The Secret Behind Bitcoin's Cyclical Rise: An Investor's Guide from 2013 to 2024

Since its inception in 2009, Bitcoin has experienced multiple distinct growth and correction cycles. Each upward phase is accompanied by unique market drivers and shifts in investor sentiment. Understanding these cycles is crucial for grasping the next market rally.

How Are Bull Market Cycles Formed?

The essence of a bull market cycle is a sustained increase in price, typically triggered by several key factors:

• Supply reduction events (such as halving)
• Institutional capital inflows
• Regulatory recognition or policy support
• Increased media attention
• On-chain data showing strong demand

Unlike traditional financial markets, Bitcoin’s bull markets are more volatile but also offer greater profit potential. Prices can double over months or experience sharp corrections within weeks.

The Magic of Halving Events

Halving cycles are the most regular catalysts for Bitcoin’s upward movement. Approximately every four years, Bitcoin’s mining reward halves, directly limiting the growth rate of new supply.

Historical data clearly illustrates this pattern:

• After 2012 halving: price surged about 5,200%
• After 2016 halving: price increased approximately 315%
• After 2020 halving: price rose about 230%

This scarcity of supply creates demand pressure, becoming a primary driver of price increases.

Review of Past Bull Markets

2013: The First Major Surge

The 2013 rally marked Bitcoin’s first entry into the public eye. Prices soared from about $145 in May to $1,200 in December, a total increase of 730%.

What happened then?

• Cyprus banking crisis prompted investors to seek safe assets
• Tech enthusiasts and early adopters surged
• Media began extensive coverage of this mysterious asset

The cost afterward: Bitcoin plummeted 75% in 2014, falling below $300, partly due to the Mt. Gox exchange hack and shutdown.

2017: Retail Investors’ Frenzy

2017 was a turning point for Bitcoin’s mainstream adoption. Prices rose from around $1,000 in January to nearly $20,000 in December, a staggering 1,900% increase.

Factors driving this rally:

• ICO craze attracted a large influx of new users into crypto assets
• Major exchanges expanded, lowering retail entry barriers
• Media hype triggered FOMO effects
• Daily trading volume surged from $200 million at the start of the year to $15 billion by year-end

The reversal: Starting early 2018, a prolonged bear market began, with prices dropping over 80%. Regulatory bodies (including the US SEC) increased scrutiny, and China shut down domestic crypto exchanges.

2020-2021: Institutional Entry

During this period, Bitcoin’s narrative shifted fundamentally—from a “speculative asset” to “digital gold” and “inflation hedge.”

Key data points:

• Early 2020: $8,000
• April 2021: $64,000 (700% increase)
• Peak in 2021: close to $69,000

Why was this different?

• MicroStrategy, Tesla, Square, and other public companies made large Bitcoin holdings
• The Federal Reserve’s liquidity injections and low interest rates boosted demand for safe assets
• Bitcoin futures and institutional ETF products received approval
• Global central bank easing policies raised inflation concerns

2024-2025: The Era of ETFs

This marks the most pivotal moment in Bitcoin history. In January 2024, the US SEC approved a spot Bitcoin ETF, opening the door to traditional finance.

Market performance:

• Early 2024: around $40,000
• November 2024: $93,000 (132% increase)
• All-time high: $126,080 (based on latest data)

Game-changing factors:

1. Power of Spot ETFs Since approval in January, US spot Bitcoin ETFs have attracted over $45 billion (2024 data). The BlackRock IBIT fund alone holds over 467,000 BTC, and total Bitcoin ETF holdings approach 1 million BTC.

This isn’t just about capital volume; it fundamentally changes how investors participate. 401(K) retirement accounts, insurance funds, and large institutions can now legally allocate to Bitcoin.

2. Halving Effect The fourth halving in April 2024 proceeded exactly as planned. Supply growth slowed by another half, while demand surged due to ETF inflows, pushing prices higher through this asymmetry.

3. Political Support Signals Policy shifts in the US also played a role. Discussions about including Bitcoin in national strategic reserves and supportive statements from policymakers have boosted market confidence.

How to Identify the Start of a Bull Market?

Technical Indicators

RSI: When the Relative Strength Index exceeds 70, it often indicates strong buying momentum. In 2024’s rally phase, Bitcoin’s RSI repeatedly entered this zone.

Moving Averages: The golden cross of the 50-day and 200-day moving averages (50-day crossing above 200-day) is a classic bull signal. In 2024, Bitcoin repeatedly touched these key averages and broke upward.

Breaking Key Support Levels: When prices surpass previous highs or long-term resistance levels, it often signals the beginning of a new upward trend.

On-Chain Data Analysis

Wallet activity rising: A significant increase in new addresses and transaction counts indicates new funds and users entering the market.

Exchange outflows increasing: Investors transferring Bitcoin from exchanges to self-custody wallets suggest long-term holding intentions, a bottoming signal.

Large inflows of stablecoins: When USDT, USDC, and other stablecoins flood into exchanges, it indicates substantial capital preparing to enter.

Circulating supply changes: As major holders like MicroStrategy accumulate more Bitcoin and coins flow less into the market, the available tradable supply continues to decrease.

Macroeconomic Factors

Bitcoin’s price is closely tied to macroeconomic conditions:

• Rising inflation expectations tend to boost safe-haven assets
• Weakening US dollar generally benefits dollar-denominated commodities and crypto assets
• Interest rate changes influence investor risk appetite
• Geopolitical uncertainties increase demand for safe assets

Current Market Situation (End of 2024 Data)

Based on latest figures, Bitcoin is trading at $88,560, near its historical high but below the all-time high:

• All-time high: $126,080
• Current change: +1.18% in 24 hours, +1.87% in the month
• Market sentiment: 50% bullish / 50% bearish (balanced)
• 24-hour trading volume: $866 million

This indicates a market in consolidation, neither overly optimistic nor panicked. With about 3 years remaining until the next halving in 2028, there is theoretically room for further upside within this cycle.

Risks and Warnings in the Bull Market

Common Pitfalls

FOMO-driven buying: Every major rally attracts retail investors, but they often buy near the top, becoming bagholders.

Excessive leverage: Borrowed funds can amplify gains but also lead to forced liquidations and huge losses during downturns.

Ignoring fundamentals: Some investors focus solely on price trends, neglecting Bitcoin’s real-world applications and adoption, which can mislead market sentiment.

Concentrated holdings: Putting all funds into a single asset leaves one vulnerable to extreme volatility.

Long-term Risks to Watch

Regulatory uncertainty: Different countries have varying policies; sudden regulatory changes can disrupt markets.

Technical risks: While Bitcoin’s network has been stable, any systemic security flaw could have catastrophic consequences.

Competitive pressure: Although Bitcoin’s position is strong, ongoing innovation in other cryptocurrencies might divert investor attention.

Environmental concerns: Mining energy consumption remains a public criticism point; policy tightening could impact Bitcoin’s long-term prospects.

Preparing for the Next Market Cycle

Pre-Investment Preparation

Deepen foundational knowledge: Avoid rushing in. Understand Bitcoin’s technical principles, economic models, and market cycles. Reading official docs and authoritative analyses helps.

Study historical cycles: Analyze the 2013, 2017, and 2021 bull runs to identify patterns and differences. Each cycle shares commonalities but also unique backgrounds.

Risk Management Strategies

Set clear goals and limits:

• Know your risk tolerance
• Define entry and exit targets
• Pre-decide maximum losses

Dollar-cost averaging: Don’t invest all at once. Buying in stages at different price levels reduces the risk of buying at the top.

Protection measures:

• Use hardware wallets for long-term holdings
• Enable two-factor authentication on exchanges
• Regularly back up private keys and recovery phrases

Choosing Trading Platforms

Prioritize security: Select platforms with strong security records and protective measures.

Ensure liquidity: Confirm sufficient trading volume for smooth transactions.

Transparent fees: Understand all costs, including trading and withdrawal fees.

User support: Check if help is available promptly when needed.

Continuous Learning and Community Engagement

Follow authoritative sources: Subscribe to reputable crypto news outlets for timely updates.

Participate in industry events: Join webinars and conferences to network with investors and experts.

Maintain rationality: Community sentiment can be overly optimistic or pessimistic; independent judgment is vital.

The Future Outlook for Bitcoin

New Growth Drivers

Government reserves plans: Proposals like the US “2024 Bitcoin Act” suggest increasing likelihood of Bitcoin being included in national strategic reserves. If realized, global demand could surge. For example, Bhutan’s national investment firm holds over 13,000 BTC, and El Salvador continues accumulation. More countries adopting such policies would further solidify Bitcoin’s status as “digital gold.”

Continued innovation in institutional products: Beyond spot ETFs, Bitcoin futures, options, and other derivatives will diversify and attract more institutional investors.

Potential technological upgrades: Discussions around restoring OP_CAT opcode are gaining traction. If approved, Bitcoin could execute more complex contracts and even deploy some DeFi applications, greatly expanding its use cases.

Maturation of regulatory frameworks: As Bitcoin’s role in finance solidifies, clearer regulations will emerge. While short-term volatility may occur, a well-defined regulatory environment will support long-term stability and growth.

Mid-term (1-2 years) scenarios

Optimistic: Based on historical patterns and current institutional involvement, Bitcoin is likely to continue rising over the next 12-18 months. The next key support may be the previous all-time high, with resistance at higher psychological levels.

Conservative: Unexpected regulatory crackdowns, macroeconomic deterioration, or technical issues could cause significant corrections. However, such dips are often viewed as buying opportunities in the long run.

Long-term (3-5+ years) outlook

Supply scarcity theory suggests Bitcoin will become increasingly rare over time (mining difficulty rising, new supply slowing, and lost coins nearly irrecoverable). This fundamental advantage remains unchanged.

Meanwhile, institutional adoption appears irreversible. Once large capital allocates to Bitcoin, it’s unlikely to fully exit.

Actionable Advice

For Beginners

Don’t rush into the market. Spend time understanding the landscape, build your knowledge base. Start small, experience trading processes, and develop market intuition.

For Experienced Investors

Reassess your holdings in the current stable environment. Should you adjust your allocations? What are your next target levels?

For Everyone

Remember the simplest truth: Long-term, Bitcoin’s scarcity and rising adoption are the fundamentals supporting its value. Short-term volatility can be unsettling, but don’t let emotions derail your long-term plans.

Final Thoughts

Bitcoin’s history is a tapestry woven from short-term frenzy and panic, but with a long-term upward trend.

The crashes of 2013, the bubble burst in 2017, and the prolonged bear market from 2018 to 2020 did not alter Bitcoin’s trajectory. Each crisis filtered out true believers and attracted more forward-looking institutional investors.

Currently, the market is relatively calm—neither overly euphoric nor panicked. Such an environment is precisely when rationality and preparation are most needed.

The arrival of the next bull cycle is only a matter of time, not whether. The key question is: are you prepared?