abstract
#比特币 The 4-year cycle is a significant trend in the crypto market, influenced by macroeconomic factors, investor behavior, and miner behavior.
Liquidity cycles and behavioral dynamics within Bitcoin play a role in the dispersion and accumulation of the asset, leading to changes in the overall state of the market.
As Bitcoin matures, macroeconomic factors and a diversified investor base are expected to increasingly influence its price, changing the 4-year cycle.
Hidden Patterns in Bitcoin’s 4-Year Cycle
In recent years, the buzz surrounding Bitcoin’s 4-year cycle has grown louder and has become a widely discussed topic among crypto enthusiasts and market analysts. Marked by major events and trends in the cryptocurrency market, the cycle has aroused the curiosity and interest of both cryptocurrency veterans and newcomers.
However, the causes and effects of Bitcoin’s 4-year cycle are often misunderstood or oversimplified. The real factors that influence it include halving, macroeconomics, and human behavior, which may benefit investors.
01/
Bitcoin Halving: The Decisive Catalyst
Or is it a self-comforting prophecy?
One of the most interesting behaviors of Bitcoin is the “halving,” a predetermined event where the number of new coins generated and distributed to the network is cut in half.
Currently, the entire network produces about 900 bitcoins per day. After the halving, which is scheduled for the end of the first quarter or the beginning of the second quarter of next year, this number will be reduced to 450. The previous halvings in 2012, 2016 and 2020 all led to major milestones for Bitcoin.
The halving affects the price of Bitcoin due to simple principles of supply and demand.
When the halving occurs, even if demand for Bitcoin remains stable, the reduction in supply will create an imbalance that will push prices higher. This price momentum could trigger a multi-year bull run for Bitcoin.
As the cycle progresses, the initial impetus of the halving, although weakened, continues to drive the market forward.
02/
Ripple Effect:
Liquidity Diffusion in Crypto Markets
As the bull market matures, liquidity spreads from Bitcoin to other cryptocurrencies such as Ethereum and eventually to riskier long tail assets.
This proliferation continues until the new money flowing into the cryptocurrency market cannot sustain the increase in the number of assets of the major cryptocurrencies and new projects being created.
When this unsustainable point is reached, the market collapses, the diffusion of liquidity reverses, and funds flow from long-tail assets back into Bitcoin and Ethereum, providing a reset point for the liquidity cycle.
This liquidity pattern is not unique to the crypto market, but is also a feature of traditional financial markets.
03/
Human Factors:
Behavioral Dynamics and Market Psychology
In addition to halving and liquidity cycles, another important factor affecting Bitcoin market behavior is the psychological dynamics of market participants. In order to better understand this, it is necessary to delve into Bitcoin's on-chain data.
The price of Bitcoin and the profitability of active network participants significantly influence market dynamics. In fact, market participants who have accumulated large unrealized profits are more likely to sell during a market downturn because they fear losing those gains.
Additionally, individuals who enter the market after a significant price rally are often less experienced or less convinced of the long-term value of the asset. These factors lead to a more volatile holder base than at the bear market lows.
04/
Profitability and Ownership Base:
The key driving factors behind
When discussing profitability, people often mention a range of metrics categorized by cost. These include realized price, a proxy for the network’s total cost basis, and realized price for short- and long-term holders.
These indicators help understand the market conditions – whether it is unrealized losses or gains.
The change between the market price and the total cost basis can be measured using the market value to realized value (MVRV) ratio.
High MVRV readings indicate large amounts of unrealized profits and have historically marked peaks in Bitcoin’s 4-year cycle.
05/
Miner influence:
A weakening force in Bitcoin’s 4-year cycle
Historically, Bitcoin mining has had a significant impact on the market as a pro-cyclical force.
Miners accumulate Bitcoin when they are profitable in bull markets and are forced to sell during bear markets.
However, capitalization indicators suggest that their impact on the market has been declining.
06/
Global macro picture:
Rising influence
Historically, Bitcoin has maintained a degree of independence from global macroeconomic factors. However, as it becomes more integrated with the traditional financial system and gains adoption by more institutional investors, it has become more susceptible to their influence.
For example, fluctuations in the strength of the U.S. dollar, changes in monetary policy, and geopolitical tensions can now directly impact Bitcoin’s market behavior.
Bitcoin is often viewed as a safe haven asset during economic crises or financial market instability, just like gold.
Therefore, during times of heightened global economic risk or uncertainty, we could see a surge in demand for Bitcoin, which could push its price higher.
07/
Compliance: A Wild Card
The impact of regulatory factors on Bitcoin market behavior is considerable and often unpredictable. While some countries have embraced Bitcoin and other cryptocurrencies, others have implemented strict regulations or even outright bans.
Positive regulatory news can drive Bitcoin prices higher, while negative news can trigger a sharp drop.
For example, when countries like Japan and South Korea recognized Bitcoin as a legal payment method, it had a significant positive impact on its price.
Conversely, when some countries announce crackdowns on Bitcoin mining and trading, the market drops sharply.
08/
For the next Bitcoin
4-year cycle preparation
Bitcoin’s price behavior is shaped by a complex interplay of factors, including its built-in halving mechanism, liquidity cycles, the psychology and behavior of market participants, the influence of miners, global macroeconomic factors, and regulatory developments.
Understanding these factors can provide investors and market participants with insights into Bitcoin’s potential price movements.
Nonetheless, due to the highly volatile and unpredictable nature of the crypto markets, one should not view these factors as definitive forecasting conditions. Instead, one should use them as a tool to assess probabilities and manage risk.
As Bitcoin continues to develop and mature, the factors that influence its market behavior may also change. Therefore, it is crucial to stay up to date with the latest developments in Bitcoin and the broader cryptocurrency market.
Disclaimer: This article is for popular science purposes only and is for reference only. It does not constitute any investment advice!
Planning and production
Original text: Bary Rahma
Formatting: 9iMxxx | Translation: Michaelyang
Posted by: NFT Gamer
