Bitcoin's 4-year cycle theory, dangerous if it continues... "2029 peak will be lower" Warning

▲ Bitcoin (BTC)

A warning has been issued that if Bitcoin's (BTC) 4-year cycle theory and the law of diminishing returns are maintained according to the mathematical model, it will be difficult to set a new all-time high in 2029.

Crypto analyst Lark Davis stated on his YouTube channel on April 11th that applying an exponential decay model to Bitcoin suggests that the peak of the next cycle could be lower than the current one. Davis noted the trend of returns decreasing by approximately 70% to 80% in past cycles. Initial returns of 51,000% sharply declined to 12,000%, 2,000%, and 730% subsequently. If this trend continues, the return from the bottom in the next cycle is projected to be around 150%.

According to this model, Bitcoin's estimated peak in 2029 is presented as approximately $93,000. This is lower than the previous all-time high, which exceeded $126,000. Davis diagnosed that if the trend of decreasing returns continues, Bitcoin's growth momentum could weaken. An analysis was also presented suggesting that if exponential decay repeats, prices could significantly decrease in the long term.

However, in this cycle, a different trend from the existing 4-year cycle is also being detected. Bitcoin broke through $74,000 in the first quarter, before the 2024 halving, setting a new all-time high. This is interpreted as a strengthening trend where increased demand, rather than a halving-centric supply structure, dictates the price.

Changes in market structure are also clear. The main buyers have shifted from individual investors to institutional investors. Large institutions such as BlackRock and Strategy have engaged in large-scale accumulation during every downturn, changing the nature of the market. Davis explained that Bitcoin is moving away from being a speculative asset and gradually establishing itself as a mature asset class.

Davis suggested that if Bitcoin surpasses $127,000 before 2028, the 4-year cycle theory and the law of diminishing returns may no longer be valid. Furthermore, the fact that the recent correction has been lower than the historical average was presented as another sign of deviation from the existing cycle model. The analysis suggests that market participants need to re-evaluate their strategies based on the changed supply and demand structure and real-time data, rather than fixed cycle theories.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*