It is talked aloud that the Bitcoin is in a supercycle or that it is about to start, which will certainly increase the Bitcoin price index. After all, Bitcoin moves from one all time high to another. That has enticed some crypto connoisseurs not to talk of a bull run, but instead they are talking about it a so-called supercycle. In this article, you will learn more about a supercycle, which can not only happen to Bitcoin. Other cryptocurrencies might reach a supercycle as well, such as the Ripple price. The Ethereum price will rise a lot too if this coin is in a supercycle.
What even is a supercycle?
A supercycle is a phenomenon where the rising price of a market effect causes the price to rise further. You can therefore consider it to be a positive feedback loop. It works the following way: people become interested in an investment. Because of that, they will start buying it, which, of course, drives up the price. In turn, this will give more people confidence and actually encourages them to buy even more coins. This way the prices continue to rise, which is a constant cycle. Typically, the term ‘supercycle’ is used to refer to a decades-long bullish run of commodities, but lately many financial analysts have been applying the term to Bitcoin as well. A great example of a supercycle is the evolution of Apple shares after the dotcom bubble.
What are Bitcoin’s half cycles?
Half cycles refer to Bitcoin’s half-life cycles. These usually last about four years. This is the case since the new supply of Bitcoin is halved every four years. At the same time, it is assumed that the demand for the crypto coin remains the same or even increases. This will, of course, have a positive impact on the price of BTC. However, you do not notice this impact immediately after the halving, it usually takes a few months for those who want to buy Bitcoin to realize that there is less Bitcoin available every day. The first of these halves took place in November 2012. Back then, the number of Bitcoins miners received per 10 minutes after solving a cryptographic puzzle went from 50 to 25. Nowadays miners receive 6,25 BTC per solved puzzle in the 10 minute periods. Every time this halves, the price peaks after a few months.
How does the Bitcoin supercycle work?
The Bitcoin supercycle depends on three factors: the macro background, financial institutions, and a special story, according to Dan Held at least. He says the idea works like this; a reduction in supply + an increase in demand = the price rises. You can call this Bitcoin’s viral marketing loop. Satoshi Nakamoto, Bitcoin’s creator, succinctly describes it: “As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop. As users increase, the value goes up, which could attract more users to take advantage of the increasing value.” Satoshi wrote this back when Bitcoin was worth about 0,01 USD. However, after every halving a bull run did occur. According to Dan Held, the current cycle is different. Never before has Bitcoin had such a strong foundation against a macro background that indicates exactly why Bitcoin is needed. The story is also unique, and the ability to flow global value into Bitcoin has never been easier. Therefore, he predicts the coming bull run due to the halving will be even bigger than the two previous bull runs. In fact, this is why Dan Held predicts a Bitcoin supercycle might be happening soon.
