How to Recognize and Take Advantage of Bitcoin Cycles: From Halvings to Record Highs

Bitcoin has transformed from a simple digital experiment into a global financial asset. Over its 15 years of existence, cryptocurrency has experienced several dramatic surges and crashes, each teaching the market and investors valuable lessons. As of December 2024, BTC is trading around $86.82K, although just a few months ago it reached new all-time highs above $93,000. Understanding the patterns of these cycles helps navigate volatility and identify opportunities.

Current Moment: 2024-25 as a Turning Point

The bullish market unfolding in 2024-2025 differs from previous cycles in that it combines regulatory approval, institutional participation, and retrospective scarcity of supply. Unlike 2017, when growth was driven by retail FOMO, the current cycle is based on a solid institutional foundation.

In January 2024, the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs, marking a revolutionary step. By November 2024, these ETFs had attracted over $28 billion, surpassing gold ETFs in the global market. This is not just a number — it indicates how traditional investors and institutions have re-evaluated digital assets.

Alongside this, in April 2024, the fourth Bitcoin halving took place — an event that halves miners’ rewards. Historically, this always stimulates price growth due to reduced supply. Since the first halving in 2012, Bitcoin has increased by 5,200%; after the second in 2016 — by 315%; and after the third in 2020 — by 230%. The current cycle already shows similar dynamics.

Anatomy of a Bull Run: What Drives Bitcoin to Skyrocket?

2013: The First Major Jump

In 2013, Bitcoin was mostly ignored as a novelty. However, in May of that year, the crypto asset surged from $145 to nearly $1,200 by December — a 730% increase. The banking crisis in Cyprus prompted some to see Bitcoin as a digital refuge from financial instability.

But this jump came at a cost. The collapse of Mt. Gox, the largest exchange handling 70% of Bitcoin transactions, triggered a 75% drop from the peak to below $300 in 2014. Lesson: major rallies are often followed by catastrophic corrections.

2017: Mass Adoption Arrives

If 2013 was about pioneers, 2017 was about mass adoption. Bitcoin grew from $1,000 in January to nearly $20,000 in December — an incredible 1,900%. The ICO boom attracted millions of newcomers eager to get rich quickly.

News headlines shouted about miracle coins that could turn thousands into millions. Daily trading volume increased from ( million at the start of the year to ) billion by year-end. But then regulatory blowback hit. China banned ICOs and domestic crypto exchanges. Bitcoin fell 84% to $3,200 by December 2018.

2020-2021: Institutions Enter the Game

This cycle was qualitatively different. Amid the pandemic and massive fiscal stimulus, giant companies began viewing Bitcoin as an inflation hedge. MicroStrategy accumulated over 125,000 BTC. Tesla bought $1.5 billion. Square and other public companies allocated significant funds.

Bitcoin rose from $8,000 in January 2020 to $64,000 in April 2021 — a 700% increase. These were not speculators but serious players. Yet, even this cycle saw a correction: a 53% drop to $30,000 in July 2021.

How to Read Market Signals

Not everyone will buy Bitcoin at $1,000 to sell at $20,000. But recognizing early cycle signals provides an advantage.

Technical Indicators

The Relative Strength Index $200 RSI$15 , when rising above 70, often signals strong buying momentum. The 50-day and 200-day moving averages are classic trend indicators. When the price crosses these levels upward, it often signals the start of a bullish trend. During the current cycle, Bitcoin’s RSI has consistently stayed above 70, confirming strength.

On-Chain Data

Number of active wallets, inflows of stablecoins to exchanges, decreasing Bitcoin reserves on trading platforms — all indicate large players accumulating. In 2024, companies like MicroStrategy added thousands of BTC to their holdings, reducing available supply on the market.

Macroeconomic Triggers

Regulatory approvals, news of government acceptance ( like in Bhutan and El Salvador ), potential crypto-friendly policies of new administrations — all influence institutional interest.

What’s Unspoken Soon: What’s Next?

Analysts discuss several scenarios for the coming years.

Bitcoin as a National Reserve

Some lawmakers in the US propose that the government accumulate up to 1 million BTC over five years. If this happens, global demand will surge. Bhutan already holds over 13,000 BTC through its sovereign fund. El Salvador continues to invest. Countries may start viewing Bitcoin as digital gold in their reserves.

Network Upgrades

Potential implementation of OP_CAT could enable Bitcoin to process thousands of transactions per second via Layer-2 solutions. This would expand its use beyond “store of value” to DeFi applications. Such upgrades could position Bitcoin as a competitor to Ethereum in many categories.

Halving Cycles Continue

The next halving is expected around 2028. History provides grounds for optimism — each previous halving triggered significant price increases in subsequent years.

How to Prepare for the Next Cycle

If you plan to invest, note that as of December 2024, BTC is trading near $86.82K. Here’s how to navigate rationally:

1. Education Before Action

Read the Bitcoin Whitepaper. Study historical cycles. Understanding what happened in 2013, 2017, and 2021 provides a template for analyzing current events.

2. Clear Strategy Before Entry

Define your goals. Are you a short-term trader or a long-term holder? What is your risk tolerance? If Bitcoin drops 50%, can you stay calm? If not — consider smaller positions.

3. Diversification as Insurance

Don’t put everything into Bitcoin. Consider Ethereum, Solana, and other projects, but keep Bitcoin as the core of your portfolio. A balanced portfolio suffers less during corrections.

4. Security Over Profitability

For long-term storage, use hardware wallets kept offline. Enable two-factor authentication on exchanges. One mistake can cost more than the gains from a rally.

5. Follow Key Events

Regulatory changes, new ETF approvals, macroeconomic shifts, news of government Bitcoin holdings — all move markets. Stay informed.

6. Emotional Control

This is the main killer of profits. When Bitcoin jumps 20% in a day, FOMO kicks in. When it drops 15%, panic selling ensues. Often, these decisions are made at the worst times. Develop a plan and stick to it.

7. Tax Implications

Don’t forget taxes. Cryptocurrency transactions are taxed in most jurisdictions. Keep detailed records of all buys, sells, and exchanges.

Cyclical Nature as a Feature, Not a Flaw

Bitcoin’s 15-year history reveals one simple truth: volatility is not a bug, but a feature. Each cycle brings new participants, new capital, and new opportunities.

In 2013, the question was whether Bitcoin would survive at all. In 2017 — whether it would go mainstream. In 2021 — whether institutions would adopt it. In 2024, the question is different: how quickly Bitcoin integrates into the global financial system?

Each cycle builds on the previous one. Infrastructure is stronger. Regulations are clearer. Institutional participation is growing. This does not guarantee future success but shows the asset’s evolution.

Conclusion: Why Understanding Cycles Matters?

No one can precisely predict when the next crisis or rally will occur. But understanding the patterns provides an advantage. Bitcoin, as an asset, is driven by events (halvings, ETF approvals, regulatory changes), and psychology (FOMO, panic, greed).

Investors studying cycles are better prepared for volatility. They are not shocked by 30% drops during corrections because they know it’s part of the cycle. They recognize early signs of new rallies and can position themselves ahead of the crowd.

Every Bitcoin cycle offers both opportunities and risks. Staying informed, following a clear strategy, and controlling emotions maximize your chances to capitalize on the next move of this unique asset. Bitcoin has evolved from an experiment to a financial institution, and understanding its cycles is key to navigating this journey.