On May 22, Bitcoin (BTC -0.25%) hit a new all-time high of nearly $112,000. With a total market cap of $2.2 trillion, it now ranks as one of the five most valuable assets in the world, trailing only Apple (AAPL -2.88%), Nvidia (NVDA -1.02%), Microsoft (MSFT -0.82%), and gold.
Based on the above, it might seem like Bitcoin is a no-brainer investment right now. But is it? Let's take a closer look at the historical evidence for Bitcoin.
The cyclical nature of Bitcoin
Given that Bitcoin started trading in January 2009, we now have 16 years of history to examine. And the overwhelming evidence is that Bitcoin tends to trade in fairly well-defined four-year cycles. The cycle begins with a steady accumulation phase, which leads to a growth phase, which leads to a bubble phase, which ultimately ends in a steep decline or even a crash. At which point, the whole cycle starts anew.
Image source: Getty Images.
The defining moment of every four-year cycle is the Bitcoin halving, which takes place -- you guessed it -- every four years. By knowing when the most recent halving event took place, it's relatively easy to know where Bitcoin is in any four-year cycle. That's because the halving is typically the signal for Bitcoin to move from the growth phase to the bubble phase.
And that's what has me so concerned right now. Based on the historical evidence, the bubble phase lasts anywhere from 12 to 18 months. So, let's do the math. The most recent Bitcoin halving took place in April 2024, which means that we're more than 12 months into the bubble phase of the cycle.
Thus, even though all lights appear to be flashing green for Bitcoin right now, there could be trouble ahead. The time to be most concerned about Bitcoin is when everyone is convinced that Bitcoin is a slam-dunk investment. And that's what's happening now: Retail investors are buying every dip on Bitcoin, corporations are adding Bitcoin to their balance sheets, and even the U.S. government is trying to figure out a way to buy Bitcoin.
Lessons from the previous Bitcoin cycle
Still not convinced? Then take a closer look at Bitcoin's chart from the previous four-year cycle, which included a halving event on May 11, 2020. On the date of the halving, Bitcoin was trading at about $10,000. During the next 12 months, it eventually hit a price of $60,000 in April 2021.
But then, out of nowhere, Bitcoin suddenly collapsed to the $30,000 level. To most crypto observers at the time, it looked like Bitcoin was done. The dreaded fourth phase of the historical cycle -- the crash -- looked like it had arrived. But, as turns out, Bitcoin once again recovered, regained its all-time high, and then soared all the way to $69,000 by the end of 2021.
Bitcoin / U.S. dollar chart by TradingView
After that, you know the ending to the story. Bitcoin collapsed again, falling all the way to $16,000 by November 2022. And then the whole cycle started again. Accumulation led to rapid growth in 2023 and 2024, which led to Bitcoin hitting another all-time high in January 2025, which led to Bitcoin briefly collapsing in value to the $75,000 price level in early 2025 before recovering to hit another all-time high in May.
Admittedly, history does not always repeat. And it can be misleading to draw too many lessons from the historical data. But you have to admit one thing: The performance of Bitcoin in 2025 is uncannily similar to its performance during the previous Bitcoin bull market rally in 2021. Back then, its all-time high was followed by an immediate price decline, and then followed by a brand-new all-time high.
What happens next?
Trying to predict the future price of Bitcoin in the near-term is a fool's errand. Typically, as soon as Bitcoin hits a new all-time high, it becomes much more volatile. The intraday price swings become much more dramatic, and the price of Bitcoin can bounce all over the place.
For all the investors and traders who are convinced that Bitcoin is going to soar to $200,000 from here, you have investors and traders saying that Bitcoin is going to fall all the way back to $69,000. Just about the only thing that you can predict about Bitcoin is plenty of volatility.
But even if Bitcoin does follow the same four-year historical pattern described above, I'm not worried. It just means that I will have to wait another four years for even more amazing gains from the world's fifth-most valuable asset.
