Popular analyst Justin Bennett He has explained why bitcoin's four-year cycle might be over in the foreseeable future. He indicated that the cryptocurrency's projected price increase in this market cycle might not happen as planned and that bitcoin could suffer a severe drop in prices quite soon
Why bitcoin's Four-Year Cycle Might Be Over
In an x (formerly twitter) x.com/JustinBennettFX/status/1833867138131492990″ rel=”nofollow” target=”_blank”>mailBennett claimed that bitcoin follows economic cycles and explained why the leading cryptocurrency could be on the verge of a new era. He noted that the leading cryptocurrency has been following the perfect cycle four-year cycles Since its inception, we have witnessed two years of bear market and one bull market.
However, he suggested that this could change, as bitcoin’s correlation with business cycles means that a contraction would end these four-year cycles. To demonstrate that bitcoin follows business cycles, Bennett highlighted how bitcoin has followed the example of the United States. Purchasing Managers Index (PMI) From the beginning.
This index measures the health of an economy using the manufacturing and service sectors. The attached chart shows that the price of btc has risen whenever the PMI has risen and has fallen whenever the index has fallen. In line with this, Bennett stated that the correlation will continue to exist during the next short- or long-term contraction.
Interestingly, this contraction could already be imminent, so bitcoin's four-year cycle could be over. US PMI The current price level is 47.20, which represents a contraction. A contraction is when a country's economy is in decline, which could be said of the US right now. Federal Reserve struggles to reduce inflation to its desired target while avoiding a recession.
It is also worth mentioning that the US economic situation has largely contributed to the stagnation of the btc price since it hit a new all-time high (ATH) in March. bitcoin investors have remained cautious as US inflation data And jobs reports have shown just how fragile the US economy is.
What this means for the price of btc
bitcoin-bottom-is-not-in-potential-30k-retest-on-the-horizon/” rel=”nofollow noopener” target=”_blank”>Bennett He noted that bitcoin's correlation with economic cycles doesn't mean its price can't go up. However, he stressed that people need to understand that btc is a risk asset driven by post-2008 economic conditions. He added that it is not “programmed to go up” as cryptocurrency analysts have projected, nor is it destined to follow a “rainbow chart either bitcoin/bitcoin-100000-in-2024/#:~:text=bitcoin%20To%20%24100%2C000%20Is%20%E2%80%9CInevitable%E2%80%9D&text=He%20noted%20that%20the%20Bitcoin,average%20price%20level%20for%20Bitcoin.&text=However%2C%20he%20added%20that%20this,year%20but%20sometime%20in%202025.” rel=”nofollow noopener” target=”_blank”>stock-flow model.”
The analyst's outlook has certainly cast doubt on bullish predictions based on halving cyclesHistorically, bitcoin reaches new highs between 16 and 18 months after the halving event. However, Bennett suggests that this bitcoin-halving-cycles/” rel=”nofollow noopener” target=”_blank”>perfect cycle It may be over, but that may not be the case this time. This cycle has already proven to be different, considering that the flagship cryptocurrency hit a new ATH before the halving, which has never happened before.
At the time of writing, bitcoin is trading around $57,900, down nearly 1% over the past 24 hours, according to bitcoin/” rel=”nofollow noopener” target=”_blank”>data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
