In macroeconomics, market cycles include an economic boom followed by a recession. In the past ten years since Bitcoin was launched, the cryptocurrency market has developed cyclical movements, featuring a bull run where the price of the overall market surges and a subsequent bear market where the market crashes and struggles to regain strength.
Currently, Bitcoin and the broader cryptocurrency industry are sitting in a bear run, with experts, investors, and traders hoping to determine when the market will turn upwards once more. If the past cyclical trends are anything to go by, there are several indicators that point to a possible turning point in the market.
The previous Bitcoin cycles
The first cycle: 2009 to 2012
When Bitcoin was launched, the first amount someone paid for it was $0.00099 for one Bitcoin token. This was a formative cycle in the life of Bitcoin, and it gained only a little attention from very early adopters and tech developers who saw the potential in the asset. There was no major tracking on Bitcoin during this discovery phase, and metric data is limited. Between April and June 2011, Bitcoin rose from $1 to $29,60, looking at a nearly 3000% increase.
The bear run entered after Bitcoin’s peak at the time, and the price of Bitcoin fell to $2.05 by mid-November.
The second cycle: 2012 to 2015
The second cycle in Bitcoin’s life ranged from 2012 to 2015. The industry and concept of digital assets were still not well known in the global market. The bear run kicked in when the only major exchange at the time, Mt Gox, was hacked, and many investors saw their wallets and accounts looted. During this, Bitcoin plummeted – a flash crash – and saw 99% of its trading value at the time wiped out.
The market turned after two major events in the industry: Firstly, Ethereum was launched, giving rise to ‘altcoins’ and other blockchain-based projects in the industry. Secondly, other exchanges and trading platforms were established, such as Bitindex Prime, and launched with increased security to protect against hackers and prevent another Mt Gox scandal from occurring.
The third cycle: 2016 to 2019
From third major cycle in Bitcoin’s market lasted from 2016 to 2019, when a wave of retail adoption was seen. The launch of Ethereum had led to the emergence of thousands of cryptocurrency projects – many based on Ethereum’s network. The projects used the concept of an initial coin offering (ICO) for fundraising which brought many new ideas and funding into the industry.
At the end of 2017, Bitcoin peaked at $19,665 before falling. By February, Bitcoin was trading around $6,800, and in December, it was at nearly half, holding just $3,200.
The fourth cycle: 2020 to present
With a global pandemic, the launch of Bitcoin futures, and the increasing rise of decentralized finance (DeFi), investor interest was piqued in response to the global economic concerns in response to the pandemic.
Bitcoin started climbing after a dip in March 2020, and the bulls entered the market between April and November 2021, when Bitcoin found its peak, seeing a $69,044 value. From there, the cryptocurrency has fallen to just under 70% of its record high value. Currently, Bitcoin is in the throes of this cycle’s bear market, with some believing that the cryptocurrency has found its bottom.
A bear market is part of the cycle in cryptocurrency and Bitcoin trading. If history has taught anything, however, it’s that the market will turn to the bulls, and the prices of the market will see steady gains again.
Trading during a bear run might seem risky, but if you time the market well when the bull run kicks in again, the investment will pay off in the long run.
Author: Morgan Reeves