Is BTC’s current drawdown and recovery cycle repeating history?

Is BTC’s current drawdown and recovery cycle repeating history?

BTC has been through multiple drawdown and recovery cycles in the past, and the current cycle shows a remarkable resemblance to the 2018-19 bear market in terms of length and trajectory. The question arises, is this a reliable pattern or an illusory correlation? Let's explore this further.

Similarities in BTC’s drawdown and recovery cycles:

The current drawdown and recovery cycle of BTC is similar to the 2018 bear market cycle in terms of duration from peak to trough, and the recovery trajectory. The peak-to-trough drawdown was more severe in 2018 at 84% versus 78% in 2022, but apart from that, similarities are eye-catching.

Takeaways:

1. If history repeats BTC will peak around May 20 at $45,000.
2. The current BTC price cycle is remarkably similar to previous cycles.
3. Committed long-term holders are still unwilling to sell at 60% drawdown.
4. The early 2023 rally has all the hallmarks of a hated rally.

Explanation for the resemblance:

The resemblance between the two cycles is hard to explain, but a pragmatic understanding of the typical BTC holder may help. Committed long-term holders are still unwilling to sell at a 60% drawdown from the previous peak and use these periods as accumulation periods. Additionally, the early 2023 rally has all the hallmarks of a hated rally - a rally where holders feel underexposed after a highly traumatic year, where investors de-risked in anticipation of further downside.

Conclusion:

While no one can predict the future of BTC, the similarities between the current cycle and the 2018 bear market cycle are striking. Whether this is a reliable pattern or an illusory correlation remains to be seen. However, it is essential to keep an eye on the upcoming developments in BTC’s drawdown and recovery cycles to make informed investment decisions.

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