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BitcoinThe historical “cycle” suggests that it may be breaking as investors’ image and supportive regulations reshape market dynamics.
If this usually predictable pattern is broken, it will have a significant impact on the way investors evaluate the price action of cryptocurrencies and when to invest in Bitcoin.
“Until 2026 we see positive returns, that’s not officially over. But I think we will, so I can say: I think the 4-year cycle is over.”
What is the Bitcoin cycle?
Typically, the Bitcoin cycle refers to a four-year price movement pattern that revolves around a key event called a halving, which is a change in mining rewards written in Bitcoin code.
Half occurs approximately every four years, the last time Occurred in April 2024 The previous one was May 2020.
When halved, rewards are given in the form of Bitcoin The so-called “miner” – The entity that keeps the Bitcoin network running is cut in half. This reduces the supply of Bitcoin entering the market. Therefore, only 21 million Bitcoins exist.
Typically, Bitcoin will gather in the months after the halving to eventually reach fresh all-time highs. Bitcoin will then collapse, down about 70% to 80% from peak The attack of “encrypted winter” Long-term digital coin prices have been long. During this period, the prices of other cryptocurrencies will also drop significantly. Bitcoin will then trade for a while for a while, and as the next halving speed it usually sees its price appreciation. Then repeat the cycle.
The price of Bitcoin is usually transferred over a 4-year cycle.
What’s wrong with the Bitcoin cycle?
As Bitcoin hits fresh, market reactions around the last half are unprecedented High history In March 2024, about a month before the halving, it reached new heights after more than $73,000 instead of expected prestigious activity.
“In the last cycle, the new all-time high was halving 12-18 months,” Coindesk Data research analyst Saksham Diwan told CNBC.
The main factors are U.S. Approves Bitcoin Exchange Trading Funds (ETFs) It starts trading in January 2024. ETFS tracks the price transfer of Bitcoin, without investors actually having to own the cryptocurrency itself.
A large amount of flows into ETFs, hopefully this can bring more Traditional institutional investors People who have been away from cryptocurrencies in the past have helped raise the price of Bitcoin.
“This time, demand for spot bitcoin ETFs is essentially a typical after-sales price discovery. This is indeed the first clear sign that institutional flows can change traditional cyclical dynamics,” Diwan said.
What factors help change the Bitcoin cycle?
ETFs are the first major factor that disrupts Bitcoin’s four-year pace. It attracts investors interested in keeping cryptocurrencies long-term.
But many other market factors have also changed.
Hougan of Bitwise Asset Management points to the “explosion in cryptocurrencies,” usually before cryptocurrencies winter. He mentioned The collapse of the so-called initial coin product (ICO) in 2018 and Crypto Exchange FTX crash in 2022.
At the same time, the macroeconomic environment and regulations are becoming increasingly supportive.
“Interest rates are more likely to fall than next year’s rise, and the fact that regulators and lawmakers are now willing to interact with cryptocurrencies rather than a firm refusal to deal with it will greatly reduce the risk of future explosions,” Hogan said.
Gary Gensler, a former SEC leader, has suppressed the industry and opened numerous cases against cryptocurrency companies. Those in the industry say they are Unfair goals. According to the current administration of U.S. President Donald Trump, the Securities and Exchange Commission (SEC) Abandoned some cases against cryptocurrency companies. Washington has introduced it New laws around cryptocurrencies Even launched Bitcoin strategic reserves.
at the same time, Listed companies are accumulating cryptocurrenciesBitcoin, especially, is part of the new strategy.
“As the market maturity increases, the accumulation of long-term holders, and the decay of volatility, the traditional 4-year rhythm is being replaced by more sensitive liquidity, macro-related behaviors,” Ryan Chow, co-founder of the SOLV protocol, told CNBC.
Where are we in the cycle now?
A key point to note is that, according to Coindesk Data’s Diwan, historically, between days 500 and 720, the price of Bitcoin is the most important. Diwan noted that Bitcoin peaked in this window of the 2016 and 2020 cycles.
“If we want to repeat this pattern, we should pay attention to the potential acceleration between 2025 and early 2026 in the third quarter,” Diwan said. “The price effect (IN) of this cycle has been significantly shortened compared to previous later stages of the standby period.”
Hougan of Bitwise Asset Management said the four-year cycle is over, but to make it officially die, Bitcoin needs to have a good 2026 year, which he hopes will happen.
“I don’t think we’re abolishing volatility, but I think a) the power that created the four-year cycle in history is weaker than in the past, and b) I think there are other very powerful forces that act on different schedules, and I think that will overwhelm our four-year trend.”
Bitcoin’s latest record high was hit more than $123,000 on July 14.
Is 80% collapsed?
A prominent feature of previous cycles is that Bitcoin’s record height after halving will be about 70% to 80%.
Crypto industry insiders told CNBC that this will not happen again as they outline the changes that support the four-year cycle.
“We think the cruel 70-80% era of shrinkage is behind us,” said Chow of SOLV Protect.
He noted that the largest correction for the cycle was about 26% in the closing ceremony, compared with about 84% after 2017, with a historical high of 77%.
Chow said Bitcoin, as well as “stable institutional inflows help holders with larger downside absorption. He added that responses to macro shocks or moderating surprises may be 30% to 50% corrected, but they may be shorter than previous cycles and less violent.”
Hogan also said that a 30% to 50% fall could be possible: “I bet a 70% pullback is a thing of the past.”
