Does Bitcoin Actually Follow the Business Cycle? (I Tested 15 Years)

The most popular theory and take right now from Bitcoin permabulls is that Bitcoin does not follow the halving cycle or the four-year cycle, it follows the business cycle. In today's video, that's exactly what we're going to test. Does Bitcoin follow the business cycle? I'm back-testing this on 15 years of data every single way that I could because I want to make sure that the answer is not biased in any direction, you know, whether it's bullish or a bearish scenario. I want to make sure that we get to the bottom of this and to the truth of this based on what the data actually tells us. So, let's go ahead and dive right in. So, the take that everybody repeats right now is that it's not the halving, it's the business cycle. There's big accounts with hundreds of thousands of followers saying it with full confidence. The biggest issue that I have with this is that these accounts have zero data behind it or they cherry-pick the data that they share. And they can do that because in crypto, pretty much nobody really fact-checks these people or checks the data themselves or does the research. But, lucky for you guys and probably unlucky for these people, I do check this data. So, here's a real example of an influencer just kind of cherry-picking what he wants you to see to pretty much back up his theory and and his bias, really. Dan here is a YouTuber with over 400,000 subscribers. And he very specifically in his picture puts crypto, macro, and data-driven. So, you think that he's putting out data-driven uh takes. However, the majority of his takes is that Bitcoin and crypto in general follows the business cycle, not the four-year cycle. When I pushed back on that idea in X, he pretty much got a little aggressive telling me that he literally does this in his videos and crypto is so heavily correlated to business cycles. Genuinely confused how you do not see it or at least understand and be open to it. So honestly, I was the one confused after I pushed back again with data, then he backed off a bit and started to move the goalpost saying that you have to give crypto a bit to catch up. And he also added, "It's quite obvious on any zoomed out chart." So okay, challenge accepted. Today we're going to zoom out the chart and show exactly how this misinformation gets spread throughout all of social media from influencers like Dan. And again, no disrespect to Dan himself, he seems like a great guy. He just has not done enough research. Honestly, probably doesn't know how to do the research needed to actually find the data-backed answers [music] for this. And it's not just Dan, I see hundreds of influencers out there spreading this same misinformation. And a lot of it just happens to be copy and pasted information, right? They saw another video talking about it or they saw somebody else writing about it, cherry-picked [music] data, and then kind of regurgitating that information, which is misinformation cuz they're not they don't have the full context [music] of it. So that's kind of what we're going to be breaking down in today's video and seeing how exactly does the business cycle affect Bitcoin. Does it actually affect Bitcoin? And we're going to do a test of just buying and selling based on the business cycle signals because if it does move Bitcoin or if it does lead Bitcoin as Dan stated, then you should make a killing, right? You should pretty much beat out buy and hold minimum, right? Buy and hold should not beat you if you're playing the business cycles >> [music] >> and Bitcoin follows business cycles, right? Right? So, first of all, what even is the business cycle? The business cycle is the economy's boom and bust loop. People measure it with one number. That's the PMI. PMI simply stands for purchasing managers index, which is a leading economic indicator that measures the health of manufacturing and services sectors. A PMI above 50 signals economic growth, while a reading below 50 indicates contraction. So, the claim itself is simple enough. If the economy grows, then Bitcoin should pump. If the economy shrinks, then Bitcoin should dump. So, let's test it. Now, there are two ways to compare the charts. You can compare it using levels, which just means that you line up two raw price lines and eyeball it. This is what everyone does, including Dan, um and it's also the trap that Dan got caught in. And then the other way, and the actual way to test this as a data analyst or data scientist, is in changes. Check if their actual month-to-month moves line up. This is the honest test. So, keep these two in your head because one of them is going to look like fool's gold. So, here's the window that all these cherry-picking [music] influencers like to show you. Sorry, I mean data-driven. If you were to just look at this chart, which is from 2020 all the way to 2021, basically 1 year, right? And they told you, "Hey, just look at these lines." Notice that as the economy went up, Bitcoin followed it, and when the economy went down, Bitcoin followed. They have a 0.73 correlation. You would probably believe them, right? Both went up together, both went down together. Case closed. The issue is that they're eyeballing the raw lines. All they're doing is picking a window where two things both went up. In that scenario, raw lines will always look linked. However, that is not proof. Almost anything that rises looks linked to anything else that rises. [music] So, watch exactly what ends up happening when we stop cherry-picking and zoom out like Dan told us to. So, here's a full 15 years of both Bitcoin's price and the PMI. So, I mean, right away, starting from 2012, Bitcoin went up until about 2014. And you can see here, if we look at that same time, the business cycle was dropping down until about 2013 before it then started going up. So, in that scenario, Bitcoin was the one leading, not [music] the business cycle. Now, in 2014, notice that both of them happened to go down together. So, sure, two trends going in the same direction look the same on the chart. However, look at when we bottomed right around here compared to where the business cycle bottomed somewhere in 2016. So, Bitcoin, once again, led the business cycle and bottomed about a year before the business cycle ever bottomed. Then Bitcoin topped at the end of 2017 and began its bear market once again. However, the business cycle didn't begin dropping down until about halfway through Bitcoin's bear market. So, once again, Bitcoin leading the business cycle. And then, at the point that Bitcoin bottomed in 2018, the business cycle continued lower all the way throughout 2020. By the time it began moving back up, Bitcoin was in the middle of its bull market already. The business cycle ended up topping early in 2021 and Bitcoin ended up topping late in 2021. Then, after Bitcoin bottomed in 2022, you can see that the business cycle remained down for almost the entire stretch of the previous Bitcoin bull market. Almost the entire time from about 2020 to 2023, all the way until about 2025, the business cycle was bearish. That entire time, while Bitcoin 8x from its bottom here all the way to its top at the top of 2025. So, remember how this correlation was around 0.73? When we zoom out, that correlation changes to minus 0.2. And before we even start talking about what it's looking like right now, since Bitcoin topped back in 2025, let's throw away the trend and just look at the actual moves, right? This is called the honest test. So, the real question is in the months Bitcoin actually moved, did the economy move the same way? I ran this test for all 15 years. Because if Bitcoin is correlated in any way over the span of 15 years, there should be some type of correlation, some type of positive correlation. I think Dan would be proud of how zoomed out we are on this chart. So, take a look at this chart. Each dot represents one month and there's 15 years of them. Bitcoin and PMI through 15 years month-to-month correlation score is 0.04. This is what we call a coin flip. And it gets worse because any type of correlation between the two has never been stable. Here is the rolling match score over 15 years. It swings from strongly together, like in this period right here, to strongly the opposite. And then back, strongly together again, and then back, strongly the opposite. Any real driver of price would never behave this way. This is a coin flip. This is not correlation. There is zero correlation here. And maybe Dan, when he said to zoom out, he didn't mean zoom out that far. Maybe he just wanted the year-to-year correlation numbers. So, I did that as well, and it doesn't help its case. Do Bitcoin and the economy move together year by year? Green means that they move together, red means uh opposite. It flips almost every single year. It's negative in seven of 15 years. Again, a coin flip. So, I decided to put it through the ultimate test. So, if the business cycle was any type of indicator or moved Bitcoin in any type of way, then trading based on business cycles should make you more money than [music] just buying and holding, right? Over 15 years, there's absolutely no way that buying and holding can outperform the business cycle if they're correlated. There's just no possible way. And this is what that would look like. The orange line is just buying and holding. The red line is trading based on the business cycle. Notice that it's basically been flat for the last four years, while buying and holding went up. So, if everybody started with $1,000 and you just bought when the business cycle said to buy, and you sold when the business cycle turned red, your $1,000 would be at $497,000. Congratulations, you made money. Now, if you were to just held instead of trying to follow the business cycle, your $1,000 would have turned into $7.7 million. So, trading the business cycle that's supposed to be correlated with Bitcoin made 15 times less money [music] than doing nothing. And notice I haven't even mentioned the halving or the halving cycles, but I threw it up on this chart just for fun. And if you would have just followed the halving, you would have your $1,000 would have turned into $179 million, dollars, but that's not even part of this conversation. I don't even want to get into that cuz that's a whole other topic. I've done plenty of content on that already. And if your argument is that it's just now that the big players and the institutions are getting into the market, so now is when the business cycle's going to be affecting crypto and Bitcoin, then once again, the proof is in the data. Over the last four years, since these institutional investors came in and changed the game and made this time different, if you were following the business cycle, you would have made zero dollars while just buying and holding eight x. This is honestly GG's. Right? There's There's no argument in any type of data that says that the business cycle affects Bitcoin in any type of way other than when all tides rise, all trends look kind of similar. So, over the last four years, while the business cycle was in red, Bitcoin did an eight x from sixteen thousand dollars to a hundred and twenty-six thousand dollars while the economy was shrinking. And the cleanest test, I saved it for last, of course, because it's happening right now. This is why Dan wanted me to zoom out. He didn't want me to look at the chart that's happening right now in front of our faces because this is what it looks like. Since Bitcoin topped, the business cycle has gone up while Bitcoin has gone down. And overall, since the top, Bitcoin's down fifty percent. The same exact months, the exact opposite direction. So, of course, Dan didn't want me to be talking about this because this is a very, in his words, quite obvious chart. However, notice how he wrote this here, right? PMI is still new to its expansive phase, so have to give crypto a bit to catch up. Basically, moving the goal posts and saying even if Bitcoin bottoms in October and then goes up, then I'm right and Bitcoin is following the Bitcoin the the business cycle, right? That's basically what he's setting up with this tweet. Pretty much saying that Bitcoin lags the business cycle and when it bottoms in October based on a halving cycle, not business cycle, when Bitcoin begins to go up, then he's going to be like, "See, guys, I told you that it's the business cycle and crypto just needs some time to catch up because it just lags it." However, there's zero zero data that backs that up. There's no data out there. He couldn't even provide it to me. I asked him to give me data here. I told him, "Post a version where Bitcoin follows it." And he never replied again. And there's a reason for that. There is no data other than the cherry-picked data that we showed you in the beginning. These are the windows he can show me. I know all the windows because I did. I ran all the data. I know which windows he can show me. So, over the last 15 years, Bitcoin has had four full cycles and the PMI has had [music] one recession. So, I mean, do the math cuz the math is not mathing. Now, I'm not going to pretend that the overall economy means nothing, right? It's obviously better for Bitcoin overall if the economy goes up. Obviously. However, the economy does not predict or affect how whether Bitcoin's going to go up or down. So, hopefully now you guys understand why this is a theory which is not true. This is a false [music] theory. So, what actually affects Bitcoin's price, Bitcoin's movement, Bitcoin's tops and bottoms? There is an answer to this. And I've put it through the same exact test that I put the PMI and business cycle [music] through. Check out this video here where I tried to prove the Bitcoin for your cycle wrong with data. In that video, I show exactly what affects Bitcoin's prices, Bitcoin's behaviors, and its movement. I'll see you guys there.