In prior bull runs, we’ve seen mid-cycle corrections associated with declining transaction volumes .. This differed from each top whereby transaction volumes spiked massively into the peak by ~ 45%
2013–2014 cycle:
~ 8 months after the halving, we saw a roughly 55% correction associated with a large drop in transaction volumes after finding equilibrium in the 350k-400k range. The mid-cycle peak was associated here with a 16% rise in transaction volumes. Not until transactions spiked dramatically by a much larger ~ 45% threshold into Dec’ 13 peak at around 585k transactions did this spell the end of this bull run.. The mid cycle slowdown in this instance preceded a nearly 6x run from the mid-cycle peak to the actual final cycle peak.
2016–2017:
The midcycle drop in transactions occurred here ~ July/Aug ’17, about 12 months after the prior halving and was associated with a 36.5% correction in BTC price. In this instance, the bull run had found an equilibrium # of transactions in the ~ 2mm range, before spiking a modest 17% into the mid cycle peak. It was not until a more pronounced 33% rise from the average transaction level in Dec ’17 that this foreshadowed the peak in the overall cycle. This end of cycle peak occurred at a level 6.4x that of the mid-cycle peak.
Could we be in the mid cycle slowdown period?
2020–2021:
If this is indeed a midcycle peak we are in the early stages of, it would be occurring ~ 11 months after the halving. The current equilibrium # of transactions on the network is in the 2.2–2.3mm range, and this only briefly spiked to 2.5mm, only 11% above this equilibrium before the recent decline. If prior cycles are any indication, we can expect transaction volume to bottom somewhere in the 1.9–1.925mm transaction # area and if each correction gets smaller from the prior cycle, we may predict that BTC price will bottom at 77% of the prior cycle’s bottom magnitude or ~ 27% from the mid-cycle peak. This would equate to a BTC level in the $47,500–50,000 range. What is interesting about this price level from a technical perspective is that this is where the 100 day moving average sits, and in the ’17 bull run, the mid cycle correction also bounced off its respective 100 day moving averages (in ’13 it bottomed in between the 100 day and 200 day averages as volatility was unsurprisingly more pronounced back then). If this then plays out into the end of the cycle as prior runs did, a slightly more modest 4–5x run from the midcycle peak (~ 65,000), would arrive at a peak target in the ~ $290k range (a 6x midcycle to end of cycle move like we saw in ’13 and ’17 would get closer to $390,000 ballpark).
That is not to say history will repeat, or even rhyme, but it is a pattern worth following. If transactions bottom in the low 1.9mm area, and if BTC corrects and bottoms definitively off that 100 day moving average area in the high 40k/low 50k area, it will add further confidence to this pattern.
**Note: this is NOT financial advice
