Bitcoin is the most popular cryptocurrency that plays a key role in market development. Its value and the direction of the exchange rate affect the mood of traders and investors not only in relation to the first cryptocurrency, but also to all other coins and tokens.
Since now the crypto market is in the state of winter, because of which trading is not so active and prices in the long term go down, interest in information about the change of trend is growing.
In order to know when bitcoin will end its decline phase and move to growth, pulling the rest of the market with it, it is important to understand what influences this process.
What is the bitcoin cycle
The bitcoin cycle is the alternating phases of the rise and fall of the exchange rate. On average, one cycle lasts about four years. The calculation of time is based on the events that affect the price of the cryptocurrency.
The cycle consists of growth, decline and sideways movement, which alternate with each other. Statistically, a rising market lasts about 1.5 years and a falling market lasts 2.5 years. The sideways movement refers to one of the phases. Since there is no long-term sharp rise or fall, the fluctuation in one range after a surge in demand or supply has a corresponding direction.
Halving plays a major role in cycle phase changes. Halving is a decrease in the rate at which new blocks are mined. Each time it occurs, the mining process becomes more difficult and the reward is cut in half.
Halving acts as a starting point before growth begins. About a year after it passes, the bitcoin exchange rate updates its all-time high. This is what happened in 2017, after the halving in 2016, and in 2021, after the halving in 2020.
What phase of the cycle bitcoin is currently in
On November 9, 2021, bitcoin updated its all-time high and reached a price of $67,549 according to CoinMarketCap. After that, a decline in the price began, which continues until now.
As of October 26, 2022, the price decline reached 70% of the historical value. During this year, the rate dropped to $18,534.
Now bitcoin is still in the decline phase and will not come out of it until it reaches its bottom. Despite the fact that there has not been a sharp decline in price since July, there is no trend for a reversal as bitcoin is in a sideways downtrend.
Why bitcoin is falling
There are many factors influencing the drop in the exchange rate. These include global geopolitical problems, traders’ fear of losing their money, and more. The strength of the factors depends on the specific moment. They also have an effect on each other.
For example, in January 2022, due to the protests in Kazakhstan, there was a sharp decline in the bitcoin rate by 7%. Such a strong effect was caused by the Internet shutdown in the country, which led to the termination of the work of miners. At that time, Kazakhstan accounted for 18.1% of bitcoin mining capacity.
Such collapses put psychological pressure on traders and investors, who may withdraw their assets for fear of losing money.
The same effect was produced by the drop in the bitcoin price after reaching an all-time high. An avalanche-like movement was formed, prompting traders to sell their cryptocurrency along with everyone else before it was too late.
Economic crises and periods of instability in the world play an important role. People tend not to invest in risky assets, which include cryptocurrencies, but choose more stable ones. This leads to an outflow of investments and a decrease in active injections.
It is the cumulative effect of many factors that influence both the fall and rise of the exchange rate in the long term, which makes it difficult to identify a few dominant ones. In the short term it is easier to do so, but the input will concern a certain period of time.
When will the bitcoin rate stop falling
Since the change of phases of the cycle is closely related to halving, it is by it that the market trend is predicted to change to growth.
Considering the situation today, a change in the direction of the rate is not expected in the near future. Most experts are inclined to believe that the beginning of the bull market will not occur before reaching the bottom.
In previous cycles, the rate drop from the historical maximum reached 80-90%. Calculating for the current cycle, bitcoin’s value may fall to $13,000 or even $6,000 – $7,000 with the same percentage of decline.
No one knows exactly when this will happen, otherwise trading would be easy and everyone would know what to expect.
When bitcoin will update its all-time high
An update of the all-time high is predicted for the period after the new halving. Just like the previous times, the growth period after that may take about a year or more.
The next halving is expected from late 2023 to mid-2024. Depending on the counting system, the data varies. For example, the report before the halving from Binance states that there are 512 days left. Accordingly, it is possible to expect an update of the historical maximum in 2025 – 2026.
As with the forecasts for the end of the fall, the beginning of growth is also a floating period.
When calculating the entry point for bitcoin investments, it is worth considering the value for which you are going to sell your assets.