If History Is Any Guide, This Is What Happens Next for Bitcoin

Bitcoin (CRYPTO: BTC) hadn't given investors much to get excited about this year. But things change quickly in the crypto market, and over the last week, Bitcoin's price has risen 23% (as of Aug. 25).

Although cryptocurrencies are notoriously unpredictable, there's now over 15 years of history available for Bitcoin. That pricing history provides a good idea of where the Bitcoin market is and what's most likely to happen next.

Image source: Getty Images.

The bear market could be over

Bitcoin has historically moved in cycles lasting about four years. It experiences a bull market, reaches a new high, and then goes into a bear market lasting from a few months to over a year. The cycle then repeats, with about four years between the highest points in each bull market and the lowest points in each bear market.

In previous bear markets, Bitcoin hit lows of $152 in January 2015, $3,200 in December 2018, and $15,500 in November 2022. If the pattern holds, Bitcoin's low this cycle would happen sometime later this year.

However, all those bear markets happened before the SEC approved Bitcoin ETFs in January 2024, and institutional inflows may have made the leading cryptocurrency more resilient. At its lowest point in this bear market, which was $57,748 on July 1, it had declined 54% from its all-time high. Previous bear markets saw drawdowns of 77% or more.

Bitcoin also surpassed its 200-day moving average on Aug. 20, the first time it had done so since last November. This benchmark is often used to gauge whether the market is bullish or bearish on Bitcoin. It remains above the 200-day moving average at the time of this writing, a good sign that Bitcoin may now be in a recovery phase.

What comes next

Bitcoin recoveries tend to be choppy -- more a slow, steady grind than a sprint. Analysis by LiveVolatile puts the average recovery time from the bear market bottom to the previous high at 643 days. The median recovery time is even higher at 730 days. The fastest came after the 2021/2022 bear market, when Bitcoin recovered in 480 days.

If the Bitcoin market bottomed out in July, then a 480-day recovery would mean it gets back to its all-time high in October 2027. If its recovery is more in line with the average, then that would land in April 2028. The next cycle top, based on the historical four-year pattern, would land around mid to late 2029.

At this point, it's worth mentioning that past performance doesn't guarantee future results. There's no way to be sure where Bitcoin's price will go. If history is any indication, it could gradually recover from here, but the price will likely remain volatile. For Bitcoin investors, the strategy hasn't changed: Be patient and aim to hold for at least five to 10 years.

Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.