What is the 4-Year Cycle of Bitcoin?

The four-year cycle of Bitcoin is a pattern observed in the market that correlates the price movements of the major cryptocurrency with its fundamental event known asHalvingThis cycle is divided into distinct phases, which many analysts and investors, such as Anthony Scaramucci, believe is still in place despite recent volatility. The theory suggests that the price of Bitcoin tends to rise for three of the four years of the cycle, with a correction or consolidation period in the fourth year, which usually precedes the next halving.

Halving is a planned event in the Bitcoin code that reduces by half the reward miners receive for validating new blocks on the blockchain. This happens approximately every 210,000 blocks, or about four years. The reduction in the issue of new Bitcoins creates a shortage pressure that has historically been a catalyst for significant bull markets. The last halving occurred in May 2020, and the next one is scheduled for 2024.

The phases of the Bitcoin cycle

The cycle can be segmented into four main phases:

  • Stage of Accumulation:It follows the bottom of the previous cycle.It is a period of relatively stable or slow recovery prices, where long-term investors often enter the market.
  • The Bull Market (Bull Market)It usually starts months after a halving. The decrease in new supply, combined with increased demand, boosts prices to new historical levels. This phase can last from 12 to 18 months.
  • Phase of distribution:It is marked by high volatility, where prices fluctuate strongly across a wide range, indicating that the first investors begin to make profits.
  • The Bear Market:Characterized by a prolonged correction, which can cause the price to lose a significant percentage of its peak value.

Current Cycle and Forecasts for 2024

According to recent analyses, including Anthony Scaramucci’s vision, the 4-year cycle is still at stake. After the strong rise in 2023 and early 2024, the market has entered a period of consolidation and correction. Bitcoin’s fall to close to $68,000 in the recent weekend, which has generatedSettlements close to $400 millionIn the crypto market, it is seen by some as part of this typical cycle adjustment phase.

Scaramucci and other proponents of the theory predict a summary of the upward trend in the world.The fourth quarter of 2024This optimism is based on the post-halving history, where the biggest price gains often occur between 12 and 18 months after the event.“The Golden Cross”(Gold cross) on the Bitcoin chart – when the 50-day moving average crosses above the 200-day average – is a technical signal that many traders observe as a potential indicator of continuity of the upward to medium-term trend.

Factors Influencing the Cycle

Although the halving cycle is a powerful domestic model, global macroeconomic factors are increasingly influencing. The news of a $200 billion war financing request (equivalent to 3 million Bitcoins at current price) illustrates the contrast between the world’s economy and economic development.Inflationary State BudgetGeopolitical events and central bank monetary policy decisions can amplify or mitigate the phases of the cycle, adding layers of complexity to the analysis.

Investors and the Brazilian market

For the Brazilian investor, understanding the Bitcoin cycle is crucial to developing a long-term investment strategy, helping to navigate the inherent volatility of the market.Rather than trying to "buy at the bottom and sell at the top" in a speculative way, the knowledge of the cycle encourages a more disciplined approach to the market.Accumulation during the correction phases.

In addition, the local regulatory and tax scenario should be considered. Just like in Germany, where there are discussions about taxing earnings from tokenized assets, in Brazil earnings from cryptocurrencies, including Bitcoin, are taxable. Any investment strategy should take into account the declaration of capital gains to the Brazilian Federal Revenue.

The Importance of Education and Fundamental Analysis

In a market driven by news and cycles, financial education on cryptocurrencies becomes a differential.The underlying technology, such as the Useful Proof of Work presented by projects like Qubic, and the development of the DeFi and tokenized asset ecosystem, allows the investor to make more informed choices, going beyond mere price speculation.

The Future of the Bitcoin Cycle

The 4-year cycle of Bitcoin remains a valuable analytical structure, although it is not an infallible guarantee. The combination of programmatic halving with growing institutional adoption and the global macroeconomic context creates a dynamic scenario. While analysts project optimism for the end of 2024, it is essential that investors, especially in Brazil, conduct their own research (DYOR - Do Your Own Research), consider their risk profile and plan their strategies within a suitable time frame, always paying attention to tax obligations.