In an analysis that could change the narrative around bitcoin‘s value proposition, crypto analyst TechDev has presented evidence suggesting that liquidity cycles, rather than the much-discussed bitcoin halvings, are the main catalyst for bull runs. Using a set of charts, TechDev offers a new perspective on bitcoin price dynamics.
Is the bitcoin Halving Overrated?
In a recent mail On X, TechDev states: “Are you still waiting for the halving? The ~3.5 year liquidity cycle was already running before bitcoin existed.” The chart provided by TechDev illustrates a juxtaposition of bitcoin price movements with a liquidity signal derived from the balance sheets of major central banks.
The striking feature of this chart is the series of sine lines that appear to predict pivot points in bitcoin‘s price trajectory. These pivot points, marked with colored dots, closely align with inflections in central banks’ aggregate balance sheets, suggesting a correlation between global liquidity and bitcoin price movements.
It is worth noting that each liquidity cycle lasts around 3.5 years, which is slightly shorter than bitcoin‘s halving cycle, which takes place approximately every 4 years. Surprisingly, the Vortex Indicator (VI), a technical indicator designed to identify the start of a new trend or the continuation of an existing trend, also aligns with this trend.
This correlation seems to hint at a broader economic fabric at play, and the chart shows an intriguing synchronization with the expansion and contraction of the balance sheets of major central banks, called a global liquidity signal.
Will bitcoin‘s Next Cycle Peak in 4 to 11 Months?
The second chart from tech Dev further reinforces this relationship. Overlay the VI with the CN10Y/DXY. The VI here underlines the direction and strength of the trend, with inflection points matching the other indicators and bitcoin price movements.
The yellow arrows (dotted lines) show when the positive vortex (blue line) crosses the negative vortex (red line), marking the start of a strong upward price movement. Currently another crossing can be seen. Over the past few cycles, it took 4, 11, and 7 months after the signal for btc price to reach its cycle high.
The chart also points out trend changes in the CN10Y/DXY high-yield spread, which align with the VI and point to key moments in bitcoin‘s price trajectory. Notably, these moments do not align with the halving events. TechDev claims that liquidity cycles are the real drivers behind btc‘s explosive moves.
The previous liquidity cycle extended from December 2017 to mid-2021 and lasted 42 months. The previous cycle lasted from mid-2013 to the end of 2017 and lasted 44 months. Currently, the liquidity cycle is 37 months long.
Going deeper into this, TechDev Explain, “It doesn’t look like there ever was a halving. However, it was smart if Satoshi tried to line him up. It is a world with liquidity cycles. bitcoin lives in it.” Following a question from an It would be appropriate to exceed the halving.”
Kristoph Jeffers, partner at Three Jay Partners, echoed TechDev’s sentiments and acknowledged the visual effectiveness of these charts in understanding market dynamics. Jeffers commented, “I’ve been talking about this for a while and this is a great visualization of the dynamics at play. While the issuance rate of bitcoin is important, the liquidity cycle is the real driving force.”
Additionally, the analyst has received a lot of encouragement from the btc community and the technical analyst field. Gern van Lagen commented: “Excellent.” bitcoin advocate Dr. Jeff Ross responded: “Great chart.”
Mike Alfred said: “If I hear ‘I’m waiting for the halving’ one more damn time, I’m going to die laughing. It’s such a stupid approach, but so many kids on this website repeat it over and over like it’s gospel.”
At the time of publication, btc was trading at $35,400.
Featured image of XT, chart from TradingView.com
