BITCOIN Is this the 'most normal' Cycle of them all ??This is not the first time we use a Convergence/ Divergence approach to Bitcoin (BTCUSD) Cycles and certainly not the last one. On the previous one, it helped us to succesffuly predict the end of 2022 bottom but what we couldn't anticipate is how smooth the new/ current Cycle 5 (orange trend-line) would be.
As the title says, this is probably the 'most normal' Cycle of them all, as BTC has been trading within a Channel Up (orange) since the Bear Cycle's bottom more than 2 years ago.
To get a better understanding of this claim, we compare Bitcoin's (BTCUSD) Cycles from their previous top to the next one (with the exception of the first), on this complete mapping analysis, having them all displayed on top of another: Cycle 1 (green trend-line), Cycle 2 (red), Cycle 3 (blue), Cycle 4 (black) and the current one Cycle 5 (orange).
** Diminishing Returns **
As you see, first of all, this showcases the Theory of Diminishing Returns, which suggests that as the market grows and higher adoption is achieved, BTC will show less and less returns in each Cycle. Every Cycle Top has been lower from the previous one.
** Cycle Convergence - Divergence **
Secondly, all Cycles particularly during their Bear Phase and for a short time after, tend to follow a common path. The illustration on this analysis is very clear as it starts with each Cycle's Bear Phase and you can see that when they diverge, they converge again quickly. The most recent Bear Phase was not surprisingly as long as Cycle 4 and almost Cycle 3, which was to be expected as the market has shown an amazing degree of symmetry in the past 10 years. Note that this is also the model that helped as determine very early in 2023 that Cycle 3 would be the best fit for the new Cycle in terms of price action and without a doubt, BTC has been mostly replicating that Cycle.
** What's next for the current Cycle? **
If we compare the current Cycle (5) with Cycle 3 we can see that the Convergence - Divergence Model is holding. So far when Cycle 5 converged, it immediately diverged. And this is exactly what it has been doing since the December High and the marginal January All Time High (ATH). It has started to diverge significantly from Cycle 3 so what the recent pull-back to the 1W MA50 achieved is to normalize it and is about to touch it.
Now that the price hit the bottom of its +2 year Channel Up, we expect to rise, which will achieved convergence and contact with both Cycles 3 and 4, which is what they both did in their last 150 days of their respective Bull Cycles. Technically, this can take Cycle 5 to around $150k.
As we've first mentioned in the crypto space, regarding the last Bear Market being the 'smoothest' in history, we can securely say now that the current Bull Cycle is also the 'most normal' ever.
So what do you think? Does this Cycle regression model offer any useful conclusion as to where Bitcoin might top and if so, is this Cycle indeed the 'most normal' in the history? Feel free to let us know in the comments section below!
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