Bitcoin 's (CRYPTO: BTC) price action in recent weeks may seem unpredictable and out of the ordinary, but it is actually following a pattern reminiscent of past years. In times like these, it is especially helpful to zoom out so that you don't miss the forest for the trees.
In doing so, not only does it get a little easier to handle Bitcoin's fluctuating price, but opportunities come into focus. With clear patterns showing that Bitcoin is on a familiar trajectory, data suggest it's still a great time to buy Bitcoin before its next big move.
The current Bitcoin landscape
Just two years ago, Bitcoin was in the depths of a crypto winter that saw its price plummet more than 60%, and its price was just over $20,000. While it was slow, eventually Bitcoin gained some momentum, and as 2023 rolled around, the prospects of a bull market loomed.
After finishing 2023 up more than 50%, Bitcoin kept up momentum as 2024 started, thanks partly to the approval of spot Bitcoin exchange-traded funds (ETFs) . At one point, the 11 spot Bitcoin ETFs were buying more than 10 times Bitcoin's daily production rate. In other words, the added demand from the spot Bitcoin ETFs created a temporary supply shortage. This buying frenzy led to Bitcoin notching a new all-time high of more than $73,000 in March, just before the halving that cut rewards for miners who create new Bitcoin.
For those first few months of 2024, it seemed like Bitcoin only went up. Between January and April, it rose by an astounding 60%. But since then, things have been lackluster as Bitcoin has undergone a period of turbulent moves.
This volatility was particularly pronounced recently, as Bitcoin fell from roughly $65,000 to $53,000 in just a matter of a few days. While it has since recouped some of those losses, many may have perceived that correction as Bitcoin showing signs of weakness. But this couldn't be further from the truth. If anything, it solidifies the common presumption that Bitcoin's bull markets resemble each other and, more importantly, that it remains a great time to buy the world's most valuable cryptocurrency.
Contextualizing Bitcoin's behavior
To better understand Bitcoin's current position, it's best to look at it relative to past bull market cycles. In doing so, we can see that Bitcoin remains attractive, despite still being up more than 30% year to date.
Cryptocurrency analyst Benjamin Cowen recently posted a chart on X that provides the necessary context to see that Bitcoin remains strong at today's prices, despite the recent cooling. In the chart below, Cowen tracked Bitcoin's prices from its market lows to the highs of bull cycles.
If you look at #BTC market cycles, as measured from the low, you can see we are at the same spot we are normally at in this phase of the cycle pic.twitter.com/j9grLtiN0z
-- Benjamin Cowen (@intocryptoverse) Aug. 9, 2024
Notice the purple-ish line, which represents the fifth Bitcoin bull market cycle, and how it is in a virtually identical position to the orange and green lines in past cycles? All this means is that Bitcoin is on track compared to those bull market runs.
Those days in February and March this year when Bitcoin's price was skyrocketing were a sign that the market was ahead of schedule and overheated. It needed to cool off, and that's what has happened since then. While many may have panicked, zooming out would have provided the confidence that nothing was awry.
More importantly, though, it insinuates that Bitcoin's most explosive days are likely ahead. Take a look at how steeply Bitcoin's price begins to curve later in cycles. While there's no telling how high Bitcoin will make it in this bull market, history shows that there is at least some reason for optimism -- and that there is a good chance that investing in Bitcoin today remains a potentially lucrative opportunity.
The long-term investment perspective
While this isn't an incentive to try to time the market, it provides valuable context to make decisions more practically and not based solely on emotion when markets sway. There is no doubt they are unsettling, but these types of corrections are part of the natural ebb and flow of Bitcoin.
Even though history may not repeat itself exactly, the patterns and trends observed in Bitcoin's past provide valuable insights for investors today. With the right mindset and a long-term investment perspective, Bitcoin continues to present an opportunity for those looking to be part of the next chapter in its journey.
Before you buy stock in Bitcoin, consider this:
