The crypto market has long been characterized by its volatility, with familiar patterns emerging throughout the years that have guided both retail and institutional investors alike. However, recent developments in 2024 suggest that these long-standing behaviors might be shifting, prompting a need to reassess traditional market models.

In this article, we explore whether the four-year cycle theory and the internal crypto market cycle theory are in need of updates. The extended mid-bull market correction we’ve experienced has lasted longer than any in history, giving us pause and forcing us to consider that the crypto market may be evolving in ways we haven’t fully anticipated.

This week as usual I have prepared both a short video as well as an accompanying article. However, this week they are complementary, meaning if you want my full analysis make sure to read and watch them both.

Bitcoin Update

We can’t dive into potential changes to the crypto market without first taking a look at Bitcoin (BTC). Over the past few weeks, Bitcoin has made a notable recovery from its August 5th lows. As of the most recent data, Bitcoin is up 17% from these lows, trading just under $58,000. This recovery, however, follows a pattern of lower highs and lower lows, which has become more pronounced since the start of the correction in mid-March.

Bitcoin’s inability to sustain any long-term positive price action raises questions. The correction that began in March, after Bitcoin surged from $16,000 in late 2022 to over $73,000 earlier this year, caught many analysts by surprise. This downturn has persisted longer than anticipated, challenging the traditional four-year cycle theory that has predicted market movements in the past. The sustained pattern of lower highs and lows suggests that the market dynamics may be undergoing significant changes.

The Four-Year Cycle Theory in Question

The four-year cycle theory has been a cornerstone of crypto market analysis. It suggests that the market moves in predictable cycles tied to Bitcoin’s halving events, which reduce the rate at which new Bitcoins are created, typically leading to supply constraints and subsequent price increases. Historically, these cycles have followed a clear pattern: a sharp bull market, followed by a bear market correction, and a period of accumulation before the next cycle begins.

However, the current market behavior has cast doubt on this model. The extended correction we’ve seen in 2024 is unprecedented in its duration and severity, deviating from the typical pattern expected during a bull market. This is now officially the longest mid bull market correction in Bitcoin’s history. This has led to speculation that the four-year cycle theory may no longer apply in its traditional form. The market’s maturation, particularly with the introduction of institutional products like spot ETFs, could be influencing these cycles in ways that weren’t previously considered.

Internal Crypto Market Cycles—Are They Changing?

In previous bull markets, the flow of capital within the crypto space followed a relatively predictable pattern. Capital typically moved from Bitcoin to Ethereum (ETH), then to mid-cap altcoins, and eventually to smaller, more volatile assets. This internal rotation of funds provided a roadmap for investors, allowing them to anticipate market movements and allocate their resources accordingly.

However, the 2024 bull market has defied these expectations. While some altcoins have experienced significant gains, these movements appear random and lack the sector-wide breakouts that characterized past cycles. For example, during DeFi Summer in 2020 or the rise of alternative layer-1 blockchains in 2021, there was a clear flow of capital into specific sectors. This year, though, the market has been less predictable, suggesting that the internal crypto cycles we’ve relied on might be changing.

The difficulty in pinpointing where we are in the current market cycle raises concerns. If the internal dynamics are indeed shifting, it could mean that the strategies that worked in the past may no longer be as effective. As traders and investors that means this is a serious thing to pay attention too. This potential change could be tied to the growing influence of institutional money in the market, particularly as it becomes easier for these investors to enter and exit positions through regulated financial products like ETFs.

It May Be Time To Update Our Analytical Style

Given these observations, it is clear that our traditional models for analyzing the crypto market may need to be updated. The prolonged correction, coupled with the irregular internal market cycles, suggests that the market is evolving in ways that require new analytical approaches. As the market matures and institutional involvement grows, the factors driving price movements may be shifting away from the patterns we’ve grown accustomed to over the past decade.

It’s essential for both analysts and investors to remain vigilant and adaptable during this time. The changes we are witnessing could signify a more profound shift in market behavior, one that might not be temporary. Whether these changes will ultimately be for the better or the worse is still uncertain, but what is clear is the need for updated models and strategies to navigate this new landscape.

As we continue to monitor these developments closely, it’s important to stay informed and flexible in our approach. The crypto market has always been dynamic, and 2024 is proving to be no exception. By staying ahead of these potential changes, we can better position ourselves to understand and capitalize on the opportunities that lie ahead.

Editor’s Note: Cryptocurrency has been the best returning asset class of the last decade and is know for its parabolic bull markets. It is also a key to a truly diversified portfolio and one of the best hedges against the potential risks that lie ahead in markets. But you need to act now before institutions gobble it all up.

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