Bitcoin’s Next Four-Year Cycle Has Already Begun; Here’s What Investors Can Expect

Bitcoin (BTC) is in the fourth month of a new four-year cycle, one that could set the stage for a new bull market that rivals all the previous in terms of intensity and duration. If history is any indication, long-term investors can expect big things, but only if they are prepared to wait it out for the next three-to-four years.

Dominant Market Trend

Bitcoin’s December low marked the end of the previous four-year cycle, according to cryptocurrency trader Bob Loukas, who confirmed the new paradigm in a YouTube video uploaded earlier this month. Loukas speculated about the end of the previous cycle in a January 14 video but was still waiting to confirm whether bitcoin’s price had actually bottomed. Now that the bottom has been priced in, the new four-year cycle is said to have started back in January.

As Loukas notes, the four-year cycle is the dominant market trend across most asset classes and influences short-term price movements as well as long-term trends. The previous four-year cycle, which ended in December, was marked by a 153-week uptrend followed by a 52-week bear market, for a total of 205 weeks. That’s just three weeks short of a full four years.

While predicting bitcoin’s future is never easy, we can be relatively confident that the December low marks the end of the previous cycle. That’s because there’s too much separation in terms of time and price action for the current move to be anything but the beginning of a new cycle.

New Cycle: What to Expect

As the new market paradigm continues to evolve, Loukas implied that the sky is the limit for bitcoin’s price over the next four years. This means a new record high is almost a certainty. Investors shouldn’t take this to mean that accumulation will be linear. Bitcoin will likely see long periods of consolidation followed by sharp reversals that could shake out over-leveraged positions and those who entered the market over a fear of missing out. Those who are patient, i.e. investors with a three-to-four-year time horizon, will be rewarded significantly during the next bull market.

On that basis, bitcoin is likely to face strong resistance near $6,000, a psychologically significant level that also corresponds with average mining costs before last November’s sudden market crash.

Given bitcoin’s long-term trajectory, cost-averaging at current levels isn’t a bad idea. Based on Loukas’ analysis, investors can still load up on bitcoin at lower levels than we see currently as the aforementioned shakeout plays out sometime in the future. Regardless of your strategy, taking out loans or buying bitcoin on margin isn’t a good idea. People who buy assets with funds they cannot afford to lose tend to panic during sharp corrections.

Also read Crypto Weekly Recap: Market Correction Fails to Shake Bitcoin Bulls.

BTC/USD: Current Levels

Bitcoin is currently trading in the $5,080 region on most major exchanges, though it was priced as high as $5,112 on Bitfinex. A sharp reversal on Thursday knocked bitcoin off overbought levels, which had approached the highest since the bull market.

The leading digital currency remains well supported near $5,000. Price action has moderated from early last week, though the underlying trend remains bullish. Read more about bitcoin’s technical levels here.

Bitcoin’s share of the overall cryptocurrency market has improved to 52%, which reflects an oversized drop in altcoin and token values in the last 72 hours.

Research from OnChainFX, which attempts to calculate real trade volumes via Bitwise, says daily turnover in bitcoin has increased 25% since March.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

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Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi