Bitcoin price action is beginning to mirror BTC’s 2015-2017 pre-bull market cycle

August 15, 2023 Coin Telegraph

ATH

Bitcoin’s price action and the crypto markets’ structure are beginning to mirror the pre-bull run activity seen in previous years, according to Delphi Digital.

A recent report by the research firm Delphi Digital illustrates the predictable consistency of price action and trends within the crypto market. The report delves into the interconnectedness between the four-year Bitcoin (BTC) cycle and broader economic trends.

According to Delphi Digital analysts, the ongoing consolidation at $30,000 is similar to the period between 2015 and 2017, with indicators pointing toward an all-time high (ATH) for Bitcoin by the fourth quarter of 2024.

Economic cycle's impact on Bitcoin's performance

Delphi’s analysis draws attention to the inherent cyclical nature of the cryptocurrency market. This cyclicality is demonstrated by the timing between peak-to-trough bottoms, recovery periods to previous cycle highs and the timing of price rallies to new cycle tops. Using Bitcoin as a benchmark, Delphi outlines the general blueprint of a cryptocurrency market cycle.

*Bitcoin price in USD (log scale) reflecting four-year cycles. Source: Delphi Digital*

These four-year cycles include Bitcoin hitting a new ATH, experiencing an approximate 80% drawdown, then a bottom around one year later. This tends to be followed by a two-year recovery to prior highs and, finally, a price rally for another year leading to a new all-time high.

The research reveals a fascinating correlation between Bitcoin price peaks and changes in the business cycle, as indicated by the ISM Manufacturing Index.

*Bitcoin/USD year-over-year (orange) vs. U.S. ISM Manufacturing Index year-over-year (white). Source: Delphi Digital*

During Bitcoin’s price peaks, the ISM often demonstrates signs of topping out, and active addresses, transaction volumes and fees reach their highest point. Conversely, as the business cycle signals recovery, so do network activity levels.

The report emphasizes the Bitcoin halving’s role in these cycles. The last two halvings occurred about 18 months after BTC bottomed and roughly seven months before a new ATH. This historical pattern indicates a projected new ATH for Bitcoin by the fourth quarter of 2024, aligning with the expected timing of the next halving.

Bitcoin price action looks similar to the 2015-2017 pre-bull run phase

The report also suggests that the current market environment shares striking similarities with the period between 2015 and 2017. The alignment of market behavior, economic indicators and historical trends indicates that the current phase is akin to a time of increased risk exposure and potential growth, just as was experienced during that period.

The report notes that the market’s trading patterns, especially in the S&P 500, closely resemble the trajectory observed during 2015-2017. Even during times of uncertainty, such as an earnings recession, these patterns persist, mirroring the sentiment of that period.

The consistent pattern of Bitcoin’s cycle, its synchronization with broader economic shifts and the imminent halving in 2024 all contribute to this thesis.

*U.S. ISM Manufacturing Index, current (orange) vs. 2013-2019 cycle (white). Source: Delphi Digital*

Delphi highlights parallels between the bleak global growth outlook during 2015-2016 and the recent period of economic uncertainty in 2021-2022. Factors such as the strength of the U.S. dollar and changes in global liquidity cycles echo the past.

The report underscores how gold’s performance around that time, influenced by currency debasement concerns, exhibits remarkable similarities to the present. These parallels bolster the argument that macroeconomic conditions are following a familiar trajectory.

*Gold price in USD (log scale), current (orange) vs. 2015-2019 cycle (white). Source: Delphi Digital*

The crypto market reflects an optimistic outlook, with some red flags

Delphi’s analysis provides compelling evidence that the crypto market operates within cyclical patterns that mirror broader economic changes. The report’s prediction of a new all-time high by the fourth quarter of 2024 aligns with historical halving patterns. This timing, coupled with the state of indicators like the ISM and expectations of renewed liquidity cycles, strengthens the argument for a cycle akin to the one seen in 2015-2017.

The upcoming Bitcoin halving in 2024 further adds credence to the firm's expectations of a possible bull market by the fourth quarter of that year. While the analysis is not without its risks and uncertainties, the overall outlook for the cryptocurrency market in the next 12-18 months appears promising, given the stacking catalysts and historical precedent.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

‘Evidence is piling’ for a new crypto bull run: Delphi Digital co-founder

August 15, 2023 Coin Telegraph

bull market

Delphi Digital co-founder Kevin Kelly believes a recent change in a key U.S. manufacturing business index could be one of the bellwethers for a crypto bull run.

Several on-chain metrics and charts are showing signals that could hint at the beginning of a new crypto bull market cycle, according to the co-founder of Delphi Digital.

On Aug. 14, institutional crypto research firm Delphi Digital's Kevin Kelly said that crypto markets are cyclical and predictable which “has huge implications for the crypto market going forward.”

"Evidence is piling up that we're in the early stages of a new cycle. Risk assets like stocks [and] crypto have been sniffing this out all year."

Kelly also shared an Aug. 8-dated chart by Delphi Digital, highlighting that Bitcoin follows four-year cycles with distinct patterns that have reliably repeated for the past three cycles — with Bitcoin suffering an 80% drawdown in the first year, recovering to prior highs over two years, before rallying to a new all-time high in the fourth year.

The crypto market is highly cyclical.

Crypto market cycles are also remarkably consistent.

But their consistency isn’t just by coincidence.

They’re predictable.

If we're right, this has huge implications for the crypto market going forward.

Time to air out some charts...
— Kevin Kelly (@Kevin_Kelly_II) August 14, 2023

Kelly noted that Bitcoin cycle peaks also typically coincide with the peaks in the Institute of Supply Management (ISM) manufacturing index — which tracks the health of the manufacturing and service sectors in the United States.

“BTC price peaks occur around the same time the ISM shows signs of topping out. Active addresses, total transaction volumes, total fees – they all peaked alongside tops in the ISM too.”

*BTC price/ISM PMI. Source: Delphi Digital*

Kelly explained that when the business cycle starts to show recovery, so does the crypto market.

“Turning points in the business cycle have historically been ripe opportunities to increase risk exposure,” he said before adding, “It looks like the ISM is nearing the final stages of its two-year downtrend which again risk assets have been sniffing out.”

Bitcoin and crypto markets have been lethargic for the past five months or so but analysts told Cointelegraph that several fundamental factors such as ETF approvals, an end of the rate hikes, and an Ethereum scaling upgrade could bring them out of hibernation.

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Analysts tip 5 catalysts that could break Bitcoin, crypto from its stupor

August 15, 2023 Coin Telegraph

Coin Telegraph

Analysts believe spot Bitcoin ETFs, new stablecoin adoption, and an upcoming Ethereum scaling upgrade are among the catalysts that could reignite the crypto markets.

A potential wave of spot Bitcoin exchange-traded funds, PayPal’s new stablecoin and a key Ethereum upgrade are among the catalysts that could wake crypto from its hibernation.

While early 2023 has seen the price of Bitcoin and other cryptocurrencies improve from the second half of 2022, the past five months have seen more lethargy, with Galaxy Digital CEO Mike Novogratz calling the markets “lackadaisical” in June.

However, analysts told Cointelegraph that they’re tipping several catalysts that could add a new spark to crypto markets.

Chief Investment Officer at Apollo Crypto, Henrik Andersson, is among those with their eyes fixed on the potential approval of spot Bitcoin ETFs, saying it was “not unlikely” to see one approved in the next six months.

He told Cointelegraph that cryptocurrency's institutional acceptance has continued to rise, adding that “the worst of the macro tightening appears to be behind us.” He said that central banks have paused rate hikes, meaning we’ve potentially reached the end of the hiking cycle.

Andersson has also seen PayPal’s stablecoin launch and potential moves from X (Twitter) to include crypto payments as bullish markers for future crypto adoption.

“There are other potential catalysts on the horizon, for example, what is X [Twitter] planning in terms of payments and financial applications — crypto is a real possibility there.”

Markus Thielen, head of research at crypto financial services platform Matrixport has also placed his bets on spot Bitcoin ETFs, but says an upcoming upgrade to Ethereum is also one to keep an eye on.

“Two significant catalysts are supporting Bitcoin and Ethereum prices into year-end: the potential SEC approval for a US-listed physical Bitcoin ETF and Ethereum’s EIP-4844 upgrade, which is expected for Q4 2023.”

The Ethereum upgrade will introduce a mechanism called proto-danksharding that will reduce fees and increase transaction throughput.

In the short term

Meanwhile, Singapore-based trading firm IG's market analyst, Tony Sycamore, told Cointelegraph that investors should keep an eye on the minutes from the Fed's last meeting.

The Federal Open Market Committee is scheduled to release the minutes of its July meeting on Aug. 16 and it is expected to keep rates on hold.

“For Bitcoin specifically, it will be looking towards US stock markets for signs of stabilization after the Nasdaq posted its second consecutive losing week and towards the interest rate market, given that yields have closed higher in each of the last four weeks.”

Bitcoin prices have oscillated within a $6,000 range-bound channel since the middle of March. Resistance just above $31,000 has proven to be too strong on at least four separate occasions while support was found at $25,000 during the mid-June dip.

Furthermore, markets have suffered record lows in volatility as the liquidity and volumes have dried up in recent months.

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Deribit’s Bitcoin volatility index hits lifetime lows, hinting sideways action

July 25, 2023 Coin Telegraph

Bitcoin

The Bitcoin Implied Volatility Index has fallen to its lowest levels since the crypto options exchange launched the tracker in early 2021.

Crypto options exchange Deribit's future-looking Bitcoin (BTC) volatility index — used as a crypto fear gauge of sorts — has reportedly reached its lowest level in two years, indicating a possible lack of price turbulence for Bitcoin in the near future.

On July 24, crypto derivatives analytics platform Greeks Live noted that the volatility index for both Bitcoin and Ether (ETH) has fallen to a multi-year low of 37%.

Furthermore, the current implied volatility level has fallen to the lowest level in crypto's history according to the DVOL algorithm, it added.

The Dvol (Volatility Index) for BTC and ETH fell to 37%, the lowest level in history since two years ago, and the current Implied Volatility level, as projected by Dvol's algorithm, has fallen to the lowest level in crypto's history.
Continued low liquidity has severely depressed… pic.twitter.com/GdWE4GHXZw
— Greeks.live (@GreeksLive) July 24, 2023

DVOL is the Deribit Implied Volatility Index. It gives an indication of the expected volatility for a crypto asset over the next 30 days by analyzing option activity. In simple terms, the index can indicate investors' expectations for a crypto's price turbulence.

Greeks Live noted that continued low liquidity has severely depressed implied volatility (IV) levels for Bitcoin.

This suggests that derivatives traders are not confident that there will be any major moves in crypto markets in the short term and the lack of volatility is likely to continue, it said.

“It is an indisputable fact that the overall volatility of cryptocurrencies is declining, which will inevitably force the implied volatility of cryptocurrencies to keep going to new lows.”

Other analysts using different metrics have echoed the sentiment. On July 24, crypto analyst Josh Olszewicz observed that Bitcoin’s weekly Bollinger Bands had contracted to record levels. “This is officially the tightest bbands [Bollinger Bands] have ever been on the weekly timeframe,” he said.

Bollinger Bands are a type of statistical chart characterizing asset prices and volatility over time which consist of a middle trend line with two outer bands that are two standard deviations away.

*BTC weekly Bollinger Bands, all time. Source: Twitter/CarpeNoctom*

Crypto markets have been rangebound since mid-March with total capitalization hovering around $1.2 trillion. There has been very little deviation from this level aside from a brief peak in mid-April and an equally brief trough in mid-June.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Further BTC mining consolidation as Crusoe acquires peer mining firm

October 13, 2022 Coin Telegraph

Acquisition

Crusoe Energy Systems has just acquired the operating assets of Great American Mining, a sign that further consolidation could be ahead.

Amid soaring Bitcoin (BTC) mining difficulty and sinking mining profitability, Colorado-based Bitcoin miner Crusoe Energy Systems has announced the acquisition of the operating assets of portable BTC mining operator Great American Mining (GAM).

The deal will see GAM’s operations integrate into Crusoe’s, adding over 10 megawatts (MW) to its mining output and around 4,000 application-specific integrated circuit (ASIC) crypto mining rigs — increasing Crusoe’s capacity by about 9% according to the company.

GAM builds and deploys portable BTC mining facilities — vehicle trailer-mounted containers enclosed with ASIC miners — with the goal of helping oil and gas companies take advantage of stranded or otherwise wasted natural gas by using it to power the facility to mine BTC.

Crusoe will have roughly 125 of these waste gas-powered containers deployed and operating following the acquisition, which it says could reduce an annual CO2-equivalent emission of around 170,000 cars.

The consolidation of these two mining operations comes as the sector faces pressure from both the traditional and crypto markets, along with an all-time high BTC mining difficulty all of which is negatively affecting miner profitability.

Markus Thielen, head of strategy for digital asset services platform Matrixport told Cointelegraph the majority of the mining hashrate moving to the United States over the last two years had “significant consequences” on how the industry was positioned into the wider economic downturn.

“Around 20 Bitcoin mining companies raised additional capital through IPOs where shareholders demanded a high correlation to the underlying Bitcoin price,” he said, explaining orders for new mining machines were placed a year in advance, which was expected to come online in the third quarter of 2022.

“The result was that mining companies bought Bitcoin directly from the market at higher costs than their mining operations and were negatively exposed to further capital expenditure investments as they placed equipment orders a year in advance.”

As miners waited for the equipment some sold significant parts of their BTC reserves to recoup expenditures, but Thielen says “this has not been enough,” and expects an “outright industry restructuring.”

Crypto miners such as CleanSpark have already shown to be interested in snapping up cheap assets amid tough market conditions, purchasing over 1,000 ASIC mining rigs at a “substantially discounted price” in July, and 1,800 Antminer S19 XP rigs the month prior.

In September CleanSpark went on to purchase a $33 million facility in the U.S. from Australian-based miner Mawson, spending an extra $9.5 million buying the firms’ 6,468 ASIC mining rigs.

Rising energy costs and the crypto bear market caused mining hosting firm Compute North to file for Chapter 11 bankruptcy in September, with the company owing $500 million to 200 creditors with assets worth anywhere between $100 million and $500 million.

Report: On-chain data points to crypto consolidation in Q3

October 6, 2022 Coin Telegraph

Coin Telegraph

The latest quarterly report from DappRadar highlights a period of consolidation across the cryptocurrency ecosystem following a turbulent Q2.

A third quarter industry report from DappRadar citing on-chain metrics suggests cryptocurrency markets are showing signs of recovery from ongoing bearing market conditions.

A number of factors played their part in a busy third quarter of 2022, with Ethereum’s Merge marking a successful shift to proof-of-stake having a notable influence on layer 2 activity before the event. The report also highlights a slight recovery in the overall cryptocurrency market capitalization, which still sits below the $1 trillion mark.

Quarter three data reflected an 8.5% increase in the total crypto market cap from July to the end of September 2022. The Decentralized Finance space also showed signs of consolidation, with the total value locked (TVL) in the space increasing by 2.9% in the third quarter to $69 billion. Ethereum continues to account for the bulk of TVL, with $48 billion locked in smart contracts.

Dappradar also highlights a 12% increase in unique active wallets across the cryptocurrency ecosystem quarter-on-quarter, adding up to 1.8 million. The Blockchain gaming sector contributed significantly, with unique wallet addresses increasing by 8% from August to September.

ImmutableX saw its unique active wallets grow by 30% during the same time period and recorded an 87% growth in NFT trading volume from the previous quarter while Polygon followed a similar trajectory, seeing its unique active wallets increase by 17% to 148,000.

The number of nonfungible token (NFTs) trades increased by 11% from the second quarter of 2022 while Ethereum’s NFT trading volume was down by a large margin of 76%. Third quarter NFT trading volume totalled $2.71 billion, which still marks a significant 67% drop from Q2 2022.

Yuga Labs-owned NFT projects dominated the market in September, with Otherside, Bored Ape Yacht Club, Mutant Ape Yacht Club, and CryptoPunks accounting for 46.21% of the entire NFT market cap.

The theft of cryptocurrency assets was also highlighted once again, with blockchain bridges still being targeted. Dapprader listed the $190 million Nomad exploit in August as a significant contributor to the $461 million worth of crypto assets stolen in Q3. Algorithmic market maker Wintermute also succumbed to a $160 million exploit during the same period.

The Dappradar report also highlights the effect of wider macroeconomic factors on the global economy. As central banks look to manage inflation to stave off recessionary effects by raising interest rates:

“Current macroeconomic conditions significantly influence the crypto market, making it impossible to foresee a worldwide expansion of cryptocurrencies without a general recovery in conventional financial markets.”

This slightly gloomy outlook was countered by a number of positive events during the third quarter of 2022. The European Union’s approval of the Markets in Crypto-Assets (MiCA) regulatory plan indicates that governments are looking to manage the industry carefully.

Similarly the White House published the "First-Ever Comprehensive Framework for Responsible Development of Digital Assets" in Sept. 2022 in a bid to protect investors that indicates that cryptocurrencies have become a fully-established industry.