Will The ETF Effect & A Trump Presidency Adjust Bitcoin's 4-Year Cycle?
Significant Developments
Despite external factors, Bitcoin has remained within the confines of its 4-year cycle ever since the first halving event. I remember writing an article in 2020 addressing Bitcoin’s future cyclical behavior. It’s important to note that even though the bear market of 2022 was incredibly harsh regarding the events surrounding the collapse of FTX, it was less severe for Bitcoin. In other words, every bear market bottom before the bear market of 2022 was more severe.
You will remember that MicroStrategy entered the market in 2020 and helped to bolster confidence in Bitcoin and the broader Crypto market. However, this was before BlackRock’s ETF approval and the enormous institutional interest we are now experiencing. Many are now beginning to speculate whether or not Bitcoin will remain true to its cyclical pattern. There is a lot of talk regarding a 7-year cycle. The introduction of a gold ETF propelled gold into a 10-year bull market.
The current catalysts may have enough power to influence Bitcoin’s behavior above and beyond previous cyclical limitations. However, to what extent remains to be seen? If history were to repeat, the current bull market would run out of steam towards the end of 2025. Even if Bitcoin remains within historical expectations, there is still time for altcoins to experience new all-time highs.
Aggressive Demand
Bitcoin has entered into a period of aggressive demand. Ongoing demand from institutions and ETFs is bolstered further by Trump’s strategic Bitcoin reserve, which is expected to push the asset to $15 trillion. This does not even include retail money, which is only beginning to flow into the market. Furthermore retail is always last to respond in a bull market.
Naysayers are often convinced during the final stages of the bull market. Eventually, they cannot take it any longer! They capitulate but at the worst possible time. Essentially, the majority of retail investors arrive in the final months of a bull market. However, will this time be different? Will latecomers not be punished as before, or not as severely? This is the question that is currently doing the rounds.
Some time ago, I mentioned that Bitcoin was likely to follow a similar path to gold when it received ETF approval in 2004. The graph above reveals a strong decade for gold, largely thanks to an ETF approval. Bitcoin’s cyclical behavior has been very reliable regardless of what has occurred in financial markets and the world at large. Given the amount of bullish catalysts, I consider an extended bull market a real possibility.
The worst-case scenario is a much less aggressive bear market. Altcoins, on the other hand, are likely to suffer regardless. However, this might be the first cycle where we see certain sectors of the altcoin market performing a lot better than the overall market. This is all very speculative at this stage. However, we can all agree, that Bitcoin is in a strong position, the strongest it has ever been. This has to play in its favor, one way or another.
Final Thoughts
If corrections are severe and short-lived, this could also help avoid a full-blown bear market. I like the idea of an extended cycle, and given everything that is unfolding, it’s not that outlandish. As always, we must see more unfold, especially Trump’s Bitcoin reserve plans. If this is activated, it could impact the long-term trajectory of the Bitcoin price. We wait and see. All the best! See you next time!
Disclaimer
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This article was first published on Sapphire Crypto.
Posted Using InLeo Alpha