Fed Rate Cuts Hold the Key to Decoding Bitcoin’s Cyclical Behavior, Analyst Suggests

On March 28, Into The Cryptoverse CEO Benjamin Cowen postulated whether the current Bitcoin market cycle is normal or a “left-translated” one, where the peak occurs earlier than usual.

Bitcoin has already notched up a new all-time high and it is still three weeks to go until the halving.

This has introduced the possibility of this cycle peak coming much earlier than previous ones, which happened in the year following the halving event.

Fed Rate Cut Influence

If Bitcoin markets pull back after any Federal Reserve rate cuts, it could put it back on track with prior cycles, potentially peaking in 2025. However, if there is no significant correction or consolidation period, it could suggest a left-translated peak.

I think the answer to whether this #BTC market cycle is a normal one or left-translated will depend on how the market reacts to rate cuts in a few months.

Thread 👇

— Benjamin Cowen (@intocryptoverse) March 28, 2024

The Fed kept rates the same at 5.5% during its last meeting on March 20, which initiated a lot of immediate volatility. Its next policy and rate decision meeting is in May, but 95.8% of observers think it will remain unchanged again, according to the CME FedWatch Tool.

Cowen compared the price action in 2013 and 2021, with blow-off tops in April followed by another top in November. He suggested that a similar pattern in this cycle could indicate a left-translated cycle.

“If BTC gets a correction after rate cuts arrive that lasts through Q4 (meaning no new mania phase in Q4), then I think we could get a standard cycle peak in the post-halving year.”

Comparing the current cycle’s returns to post-halving years, he noted that if the peak is translated one year ahead, 2023’s returns may resemble post-halving years.

Ultimately, this bull market cycle will be dependent on Bitcoin’s reaction after rate cuts arrive later this year, he said.

“I would suspect that the market finally cools off after April,” he said before concluding, “Then this summer the debate will be around if the market picks back up again in Q4 or if we have to wait until 2025 for another move.”

Cycle Comparisons

On-chain analytics platform Glassnode also made some comparisons to previous market cycles.

By both duration and distance from the April 2021 peak, the market is in a near identical spot to December 2020, relative to the 2018-21 cycle, it noted.

If we index the #Bitcoin price performance (black) since the April 2021 ATH (where we argue bear market sentiment set in), we can see a remarkable similarity to the prior cycle (blue).

By both duration and distance from the April 2021 peak, the market is in a near identical… pic.twitter.com/mOGfSF6apG

— glassnode (@glassnode) March 28, 2024