Author: Bitcoin Magazine Pro Team; Compiler: BitpushNews
After breaking through $100,000 to hit a record high, Bitcoin has entered a downward trend that has lasted for several weeks. This price correction naturally raises questions in the market about whether Bitcoin is still following the 2017 cycle. Through data analysis, we will evaluate the correlation between the current Bitcoin price trend and historical bull market cycles, and look forward to the possible development path of BTC in the future.
Will the trend of 2017 be replicated?
Since the 2022 bear cycle low, Bitcoin’s price trajectory has shown striking similarities to the 2015-2017 cycle, the historic bull run that ultimately hit $20,000 in December 2017. However, the recent downward trend of Bitcoin marks the first time that its trend has significantly deviated from the 2017 cycle. If the 2017 pattern had been strictly followed, the past month should have been a period of rising prices for Bitcoin to set new highs, but the actual market trend has been sideways and downward, suggesting that the correlation between the two cycles may be weakening.
Figure 1: The current cycle trend trajectory has recently deviated from historical patterns
Despite the recent divergence in trends, the historical correlation between the current Bitcoin cycle and the 2017 cycle is still at an abnormally high level. Earlier this year, the current cycle was about 92% correlated with the 2015-2017 cycle. Recent price divergences have brought the correlation down slightly to 91%, which is still extremely high in financial markets.
Investor Behavior Analysis
The MVRV ratio (market value to realized value ratio) is a key indicator for observing investor behavior. It is used to measure the relationship between the current market price of Bitcoin and the average cost price of all BTC holders on the chain. When the MVRV ratio rises sharply, it indicates that investors' paper profits have significantly expanded, which often indicates that a market top has formed. When the ratio falls back to the realized price, it means that the Bitcoin price is close to the average holding cost of investors, which usually indicates that the market has entered a bottoming stage.
Figure 2: The MVRV ratio still maintains a similar fluctuation pattern to the 2017 cycle
The latest developments of the MVRV ratio
The recent decline in the MVRV ratio reflects the current situation of Bitcoin's correction from its historical highs, but its overall structure remains similar to the 2017 cycle - the early bull market was followed by multiple deep corrections, so the correlation between the two remains at 80%.
Data lag effect
One possible reason for the current trend divergence is the impact of data lag. For example, Bitcoin price movements are highly correlated with global liquidity (the total money supply in major economies), but historical data shows that changes in liquidity typically take about two months to be reflected in Bitcoin prices.
Figure 3: Global M2 money supply has a lagged transmission effect on Bitcoin prices
Verification of lagged effect
If the current Bitcoin price trend is lagged by 30 days with the 2017 cycle, the correlation between the two will rise to 93%, becoming the highest correlation value between the two cycles on record. This lagging-adjusted trend pattern suggests that Bitcoin may soon return to its 2017 trajectory, meaning a strong uptrend may be imminent.
Figure 4: The price trend is still highly consistent with the 2017 data after 30 days of lag processing
Core Conclusion
History will not simply repeat itself, but it often has similar rhymes. The current Bitcoin cycle may be difficult to replicate the exponential surge in 2017, but the deep psychological mechanisms of the market still show surprising similarities. If Bitcoin reconnects with the lagging 2017 cycle, historical patterns suggest that Bitcoin may be about to recover from the current adjustment and experience a breakthrough rise.
Brian
