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Cryptocurrencies have gone through bad headlines for the last 12 to 18 months. This occurred on the back of exchange bankruptcies, fraud (lost fortunes), the arrival of new coins (market dilution), panic trades by less experienced high-street investors, and external factors such as reinforced rules, regulations, and taxation.

By reference and as of today, by market capitalization about 50% of all digital assets are Bitcoin which acts as proxy or point of reference for all other coins in the market. The particularity of Bitcoin is that is size is capped. Once all 21 million bitcoins are mined, no new coins (bitcoins) will be added to the market – hence the concept will work similarly to a closed-end fund with the price being paid for one coin being the value estimate (made by the buyer) at a given point of time. In the meantime, in order to stimulate the market price, bitcoins go through the process of “halving”. This unique aspect creates a kind of scarcity as the number of coins being available in the market, every 10 minutes, is halved. Technically speaking, the shortage is expected to affect the price of Bitcoin to a potential bull run. Since its inception in 2011, there have been three such halving processes on Bitcoin, each lasting 12 to 18 months after the halving.

Obviously, investors in Bitcoin may want to wish when the next halving process starts, but the point of the story is that no one really knows this. Given this, let’s look at the different phases of the Bitcoin market. A four-year cryptocurrency cycle roughly corresponds to the four seasons of the year:

• Spring: Spring precedes each halving: The price of bitcoin generally recovers from the cycle’s low point with price volatility being relatively high. Additionally, investor interest tends to be weak and uncertain.
• Summer: Historically, most of Bitcoin’s gains come directly after the halving. This bull-run period starts with the halving event and ends once the price of bitcoin hits its prior peak. Throughout this period, volatility is relatively low.
• Fall: Once the price surpasses the old high, it tends to attract interest from the media, new investors, and businesses. The pure speculation process can drive the price to an unprecedented high. Given the speculative nature of the trend, probability ratios are relatively high for the bull market running its course. 
• Winter: In previous cycles, the bear-market decline has come when investors decided to lock in their gains and sell bitcoin. In the absence of new buyers, latecomers to the party may lose much of the accumulated gains in a short period of time. There have been three crypto winters since 2011, lasting about 13 months each.

What about the oncoming Crypto-Spring?

Most likely, we are still in the crypto winter period. Hence, thinking and searching for information that would help determine whether crypto spring is about to come would imply the following:

• Time since the last peak: The trough of bitcoin in previous crypto winters has historically occurred 12 to 14 months after the peak.
• Magnitude of bitcoin drawdown: Previous troughs were about 83% off their respective highs.
• Miner capitulation: When bitcoin has neared the trough of past cycles, many bitcoin miners shut down their operations because they were losing money. When a miner shuts down, it makes it a little easier for the remaining miners. A statistic called “bitcoin difficulty” measures how easy or hard it is to mine bitcoin. When difficulty decreases, it is a sign the trough may be near. 
• Bitcoin price-to-thermocap multiple: “Thermocap” measures how much money has been invested in bitcoin since its inception. A lower bitcoin price-to-thermocap (PTT) multiple indicates a trough, while a higher multiple indicates a peak.
• Exchange problems: When the price of crypto drops, it tends to impact the viability of some crypto exchanges. Bankruptcies, bad news or new regulations may all indicate an end of the trough.
• Price action: A 50% increase in price from bitcoin’s low is typically a good sign that the trough has been achieved. As often with highly volatile assets, although the trend has changed, significant short-term losses may occur and are the actual norm.

Based on the analysis performed and the parameters used, one can conclude crypto spring should coincide with spring 2024. Yet, these are pure technical considerations and basic risks such as coordinated changes in rules and procedures (imposed by governments), new cases of bankruptcies, fraud, and recession, amongst others can change the course of action, price, and performance at any time. So, as a piece of good advice, you may watch out when farmers start seeding and you too will be right with harvesting the crop some time later.