Published in · 4 min read · Apr 25, 2024
--
Where are we in the crypto cycle?
That’s the question many involved with crypto investing are pondering right now.
My research suggests we’re in the fourth or fifth inning. In short, we’re roughly halfway through the bull cycle.
So it’s not to late to start investing in crypto.
Best of all, around 80% of profits are made in the last 20% of the cycle. We’re entering the period where things get truly silly, to the upside.
Let’s look at a few charts…
Crypto prices tend to follow a 4-year cycle.
Every fourth year, crypto prices plunge.
Prices tend to bottom 12–18 months before bitcoin undergoes a halving. They then rally into the halving… then rally even harder in the year following the halving, as this crypto cycle chart shows:
The “halving boom” can be explained by the reduction in supply. With each halving, miners’ rewards get cut in half. This means to keep revenues stable, bitcoin price must double. Unwilling to sell at a loss, miners withhold the supply of BTC from the market until prices rise.
Bitcoin is right on script for this cycle. Prices bottomed 17 months before the halving and have now jumped 300%+ off the lows.
Bitcoin’s fourth halving happened on April 19, 2024.
We arrive at the same conclusion when we look at bitcoin’s gain since it bottomed in late 2022. You can see the current cycle (black line) mirrors the last two market cycles:
Source: Glassnode
From studying past market cycles, we also know bitcoin price reaching new highs is an extremely important crypto signal.
Fresh highs usually kick off the most profitable part of the bull market as this chart shows:
Source: Glassnode
I was recently in London meeting with a few friends who run hedge funds. One of them said, “There is the pre-all-time-high market, and the post-all-time-high market.”
All-time highs matter for a few reasons:
- Every major news outlet starts covering crypto again.
- The people who called crypto a “scam” go quiet because scams do not recover. Dutch tulips never bounced back to new highs.
- They act like a “bat signal” shining in the night sky telling everyone, “Crypto is back” — and the tourists soon flood back into the market.
Just like Louis Vuitton handbags, crypto is a “Veblen good.” Named after economist Thorstein Veblen, these items become more desirable as their prices increase. More people are interested in buying BTC at $70,000 than at $16,000.
Last October, when bitcoin was trading at $27,000, I laid out the case for why it was headed to at least $150,000. I’m sticking to that call.
If anything, I lowballed it. I underestimated the power of bitcoin ETFs.
ETFs remove the taboo of investing in crypto for Wall Street. These ETFs are a genuine game-changer.
GLD was the fastest ETF to accumulate $10 billion in assets. That is, until the bitcoin ETFs debuted.
GLD took three years to reach $10 billion. BlackRock’s iShares Bitcoin Trust ETF (IBIT) did it in just seven weeks.
Bitcoin ETFs also create an “infinite bid” for crypto.
When tens of millions of Americans get paid every other week, they buy stocks on autopilot through their retirement accounts.
This creates continuous demand for stocks, which puts a floor under prices.
Thanks to the ETFs, crypto now has an “infinite bid” as well. The world’s largest asset managers — including BlackRock, Fidelity, VanEck, and others — are telling their clients to buy and hold BTC in their 401(k)s.
The floodgates have opened. Billions of dollars of Wall Street’s money are pouring into crypto for the first time ever. And I think we’re only getting started.
But I wouldn’t buy bitcoin here… even though I predict BTC will reach at least $150,000 by the end of this crypto cycle.
I prefer to invest in smaller, fast-growing cryptos with higher upside. I list 3 such disruptor cryptos in this article (click here).
P.S: For more insights and analysis, subscribe to my investing letter The Jolt⚡.
I publish fresh research on cryptocurrencies and stocks every M/W/F.
