Since its launch almost 12 years ago, Bitcoin (BTC) has experienced a number of bull and bear cycles, each larger than its predecessor. But what drives these courses? Dear co-founder Jake Yukum Pyat stated that the answer lies in the human brain.
“Bullish and bearish cycles in Bitcoin are features of general human psychology, attention span and its deterministic and declining returns,” Yukum Bit told Cointelegraph.
Various parties have discussed different occurrences of bitcoin cycles over the years, including the PlanB-to-flow model, which shows future bitcoin prices based on half-periods programmed every four years.
Bitcoin is unlike any asset before it. The limited program display and freedom of movement make it possible to store an infinite number of values.
However, one may wonder whether the nature of Bitcoin as a programmed asset dictates the price cycles on some level, especially since mining returns are halved every four years, and essentially bring fewer bitcoins to market each time. The block has been recovered. The final supply ceiling of 21 million workers may also be a factor in the equation.
“The supply of bitcoin is constantly declining as a percentage of total turnover, with the addition of a large supply shock that is halved,” Yokom-Piatt explained.
Bullish trading occurs when demand exceeds supply, which causes prices to rise and attract the attention of short-term investors. After a certain period, the attention of these short-term investors for the beef market disappears, and we return to the bear market. For every bull market, the public’s awareness of Bitcoin grows and gives the seeds for the next bullish round.
Bitcoin recently reached a full-time high in 2017 of around $ 20,000, while receiving its good share of regular media coverage.