Crypto Market Signals, New Bull Cycle Ahead

According to the co-founder of Delphi Digital, several on-chain metrics and charts are displaying signals that could indicate the commencement of a new bull market cycle for cryptocurrencies.

Kevin Kelly of Delphi Digital, an institutional crypto research firm, stated on August 14 that crypto markets are cyclical and predictable, which “has enormous implications for the future of the crypto market.”

“Evidence is piling up that we’re in the early stages of a new cycle. Risk assets like stocks [and] crypto have been sniffing this out all year.”

Bitcoin follows four-year cycles with distinct patterns that have reliably repeated over the past three cycles, with Bitcoin suffering an 80% drawdown in the first year, recovering to prior highs over the next two years, and then rallying to a new all-time high in the fourth year.

Kelly observed that Bitcoin cycle peaks typically coincide with the maxima of the Institute of Supply Management (ISM) manufacturing index, which monitors the health of the United States manufacturing and service sectors.

“BTC price peaks occur around the same time the ISM shows signs of topping out. Active addresses, total transaction volumes, total fees — they all peaked alongside tops in the ISM too.”

BTC price/ISM PMI. Source: Delphi Digital

“Turning points in the business cycle have historically been ripe opportunities to increase risk exposure,” he said, adding, “It appears the ISM is nearing the end of its two-year downtrend, which risk assets have once again been sniffing out.”

Bitcoin and cryptocurrency markets have been sluggish for roughly five months, but analysts believe that several fundamental variables, such as ETF approvals, an end to rate hikes, and an Ethereum scaling upgrade, could rouse them from their slumber.