The cryptocurrency market continues to evolve, transitioning from a speculative frontier into a maturing asset class. With the recent approval of spot Bitcoin and Ethereum ETPs (exchange-traded products), access has broadened significantly. Coupled with the potential for clearer regulatory frameworks under a new U.S. Congress, digital assets may be on the verge of outgrowing their early-stage, four-year cyclical patterns.
Despite these structural shifts, Grayscale Research assesses that current market indicators align closely with the mid-phase of a bull cycle. If fundamentals—such as real-world adoption and favorable macroeconomic conditions—remain strong, the current rally could extend into 2025 and beyond.
Like many commodities, Bitcoin’s price does not follow a purely random walk. Instead, it exhibits statistical momentum: upward trends tend to persist, and declines often continue once initiated. Over longer timeframes, Bitcoin’s boom-and-bust cycles oscillate around a long-term upward trendline (Figure 1). While past performance doesn’t guarantee future results, analyzing historical patterns helps investors understand typical market behavior and manage risk effectively.
As Bitcoin matures and gains broader institutional acceptance, the impact of its quadrennial halving events on supply may diminish—potentially reshaping or even flattening its traditional cycles. Still, studying past movements offers valuable context for today’s market dynamics.
Measuring Momentum: Historical Price Cycles
To evaluate where we stand in the current cycle, one effective method is comparing price performance across previous bull markets.
Figure 2 illustrates Bitcoin’s price trajectory during prior bull runs, indexed from the cycle low (set at 100) to the peak. Figure 3 summarizes this data in tabular form.
Bitcoin’s early cycles were remarkably short and explosive:
- The first cycle lasted less than a year.
- The second spanned about two years.
- Both saw gains exceeding 500x from prior lows.
Later cycles extended in duration:
- From January 2015 to December 2017: over 100x growth.
- From December 2018 to November 2021: roughly 20x increase.
After peaking in November 2021, Bitcoin bottomed around $16,000 in November 2022—marking the start of the current cycle, now over two years in progress. Its current price path mirrors the earlier stages of the previous two bull markets, both of which continued for about another year before reaching their peaks.
So far, this cycle has delivered approximately a 6x return, which is substantial—but notably lower than prior cycles. This suggests room for further upside in both duration and magnitude, even if the market no longer follows historical patterns exactly.
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Key On-Chain Metrics to Watch
Beyond price trends, blockchain analytics offer deeper insights into investor behavior and market health. These on-chain indicators help assess whether the current bull run still has fuel left.
1. MVRV Ratio: Market Value vs. Realized Value
The MVRV ratio compares Bitcoin’s market value (MV) to its realized value (RV)—essentially measuring how much the current price exceeds the average acquisition cost of all coins in circulation.
Historically, this ratio has reached at least 4.0 before each cycle peak (Figure 4). Today, it stands at 2.6, suggesting significant upside potential remains. However, peak MVRV levels have declined across cycles, so it may not need to hit 4 before a top forms.
2. HODL Waves: Measuring Supply Rotation
Another useful metric tracks how much of Bitcoin’s circulating supply has moved on-chain over the past year—often referred to as “HODL Waves.” High turnover indicates fresh capital entering the market.
In past cycles, at least 60% of the total supply changed hands during the bull phase (Figure 5). Currently, that figure sits at 54%, implying further rotation—and potential price appreciation—could occur before a peak.
3. Miner Positioning: MCTC Ratio
Bitcoin miners play a crucial role as consistent sellers due to operational costs. The Miner Cap to Transaction Cost (MCTC) ratio measures how much value miners have accumulated relative to what they’ve earned through block rewards and fees.
When this ratio exceeds 10, historical data shows prices often peak shortly after (Figure 6). Currently at 6, the metric suggests miners are still in accumulation mode—not yet at profit-taking levels. As with other indicators, though, peak thresholds have trended downward over time.
While no single metric guarantees future returns, most key on-chain signals remain below prior cycle highs. This collective picture supports the view that the current bull market is in its middle phase, not late stage.
Beyond Bitcoin: Broader Crypto Market Signals
Bitcoin dominates headlines, but the broader ecosystem provides critical context for assessing overall market sentiment and maturity.
Bitcoin Dominance Trends
Bitcoin’s share of total crypto market cap—known as dominance—has historically peaked around the two-year mark of a bull cycle (Figure 7). Recently, dominance has begun to decline just as this timeline unfolds.
This shift often signals increased capital rotation into altcoins (“altseason”), which can extend overall market momentum. However, it also warrants caution: if too much capital chases speculative assets too quickly, it may accelerate a top.
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Funding Rates: Gauging Leverage Sentiment
Funding rates reflect the cost of holding perpetual futures positions and are a proxy for speculative leverage.
Currently, the weighted average funding rate for the top 10 non-Bitcoin cryptocurrencies (the largest “altcoins”) is positive but moderate (Figure 8). This indicates healthy long-side demand without extreme over-leverage—at least compared to earlier highs this year or in previous cycles.
While funding rates spiked briefly during last week’s sell-off, they remain well below overheated levels. This suggests the market hasn’t entered a euphoric phase yet.
Open Interest in Altcoin Perpetuals
More concerning is the rise in open interest (OI) for altcoin perpetual contracts. Before a major liquidation event on December 9, OI across three major exchanges approached $54 billion (Figure 9)—a record high.
Even after shedding around $10 billion post-clearance, open interest remains elevated. High OI reflects large speculative positions, a hallmark of late-cycle behavior.
This divergence—moderate funding rates but high open interest—suggests cautious optimism with pockets of risk. Traders are building leveraged positions, but not yet paying steep premiums to hold them.
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Frequently Asked Questions
Q: What stage of the bull market are we in now?
A: Based on historical patterns and current on-chain data, we appear to be in the mid-phase of the bull cycle. Price momentum is intact, key indicators like MVRV and miner ratios remain below prior peaks, and supply turnover hasn’t fully played out.
Q: Can Bitcoin break its four-year cycle pattern?
A: Yes. As Bitcoin matures and integrates into mainstream finance through ETPs and clearer regulations, its price behavior may decouple from past halving-driven cycles. Structural changes could lead to longer, less volatile uptrends.
Q: Is an altseason starting?
A: Early signs suggest capital is beginning to rotate into altcoins as Bitcoin dominance dips. However, full altseason typically requires stronger momentum and higher funding rates—conditions not yet met.
Q: How reliable are on-chain metrics?
A: On-chain data provides valuable insight into investor behavior and network health. However, no metric is infallible. Always use them in combination—not in isolation—and consider macroeconomic and regulatory factors.
Q: What signals might warn of an impending top?
A: Watch for:
- MVRV ratio exceeding 3.5+,
- Miner MCTC ratio approaching 9–10,
- Funding rates spiking sharply,
- Sustained OI above $60B for altcoin perps,
- Rapid drop in exchange reserves.
Q: Could the bull market last into 2025?
A: Yes—if macro conditions stay supportive (e.g., rate cuts, risk-on sentiment) and adoption grows (e.g., via ETFs or real-world use). The current pace suggests momentum could carry into 2025 before peaking.
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