Renowned analyst Justin Bennett has recently shed light on the potential end of Bitcoin’s well-known four-year cycle. According to Bennett, the anticipated price surge in this market cycle might not occur as expected, and Bitcoin could face a significant price drop soon.
Why The Bitcoin Four-Year Cycle Might Be Over
In a post on X (formerly known as Twitter), Bennett explained that Bitcoin’s behavior aligns more closely with business cycles, suggesting a shift from its traditional four-year pattern. Historically, Bitcoin has experienced two years of a bear market followed by two years of a bull market, perfectly fitting into a four-year cycle since its inception.
However, Bennett proposed that this pattern could change. He highlighted Bitcoin’s correlation with business cycles and pointed out that a contraction in these cycles could disrupt the established four-year rhythm. To support his claim, Bennett cited the US Purchasing Managers’ Index (PMI), which has tracked Bitcoin’s price movements from the beginning.
The PMI is a crucial economic indicator that measures the health of the manufacturing and service sectors. Bennett showcased a chart demonstrating that Bitcoin’s price tends to rise when the PMI increases and drops when the index declines. He suggested that this correlation would persist through both short-term and long-term economic contractions.
Interestingly, an imminent economic contraction might already be in play, potentially signaling an end to Bitcoin’s four-year cycle. The current US PMI stands at 47.20, indicating a contracting economy. As the Federal Reserve grapples with balancing inflation control and recession avoidance, this contraction could profoundly impact Bitcoin’s price.
The United States’ economic state has significantly influenced Bitcoin’s stagnant price action since it reached its new all-time high (ATH) in March. Investors remain cautious, influenced by US inflation data and job reports, which reflect the fragility of the US economy.
What This Means For BTC’s Price
Bennett emphasized that Bitcoin’s correlation with business cycles does not necessarily mean its price cannot move higher. However, he stressed the importance of recognizing Bitcoin as a risk asset driven by post-2008 economic conditions. He argued that Bitcoin is not inherently programmed to increase in value, contrary to many crypto analysts’ projections based on models like the “rainbow chart” or the stock-to-flow model.
This viewpoint casts doubt on the traditionally bullish predictions centered around Bitcoin’s halving cycles. Historically, Bitcoin has reached new highs 16 to 18 months after a halving event. However, with Bennett suggesting that the perfect four-year cycle might be over, this trend may not hold true this time. Notably, Bitcoin set a new ATH before the latest halving, an unprecedented occurrence.
As of the current writing, Bitcoin is trading at approximately $57,900, reflecting a nearly 1% decrease over the last 24 hours, according to CoinMarketCap data.
In conclusion, the potential end of Bitcoin’s four-year cycle could signal a new era for the cryptocurrency. While economic conditions and market cycles play a significant role, investors and analysts must adapt to these changing dynamics. Whether Bitcoin will defy traditional patterns and continue to grow or face significant downturns remains to be seen.
