Is Bitcoin About to Go Parabolic?

For many crypto investors, it might seem impossible that Bitcoin (CRYPTO: BTC) could come roaring back to life and skyrocket higher in 2025. After all, Bitcoin is down almost 30% from an all-time high of $109,000 in January, and the intensifying global trade war threatens to cut any nascent crypto rally short.

However, according to a recent report from Fidelity Digital Assets, the price of Bitcoin could actually be ready to skyrocket. All signs point to Bitcoin having one last major rally in 2025. So is Fidelity right?

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The Bitcoin cycle

To answer this question, it's important to understand the historical four-year Bitcoin cycle: An accumulation phase, a growth phase, an acceleration phase, and a crash phase.

The real profits are made during the acceleration phase, when Bitcoin becomes highly volatile, and suddenly shoots higher. This phase is the culmination of a super-frothy, super-speculative rally that takes Bitcoin to new highs. Fidelity thinks this will happen as soon as Bitcoin regains the $109,000 level. If that happens, it's all systems go, and you'd better buckle your seatbelt, because Bitcoin is about to skyrocket higher.

The good news is that, according to different key indicators used by Fidelity, Bitcoin still appears to be in the acceleration phase. In this context, says Fidelity, the recent decline is nothing out of the ordinary.

In previous acceleration phases, Bitcoin also had significant, double-digit drawdowns. According to the myth and lore that has developed around Bitcoin, this is when you need to have "diamond hands" (and not "paper hands"). In other words, you need to hold on to your Bitcoin with rock-hard determination, despite intense market volatility.

How much time do we have left?

But there's just one catch: The time remaining for such a rally is rapidly disappearing. Fidelity Digital Assets has carefully studied past Bitcoin cycles, and determined that we are close to the end of the typical acceleration phase. Previous acceleration phases have lasted for 244, 261, and 280 days. As of April 4, we are currently more than 250 days into the current acceleration phase.

So if Bitcoin doesn't shoot higher before the start of summer, it may be the end of the acceleration phase. That's when Bitcoin could really be in trouble. As noted above, the fourth phase of the four-year cycle is the crash phase, when Bitcoin's value sinks like a rock.

Potential red flags

By now, you've probably mentally noted a few red flags. The first red flag is that all of this analysis is based on Bitcoin's performance during previous market cycles. And, as we all know, past performance is no guarantee of future results. This is especially important to keep in mind with Bitcoin, because it is a relatively new digital asset.

Image source: Getty Images.

The second red flag is that this parabolic rally scenario doesn't take into account the current macroeconomic reality. In other words, "Liberation Day" -- the day that the Trump White House introduced sweeping global tariffs against nearly every nation in the world -- might not be so liberating for Bitcoin or any other asset.

It's up to you to decide if investors will move into Bitcoin as a haven from the global macroeconomic storm. In the first day of trading after tariffs were announced, Bitcoin appeared to hold up better than many tech stocks. That could be a sign that investors have not given up on Bitcoin quite yet.

Should you invest in Bitcoin now?

If you believe in the Bitcoin cycle, you also need to believe that the acceleration phase will eventually be followed by a crash phase. This was the case in 2014, 2018, and 2022, when Bitcoin suffered staggering declines of 58%, 74%, and 64%.

Moreover, there's not much time left for Bitcoin to go parabolic. So even if you manage to load up on Bitcoin in the coming weeks or months, you are likely to see the value of those holdings crash back to earth in late 2025 or early 2026. That's just the way Bitcoin works.

Investing in Bitcoin has never been for the faint of heart. The best way to invest in Bitcoin is to take a long-term approach, such that you are not constantly checking the price of Bitcoin every 24 hours. Bitcoin is still the one crypto that you can buy and hold forever, as long as you can accept its boom-and-bust cyclical nature.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.