Amidst signs of improvement in the world trade situation, Bitcoin has once again reached $100,000.
Without a substantial improvement in the overall macroeconomic outlook, Bitcoin’s profits could be fleeting.
If history is a guide, Bitcoin could be nearing the end of the bullish stage of the four-year cycle.
10 stocks I like more than Bitcoin›
For news of positive developments in terms of global trade, see Bitcoin (Cryptography: BTC) Once again we’ve regained the $100,000 price level. The euphoria of the crypto market was evident, and almost all top cryptocurrencies were high as soon as the initial trade agreement was announced.
The new idea is that Bitcoin is moving on to another one of its famous bull markets, moving on to a new history high. But is that really true?
The White House’s announcement of a new trade deal with the UK is certainly reason for optimism, but a closer look at the “trade” reveals that it is truly an agreement and tariffs are not gone.
Furthermore, as skeptics point out, the UK accounts for only a small portion of all US trade, and the US actually has a trade surplus with the UK. Meanwhile, it would have been much more bullish for the US to sign its first trade agreement with a major Asian trading partner that had a trade deficit.
Image source: Getty Images.
It was also less than 48 hours after Fed Chairman Jerome Powell warned of economic growth and price rises as a result of tariffs. We haven’t seen the direct economic impact from tariffs yet, but warning signs on the horizon are ominous. Bitcoin’s profits could be fleeting if dozens of new trading transactions are not signed within the next 60 days.
However, given the pace of facility adoption, it will be much stronger if Bitcoin enters a new bull market cycle. The best way to see institutional adoption is to look at the influx of investors into Bitcoin ETFs. These influxes tested negative during the peak tariff uncertainty but then positive.
In fact, more money has now flowed into Bitcoin ETFs than gold ETFs. That’s especially impressive considering that gold is better than Bitcoin this year. Gold is also a safe shelter asset that you would normally want to keep during times of economic and geopolitical uncertainty. So it speaks to volume that it appears that investors are buying more Bitcoin than gold.
It also allows us to measure the pace of institutional adoption by tracking the increase in companies adding Bitcoin to their balance sheets. Leading the road is micro-strategy (NASDAQ:MSTR)currently running business as a strategy and continues to load into Bitcoin. In addition, the number of “MicroStrategy Copycats” is increasing. These follow a strategy to buy as much Bitcoin as possible.
The story continues
Combined with a new infusion of global liquidity and a sea of change in investor sentiment, Bitcoin can certainly boost its short-term. But how long?
To answer that question, it’s important to know where you are on the Bitcoin cycle. Historically, Bitcoin follows a well-documented four-year cycle, leading to a period of “boom” and “bust”. The four-year cycle is more than just statistical oddity. It continues from the fact that Bitcoin has half of events every four years.
Based on data from the previous three Bitcoin cycles, Harving usually leads to bullish activities of 12-18 months and large market profits. So, as an investor, all you have to do is take the last half date, add somewhere in the 12-18 months. There is a pretty good idea as to when the Bull Market Cycle will end. The end of the Bull Market Cycle is usually a “blow-off top,” a massive frenzy of speculative bubbles and market euphoria, followed by a sudden market correction.
That’s what I’m worried about right now. Half of the last bitcoin took place in April 2024, more than 12 months ago. So, if history is a guide, it’s soon approaching the end of the current Bitcoin cycle. If the bullish period continues for 18 months, there could be a speculative frenzy of Bitcoin buying activities until November.
This could lead to a repetition of what happened four years ago. In November 2021, Bitcoin reached a record high of $69,000 at the time, appearing to be heading for the moon. It could never be there. The crypto rocket ship never reached escape speeds, and Bitcoin quickly fell below $16,000.
Investors need to commit to buying Bitcoin for the long term. I can’t stress this enough: if you just buy bitcoin for potential short-term profits, you’re doing it all wrong.
Bitcoin is extremely volatile and goes through the boom and bust cycle. It’s exciting when Bitcoin is in the “boom” part of the cycle, but you need to be ready to ride the “bust” part of the cycle as well. We’ve seen this story in Bitcoin before, but it always ends the same way.
Consider this before purchasing inventory with Bitcoin.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
Bitcoin is again over $100,000. Are major cryptocurrencies entering a new bull market cycle? Originally published by The Motley Fool
