (CPI) report, which is set to be released on August 14. Over the past two weeks, the market has been experiencing significant volatility due to mixed economic data. During its July policy meeting, the Fed hinted at the possibility of cutting interest rates in September. Now, the market is divided on whether this cut will be a modest 0.25% or a more significant 0.50%. Historically, the crypto market tends to see a final correction leg when the Federal Reserve starts cutting interest rates. However, during subsequent cuts, risk assets tend to outperform as more liquidity is injected into the economy.
