According to Kevin Kelly, co-founder and Head of Research at Delphi Digital, a research and consulting firm focused on digital assets, the crypto market follows the overall business cycle and is poised for a new phase of growth.
Kelly, who has over a decade of experience in stock research and macroeconomic analysis, said that crypto market cycles are closely aligned with the highs and lows of the business cycle, as measured by indicators like the ISM Manufacturing Index.
He also noted that the network activity levels of cryptocurrencies such as Bitcoin reflect changes in the economic environment.
According to Kelly, the crypto market is currently in a similar state to 2015-2017, when Bitcoin recovered from the bear market and reached all-time highs with the recovery in the business cycle and the increase in global liquidity. Kelly also said that the Bitcoin halving event, which will occur in 2024 and will cut the supply of new BTC in half, could be the catalyst for another price rally.
One of the key similarities, according to Kelly, is that the crypto market tends to bottom out about a year after BTC peaked, and then return to its previous high in about two years. He said this pattern has been consistent since 2011 and coincides with the duration of the average business cycle.
Another similarity is that BTC's price peaks usually occur when the ISM Manufacturing Index shows signs of peaking, which indicates that economic activity has reached its maximum. Conversely, Bitcoin's price dips often coincide with the ISM Manufacturing Index showing signs of bottoming, indicating that economic activity has reached a minimum.
Kelly also noted that BTC network activity levels, such as active addresses and transaction volumes, follow a similar pattern to the ISM Manufacturing Index. He stated that this shows that demand for BTC is affected by the state of the economy and the availability of liquidity.
Based on these observations, Kelly argued that the crypto market is in the early stages of a new cycle, as both the ISM Manufacturing Index and Bitcoin's network activity levels have shown signs of recovery since 2023. He also said that this recovery was supported by other factors such as positive market sentiment, strong earnings data and rising gold prices.
Kelly Claims New Record In Bitcoin Will Come In The Fourth Quarter Of 2024
Kelly predicted that if the crypto market followed the same scenario as previous cycles, BTC could hit an all-time high in Q4 2024 and a new cycle high in Q4 2025. Kelly based his prediction on the assumption that the next Bitcoin halving event will occur in April 2024, about 18 months after Bitcoin's November 2022 low.
However, Kelly cautioned that there is no guarantee that the cycle will continue exactly as before, and that there are some significant risks that could undermine his view.
*Not investment advice.
