Does history make a case that Bitcoin has topped?

Judge for yourself

It’s called Exponential Decay — and it describes Bitcoin

I hate being the bearer of bad news, but data are data.

The fact is that the bull market cycles in Bitcoin have lost a tremendous amount of thrust over the years. You may like the story of this data or not — but you will have to deal with it (or at least account for it, adjust for it or just plain ignore it). In fact, I don’t like the Exponential Decay occurring in Bitcoin — Bitcoin is one of my personal largest investment positions.

There have been four major bull cycles in Bitcoin, with the current advance the fifth major bull cycle [the advance from cycle low to cycle high shown in brackets].

  1. Dec 21, 2009 to Jun 6, 2011 [3,191X advance]
  2. Nov 14, 2011 to Nov 25, 2013 [572X advance]
  3. Aug 17, 2015 to Dec 18, 2017 [ 122X advance]
  4. Dec 10, 2018 to Nov 8, 2021 [ 22X advance]
  5. Nov 21, 2022 to xxx x,, yyyy [high so far is $73,835 registered on Mar 14, 2024]

Now, here is where Exponential Decay is showing its ugly head.

  • The magnitude of the 2011-2013 was approx. 20% of the 2009-2011 cycle
  • The magnitude of the 2015-2017 was approx. 20% of the 2011-2013 cycle
  • The magnitude of the 2018-2021 was approx. 20% of the 2015-2017 cycle

Worded another way, 80% of the exponential energy of each successful bull market cycle has been lost.

Applied forward, this would indicate that the current bull cycle will experience an an exponential advance of approximately 4.5X or so (80% of the 22X of the 2018-2021 cycle).

Taking a low for the current cycle of $15,473 projects a high for this cycle of  $72,723 — guess what — a price that has already been reached.

Well, you will ask, what about the halving? Prices have exploded upwards after every previous halving. And that may happen again.

But for now we need to deal with the fact of Exponential Decay. It has happened. It is real. You may not want to believe it, but I place a 25% chance that Bitcoin has already topped for this cycle.

If Bitcoin has topped, what’s next you might ask. Of course I have no clue. But, if Bitcoin has topped I would expect a decline back to the mid-$30s, or the 2021 lows. From a classical charting point of view, such a decline is the most bullish thing that could happen from a long-term view. If you want to see an example of such a chart structure, look at the Gold chart from Aug 2020 to Mar 2024.

Do I believe the analysis just presented? I don’t want to, but the data speak for itself.