Dominic Basulto, The Motley Fool

Sat, May 24, 2025, 1:00 AM5 min read

• Bitcoin recently hit a new all-time high of $112,000 on May 22.

• Based on the historical evidence, Bitcoin tends to follow four-year cycles, punctuated by periods of boom and bust.

• Bitcoin's performance in 2025 is uncannily similar to its performance during the 2021 bull market rally.

• 10 stocks we like better than Bitcoin ›

On May 22, Bitcoin (CRYPTO: BTC) hit a new all-time high of nearly $112,000. With a total market cap of $2.2 trillion, it now ranks as one of the five most valuable assets in the world, trailing only Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and gold.

Based on the above, it might seem like Bitcoin is a no-brainer investment right now. But is it? Let's take a closer look at the historical evidence for Bitcoin.

Given that Bitcoin started trading in January 2009, we now have 16 years of history to examine. And the overwhelming evidence is that Bitcoin tends to trade in fairly well-defined four-year cycles. The cycle begins with a steady accumulation phase, which leads to a growth phase, which leads to a bubble phase, which ultimately ends in a steep decline or even a crash. At which point, the whole cycle starts anew.

The defining moment of every four-year cycle is the Bitcoin halving, which takes place -- you guessed it -- every four years. By knowing when the most recent halving event took place, it's relatively easy to know where Bitcoin is in any four-year cycle. That's because the halving is typically the signal for Bitcoin to move from the growth phase to the bubble phase.

And that's what has me so concerned right now. Based on the historical evidence, the bubble phase lasts anywhere from 12 to 18 months. So, let's do the math. The most recent Bitcoin halving took place in April 2024, which means that we're more than 12 months into the bubble phase of the cycle.

Thus, even though all lights appear to be flashing green for Bitcoin right now, there could be trouble ahead. The time to be most concerned about Bitcoin is when everyone is convinced that Bitcoin is a slam-dunk investment. And that's what's happening now: Retail investors are buying every dip on Bitcoin, corporations are adding Bitcoin to their balance sheets, and even the U.S. government is trying to figure out a way to buy Bitcoin.

Still not convinced? Then take a closer look at Bitcoin's chart from the previous four-year cycle, which included a halving event on May 11, 2020. On the date of the halving, Bitcoin was trading at about $10,000. During the next 12 months, it eventually hit a price of $60,000 in April 2021.