Understanding the Price Change Patterns of Bitcoin

Is there a pattern in the price changes of Bitcoin?

Last week, Deutsche Bank research analysts Marion Laboure and Galina Pozdnyakova analyzed the daily price of Bitcoin against the US dollar since January 2011 and published a report outlining the price change patterns of Bitcoin.

According to the report, since January 2011, Bitcoin has experienced 4 long-term upward cycles and 23 short-term upward cycles. Long-term upward cycles are usually associated with Bitcoin's halving events, while short-term upward cycles are typically driven by short-term macroeconomic changes or market sentiment.

Long-term Upward Cycles (4 Stages)

Specifically, Laboure and Pozdnyakova identified 4 major structural upward cycles in Bitcoin's price (lasting over 750 days). These cycles exhibit high volatility and significant price increases, often resulting in exponential (over 10,000%) gains for Bitcoin's price.

Deutsche Bank stated that these structural upward cycles are usually related to Bitcoin's halving events (which occur approximately every four years), as halving tightens the supply of Bitcoin.

In contrast to upward cycles, withdrawal cycles are more frequent and are included within the aforementioned long-term upward cycles.

Since 2011, Laboure and Pozdnyakova identified a total of 19 instances of over 20% withdrawals, with an average withdrawal magnitude of 44% and a duration of 123 days. These withdrawals were typically concentrated before 2018, becoming more dispersed and lasting longer afterward (82 days before 2018, 194 days after 2018), with greater withdrawal magnitudes (−41% before 2018, −50% after 2018).

Short-term Upward Cycles (23 Stages)

In addition to long-term upward cycles, Laboure and Pozdnyakova also identified "short-term upward cycles."

Since 2011, Bitcoin has experienced 23 shorter upward cycles, each lasting less than a year, typically driven by short-term macroeconomic changes or market sentiment.

Although these cycles are shorter in duration, they still result in significant price volatility—during these short-term cycles, the average price increase of Bitcoin was 528% before 2018, with an average duration of 77 days, and 136% after 2018, with an average duration of 103 days.