Shallow Drawdowns, Shallow Rallies: Bitcoin's Familiar Pattern Continues

The Bitcoin market has seen a recurring pattern over its history - new buyers entering and driving up prices, followed by crashes. Analysts have been speculating about the current cycle, wondering if this time is truly different from previous ones.

Since mid-August, analysts have noted that the drawdowns in the price of Bitcoin are getting shallower each cycle, but so are the rallies. In 2014, a poster on X claimed 'something feels different now,' but $BTC crashed around 85%. In 2017, futures contracts and institutional adoption were touted as signs of legitimacy, yet prices still fell by around 84%.

More recently, companies like Strategy (then MicroStrategy) and Tesla bought Bitcoin, leading to a crash by around 77%. This time, with spot ETFs and bitcoin treasury companies buying in, the price has dropped approximately 53% so far. Alex Thorn's chart indexing the price of Bitcoin to 100 at each cycle high shows the current cycle has a notably shallower drawdown than previous cycles.

Willy Woo argued that Bitcoin is transitioning from its four-year cycle to an 8-year cycle as halving supply shocks weaken, becoming more aligned with TradFi short-term debt cycles. However, this claim remains unproven.