Delphi Digital Researches Bitcoin Cycle: Bull Market Only One Drop Away, Expected to Break Previous High of $60,000 in Q4 Next Year
Kevin Kelly, co-founder of the cryptocurrency venture capital firm and research firm Delphi Digital, is very bullish on the future of the cryptocurrency market. He cites multiple data points and charts to emphasize the strong cyclical nature of Bitcoin, indicating that the next bull market cycle is on the horizon.
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Cryptocurrency Market Characteristics: Cyclical
Kelly pointed out:
To outsiders, the volatility of cryptocurrencies may seem irrational, but the cryptocurrency market shows strong cyclicality. The cycles are not only consistent but even predictably consistent rather than coincidental. Increasing signs indicate that we are in the early stages of a new cycle, rather than just a rebound within a bear market.
He highlighted the consistency within the cycles:
The time taken from the high point to the low point
The time taken to recover to the previous cycle's high point
The time taken from rebound to historical new highs
Bitcoin Cycles
Kelly used the example of three cyclical cycles of Bitcoin since 2015, which operated in the following sequence:
BTC hits a new high
Falls by 80%, hits bottom after 1 year
Consolidates for about 2 years
Rises to a new high after 1 year
Bitcoin and Traditional Financial Indicators
Bitcoin Highly Correlated with ISM
In addition to emphasizing the consistency of Bitcoin cycles, Kelly also mentioned the high correlation between Bitcoin trends and the U.S. ISM Manufacturing PMI index:
BTC and ISM peaks coinciding
Active addresses, total transaction volume, on-chain fees bottoming or peaking simultaneously with PMI
BTC's year-over-year growth rate YoY usually signals an imminent reversal of ISM
He stated:
ISM is approaching the final stage of a two-year decline, and the turning point of the economic cycle is usually an opportunity to increase risk assets. The more I look at the chart, the more I feel that we are currently in the cycle of 2015-2017.
Kelly cited more data to illustrate that BTC has bottomed out.
Similarities to the 2015-16 Doomsday Prediction
Kelly mentioned that in 2015-16, the market was filled with doomsday predictions, with many calling for a larger market sell-off. Fast forward to today, economic recession still holds many uncertainties, but he noted that there have been several consecutive quarters of recession in recent years, mirroring the situation in 2015-16.
Furthermore, the trends of the U.S. dollar and gold overlap with the past, indicating that both are in a long-term upward cycle.
Bitcoin Halving: New High in 2025
The Bitcoin halving is expected to occur in April 2024, with the previous two halvings occurring:
Approximately 18 months after BTC hit bottom
Approximately 7 months before BTC broke a new high
This indicates that Q4 2024 will surpass the previous high of 2021, setting a new high for this cycle in Q4 2024.
Kelly is very much looking forward to Bitcoin reversing at the most appropriate time, which is when indicators such as ISM show signs of bottoming out, aligning the upward momentum of Bitcoin with a new liquidity cycle.
Will Bitcoin Experience One Last Drop Before Halving?
Of course, Kelly also admits his bias towards a bullish Bitcoin outlook and cannot guarantee that everything will unfold as he says, but he still believes that Bitcoin will follow past cycles.
He also mentioned that the cryptocurrency market may face another round of sell-offs or consolidation, especially as the cryptocurrency market has been rebounding for nearly 9 months this year.
Similar to the second half of 2019, BTC was at $3,826 in January, rose to $12,927 in June, and fell to $7,430 in October.
Kelly concluded that the outlook for the next 12-18 months, if not considering short-term trading, is much brighter than what the current market reflects.