Bitrabo Editorial
Analyst Justin Bennett has shared his insights on the potential end of Bitcoin’s four-year market cycles, suggesting that a significant price drop might be on the horizon. He implies that the anticipated price increase in this cycle could fall short of expectations.
Possible End of the Bitcoin Four-Year Cycle
In a recent post on X (formerly Twitter), Bennett emphasized that Bitcoin operates in alignment with broader economic cycles, hinting at a potential shift ahead. Historically, Bitcoin has adhered to four-year cycles, typically consisting of two years in a bear market followed by two in a bull market.
However, he posits that this pattern could shift due to Bitcoin’s close ties with economic trends, suggesting that economic downturns may conclude the established four-year rhythm. To illustrate this point, Bennett referenced Bitcoin’s correlation with the US Purchasing Managers’ Index (PMI), which tracks economic health based on manufacturing and services.
This index indicates economic health through the performance of the manufacturing and service sectors. The data reveals that when the PMI rises, Bitcoin’s price tends to follow, and conversely, it drops when the PMI declines. Bennett argues that this correlation will persist during upcoming economic contractions.
He warns that such a contraction may already be underway, signifying a potential end to Bitcoin’s four-year cycles. Currently, the US PMI is at 47.20, indicating economic contraction—highlighting challenges as the Federal Reserve struggles with inflation without triggering a recession.
Moreover, the current state of the US economy has significantly impacted Bitcoin’s price stability since reaching an all-time high earlier in the year. Investors are adopting a cautious approach due to recent inflation figures and employment statistics, which illustrate the fragility of the economy.
Implications for Bitcoin’s Price
Bennett explains that while Bitcoin’s movements are closely related to economic conditions, this doesn’t negate the possibility of price increases. He emphasizes that Bitcoin should be viewed as a high-risk asset shaped by post-2008 economic environment, asserting that it is not inherently designed for continuous growth despite analyst forecasts or popular price models.
His analysis raises questions about historical bullish forecasts based on halving cycles, where Bitcoin typically reaches new highs within 16 to 18 months following such events. Given Bennett’s suggestion that this cycle may be different—with Bitcoin achieving a new ATH before the halving—prevailing trends might not hold in this instance.
As of now, Bitcoin is trading at approximately $57,900, reflecting a slight decline of nearly 1% over the past day, per data from CoinMarketCap.