History Says This Is What Will Happen With Bitcoin in 2027

There's renewed interest in Bitcoin (CRYPTO: BTC). It continues to climb back out of the bear market that it has been in. In five weeks, the world's leading digital asset has seen its price jump 33% (as of Sept. 23). The bulls are winning the battle now, even though Bitcoin still trades 31% off its record.

The momentum is not easy to ignore. And investors might be considering if it's the right time to add Bitcoin to their portfolios before this year comes to a close.

Let's consider what path this top cryptocurrency could take in the near term. History says this is what will happen to Bitcoin in 2027.

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The four-year cycle

Close followers of Bitcoin know that the crypto adheres to a four-year cycle. Throughout its history, there have been approximately four years that pass between every bull-market high and bear-market low. Of course, the timing isn't exactly 48 months. But the rough guideline is hard to overlook, especially for investors who are trying to figure out what comes next.

This historical cycle suggests that Bitcoin will establish a bottom sometime before the end of this year. Based on its recent price rise, maybe it has already passed the low point of this cycle. And in 2027, the digital asset will benefit from continued bullish sentiment, which will lift its price. Next year could be a boon for Bitcoin.

Earlier this decade, Bitcoin ended 2022 down 65%. The following year, its price skyrocketed 154%. Even further back, in 2018, Bitcoin 71%. Then in 2019, it popped 85%.

The takeaway is strikingly clear. Investors who have waited on the sidelines to buy Bitcoin can lean on the past as evidence that perhaps the crypto winter may be starting to thaw. And maybe it's time to seriously consider putting some money to work in the top digital asset.

Think about macro, industry, and AI developments

Investors should be thinking about how macroeconomic factors and industry developments could influence Bitcoin's trajectory in 2027. These have had a massive impact in the past.

From a macro perspective, inflation is the hot topic. It remains well above the Federal Reserve's 2% target, driven this year by geopolitical conflict that has pushed up energy prices. The central bank just raised the fed funds rate. And another hike could be coming.

If this is the start of a long-term rate-hiking cycle, it could be detrimental to Bitcoin and other risk assets. Tighter monetary policy incentivizes capital to flow to higher-yielding financial instruments. At the same time, assets that promise capital appreciation could fall out of favor.

The industry surrounding Bitcoin also deserves some attention. There are positive and negative trends to be mindful of.

It's encouraging to see that spot Bitcoin exchange-traded funds remain very popular. These vehicles provide hassle-free exposure to the price of the digital asset.

Bitcoin's adoption in transactional settings got a boost from Block. Through its Square segment, the fintech enterprise enabled Bitcoin payment acceptance for its merchant base.

Bitcoin still faces some risks, though. The threat that quantum computing poses, no matter how far into the future it may be, is something to think about. What's more, the ColdCard wallet hack, which resulted in the theft of well over $100 million, undermines the push for self-custody.

Forget about anything related to macro variables or industry trends for a minute, though. Bitcoin, viewed by its supporters as a revolutionary monetary technology with unreal potential, must now compete with the elephant in the room: artificial intelligence (AI). This wasn't a factor in previous cycles. And it is shaping up to be the biggest difference in 2027.

Investors are familiar with the massive amounts of capital that the five big hyperscalers are allocating to the development of data centers. Nvidia estimates that these businesses' capital expenditures will total $1.3 trillion in 2027. There is so much money flowing into the AI industry that might otherwise go toward Bitcoin.

While I believe that 2027 will be a positive one for the dominant cryptocurrency, investors should think about these forces that could have a notable impact on price action.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and Nvidia. The Motley Fool has a disclosure policy.