Original author: Biteye, chaincatcher.com

Reprinted by: Daisy, Mars Finance

This article will review the four cycles of Bitcoin from 2011 to 2024 and deeply explore the market changes in the current cycle.

The Bitcoin cycle theory, especially its association with the Bitcoin halving event, has long been seen as an important tool for predicting Bitcoin price trends. Historically, Bitcoin halvings have usually led to price increases, but current market performance and the factors behind it suggest that the effectiveness of this theory may be weakening.

This article will review the four cycles of Bitcoin from 2011 to 2024 and deeply explore the market changes in the current cycle.

Non-farm data is positive, why did Bitcoin and Ethereum plummet?

In traditional financial markets, non-farm payrolls are often viewed as a barometer of economic health. A strong non-farm payrolls (NFP) number usually means good economic conditions, increased corporate hiring, and improved consumer spending and confidence. However, despite the recent strong U.S. non-farm payrolls data, which showed a healthy job market, the cryptocurrency market reacted in the opposite way: Bitcoin and Ethereum fell sharply after the data was released. This phenomenon seems contradictory, but there are actually multiple factors at work behind it.

Crypto analyst Astronomer, known by the handle @astronomer_zero on X, has put forth a potentially compelling bottom signal for Bitcoin, which hinges on the electricity costs incurred by miners to produce BTC. According to him, this particular metric has historically served as a reliable indicator for identifying optimal buying opportunities within Bitcoin’s price cycles.

Is The Bitcoin Bottom In?

The analysis titled “BTC Miners electricity cost, a 100% accurate bottom signal,” leverages data to illustrate a scenario where the cost of Bitcoin production dips below its market price, suggesting a pivotal moment for potential investors. Astronomer elaborated on his methodology and findings by referencing his previous predictions which successfully pinpointed market tops, notably a 30% drop from a $70,000 peak, which was guided by similarly data-driven signals.

Astronomer’s current focus on the cost of mining stems from its significant implications on Bitcoin’s supply dynamics. Despite the halving events designed to reduce the reward for mining Bitcoin, there remains a 0.84% annual inflation in its supply, equating to roughly $10 billion worth of Bitcoin entering the market each year. This is equivalent to the total holdings of significant corporate investors like MicroStrategy, indicating a substantial influx of Bitcoin from miners, who are inclined to sell gradually to sustain their operations.

However, the current market conditions, as described by Astronomer, have reached a rare state where the market price of Bitcoin has fallen below the average weighted cost of electricity required to mine it. This situation typically constrains miners from selling their holdings at a profit, thus potentially reducing the sell pressure on the market.

“Not only does that mean that the miners can’t sell their BTC for a profit. It also means that it is simply cheaper to just log into a CEX and buy 1 Bitcoin, instead of going through the pain of mining 1 Bitcoin. So not only does this make the miners (the people controlling BTC) not want to sell, it also makes them want to buy, because it is cheaper to just buy instead of mine them,” Astronomer suggests.

This shift not only impacts the selling behavior of miners but also their buying strategies, contributing to a decrease in supply pressure and possibly triggering upward price movements. Astronomer supports his claim by pointing out that historically, when the cost of production fell below the market price, it has consistently led to substantial price recoveries.

He detailed instances from the recent past, including notable dips in March 2023 when Bitcoin hit $19,500, November 2022 at $16,500, June 2022 at $18,000, May 2020 at $8,900, March 2020 at $4,700, and November 2018 when it bottomed out at $3,500. Each of these moments was followed by robust bull runs, underlining the potential reliability of this signal.

“How many times? 17 out of 17 times, it meant that price was at levels that, according to history (with high statistical significance), you would want to buy, or would miss and regret it for a very long time,” the analyst adds.

Currently, with the production cost of Bitcoin, according to Capriole Investment’s data, standing at $60,711 and the price lingering at $56,713, the conditions described by Astronomer are manifesting yet again. This juxtaposition poses a critical question to the market: Is now the time to buy?

While Astronomer’s analysis is backed by historical data and detailed market observation, he remains cautiously optimistic about the outcomes, encapsulated in his closing remark, “Will this time be different? Maybe.”

At press time, BTC traded at $56,804.

Source: NewsBTC.com

The post 100% Accurate Bitcoin Bottom Signal Hits: Time to Buy? appeared first on Crypto Breaking News.

Bitcoin, the largest cryptocurrency by market capitalization, ended the month of August down 8.73%, as expected based on past trends.

In a recent tweet, Ali Martinez noted that while Bitcoin played out its historical narrative for August, similar expectations exist for September typically believed to be a negative month for Bitcoin.

However, recent insights from Spot On Chain, shared in a thread of tweets, suggest five reasons why this year might be different.

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First, negative Augusts may help to avoid a negative September. In other reasons cited, major selling pressures have cleared and long-term holders remain strong. Fourth, Bitcoin ETFs can be a renewed buying force and lastly, favorable interest rates, capital and regulations might help to boost the market in September.

Bitcoin to break September's jinx? Here are five indications

Spot On Chain’s analysis begins with a historical observation: While it is true that September usually sees a downturn, it's not a given. Nearly 43% of negative Augusts have been followed by a positive September. This year, with Bitcoin experiencing a negative August, there’s a chance that the worst may be behind it, setting up for a potential rebound.

5/ Potential buying simulators:• FED may cut the interest rate in September, which could boost demand for risky assets like $BTC or Bitcoin ETFs.• #FTX will repay $16B to creditors in cash, not crypto, which can be re-injected into $BTC and the broad market.• Both US… pic.twitter.com/a2ycWxLYoc

— Spot On Chain (@spotonchain) September 1, 2024

Second, selling pressure has substantially declined for Bitcoin. Three major selling forces unloaded 170,917 BTC or $10.69 billion to the market in July and August, including the German government, which sold 49,859 BTC worth $3 billion in early July and no longer holds BTC. Mt Gox repaid 95,958 BTC in July and August and still holds 44,898 BTC worth $2.65 billion, or only a third of the initial holding. GenesisTrading distributed 24,068 BTC for repayment on Aug. 2 and no longer holds BTC.

However, the U.S. government still holds 203,650 confiscated BTC worth $12 billion, and like in the German government case, this can be a big selling force. However, recent actions suggest limited near-term sell-off risk.

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In 2023 and 2024, the U.S. government moved 35,516 BTC worth $1.48 billion to Coinbase at nearly $41,637, but overall there were only weak price reactions because most sales were done via OTC with minimal impact on the market.

Long-term holders, which increased their supply by 262,000 BTC in August, bringing their total holding to 14.82 million BTC, or 75% of the total supply, remain another positive factor. Similarly, BTC ETFs can be a renewed buying force, if the pattern of alternating between positive and negative months continues.

Other potential buying simulators include the likelihood of FED cutting the interest rate in September, which could boost demand for risky assets like BTC or Bitcoin ETFs. FTX will repay $16 billion to creditors in cash, not crypto, which can be reinjected into BTC and the broad market.

The world’s leading cryptocurrency has traded in a sideways channel ever since the early 2024 Bitcoin ETF rally.

Market bulls started it in earnest in October as a result of premature reports that SEC approvals were around the corner.

After that, BTC went from $27,000 on Oct. 14 to an all-time record high of almost $74,000 on Mar. 14. That represented a 170% gain for crypto investors in just five months.

The United States Securities and Exchange Commission approved 11 Bitcoin ETFs on Jan. 10, 2024. SEC Chair Gary Gensler said, “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

The Bitcoin ETF rally delivered a whopping average annualized ROI of 415%. It was by far not the first time the largest cryptocurrency delivered eye-popping returns.

Also, by far, it was not the most BTC has returned to investors over comparable timeframes in previous markets over the past 15 years of its existence as an open-source blockchain operating over the Internet.

However, since peaking in March, bitcoin has traded sideways in a rangebound channel. So when will April’s halving supply cut kick in and touch off another rally based on BTC’s limited inventories?

The market is in different waters, to be sure, with the asset reaching a new ATH before its halving. That hasn’t happened in previous cycles. Regardless, there are signs this bull has room left to run.

But first, here are the headwinds Bitcoin’s price faces in September:

5 September Headwinds for Bitcoin’s Price

1. $33B Government Supply Overhang

According to crypto research company Kaiko, there is the looming threat of a $33 billion BTC supply glut because several governments have stashes they might offload, plus recovered Mt. Gox funds are being restored to their owners.

History from earlier this year showed us that when authorities and former users of the defunct crypto exchange decide to dispose of their assets, BTC’s price suffers.

2. Bitcoin ETF Paper Hands

Bitcoin purists like Andreas Antonopoulos warned about this years ago. Now that Wall Street is interested in cryptocurrency, its buying and selling pressure affects the price.

September is usually a month of selling on Wall Street. Since 1950, stocks returned investors an average loss of 0.7%, making it the worst month for the asset class.

The selling has already started in Bitcoin ETF markets, which saw outflows for four consecutive days from Aug. 27 through 30, totaling $454 million, according to Farside data.

3. Bitcoin Cyclical September Doldrums

Crypto has been no different from stocks in its short history. Bitcoin has only generated positive returns in September three times in the last decade. This seasonal trend could affect prices this year.

4. US Election Jitters

This four-year U.S. political cycle usually leaves financial markets uncertain until democracy has prevailed again with another peaceful transition of power and more policy certainty. The big money waits to make its moves until after election day.

5. Post-Halving Consolidation

Markets are right in the timeframe after previous halvings when bitcoin’s price tends to decline before rallying to new all-time highs.

Once all the sellers shake out and BTC finds its post-halving bottom, the bulls take over and run it up to new heights.

4 Long-Term Bitcoin Price Supports

While bitcoin markets may have tough waters ahead based on the factors listed above, here are four long-term BTC price supports for bulls and bears to consider:

1. Financial Tailwinds for Bitcoin’s Price

The Fed is pivoting to low rates. This is bitcoin’s time to shine.

The US Federal Reserve sets the tone for the global financial economy by adjusting target interest rates for the supply of new dollars through daily lending markets in time with prices and employment.

Now that the Fed has called for rate cuts to shore up slowing labor markets with post-pandemic inflation, interest rates will begin to fall again, and prices are likely to start rising.

The way the credit economy works usually causes that wave of rising prices to happen first and with the most force in financial markets like the New York Stock Exchange and NASDAQ.

The more liquid the market for a trading asset and the more high-growth its future prospects are, the more leverage it tends to move against the benchmark change in interest rates.

That goes for bitcoin big time. For the previous three supply cycles, the daily new issuance was cut by half every four years. One year after the 2012 halving, BTC was up 50,000%. About 18 months after the 2016 halving, it had gone up 8,500%.

Federal interest rates were functionally zero percent during the entire post-2012 halving bitcoin bull market. However, BTC still delivered market-whopping alpha compared to stocks in the 2016 cycle. The Fed began steadily hiking rates in late 2015, reaching 2.4% by mid-2019.

Bitcoin surged to above $64,500 on Sunday, Aug. 25, after Fed Chair Jerome Powell announced on Friday that the central bank would soon begin cutting interest rates.

Over the week, BTC corrected but found support at $58,000 instead of falling as low as $55,000 as it did in the last two big corrections in August and July. That could signal the Fed pivot is emboldening long-term bulls.

2. Bitcoin Goes to Washington

The embrace of BTC by both U.S. political parties is very promising for long-term price support.

As markets grow more assured that the United States government groks bitcoin and has the will to back the crypto industry, the more calculated the risks are for the rewards of innovating and capitalizing valuable contributions in the blockchain space.

Crypto expert Andrea Barbon, a Swiss University of St. Gallen finance professor, recently told Forbes:

“While bitcoin has often been viewed as a hedge against economic turmoil, its future performance could hinge on the upcoming U.S. elections. So far, Donald Trump has been more supportive of crypto, and a return to the White House could bring regulatory shifts that favor digital assets.”

But regardless of how Republicans and Democrats parcel up the levers of power this November, crypto companies are beginning to wield enormous influence in Washington.

They have made the most political donations in 2024, according to a report by Public Citizen, a non-profit D.C. consumer advocacy watchdog.

3. Bullish Smart Money

Participants representing the smart money in crypto, for example — MicroStrategy co-founder Michael Saylor and Blockstream CEO Adam Back — are outlandishly bullish for BTC this cycle.

Saylor recently confirmed in August that he personally owns bitcoin in an amount worth some $1 billion at the current market prices.

Adam Back, meanwhile, has an $80,000 BTC price target in view.

Back commented in late August that financial company Cantor Fitzgerald’s $194 target for MicroStrategy stocks implies an $80,000 BTC price.

That would represent a 33% gain for the asset over its $60,000 long-term support level since March. Why is smart money betting on further price increases of this magnitude for bitcoin?

Because they believe the most securely scarce cryptocurrency is poised to become a major world reserve for massive private and public treasuries to engage in international trade.

4. Bullish BTC Technical Indicators

Bitcoin markets gathered strength to the upside last week, with exchanges increasing in volume as bulls took the price above $65,000, according to data from CoinMarketCap.

That enthusiastic buy-up following the Fed’s interest rate announcement is an early signal of the market’s demand for the asset as rates go down and prices increase.

Bitcoin and altcoin chart analyst Mister Crypto posted to over 118K followers on X Tuesday that he expects to see an enormous parabolic move for BTC sometime in the near future.

Highlighting the descending flag pattern on bitcoin’s chart from March through August, often a bullish continuation pattern during a broader uptrend, Mister Crypto asked, “Would you believe me if I told you this #Bitcoin breakout has a target of $93,000?”

Earlier in August, the crypto investor said it is very likely that bitcoin’s price will return to the $68,000 level in the short term now that it has broken above $64,000.

The post 5 Bearish and 4 Bullish Factors for Bitcoin (BTC) in September appeared first on CryptoPotato.