Bitcoin: Is the four-year cycle over?

For more than a decade, Bitcoin's price appears to have followed a relatively stable four-year cycle. Proponents of this cycle particularly point to the Bitcoin halving event, in which the reward for mining new blocks is halved. As a result, fewer BTC enter the market, theoretically leading to higher prices. Proponents of the efficient-market hypothesis see this differently: since everyone already knows in advance when supply will decrease, this should already be fully reflected in the current price. With no further price increases for now, this debate is regaining momentum. Many investors are wondering whether the familiar patterns still exist and what this means for their investment strategy.

The crypto cycle in a nutshell
Bitcoin's historical development supports the idea of this cycle. Previous halvings were followed by rapid bull markets that peaked after about 12 to 18 months, followed by severe crashes and long bear markets in which public interest declined sharply. This pattern occurred in 2013, 2017 and 2021. In addition, in 2017 and 2021, we saw strong rallies of speculative altcoins, which attracted mostly retail investors.

Traders, analysts and retail investors largely still believe in this pattern and trade accordingly. As a result, they reinforce the cyclical nature, leading to a self-fulfilling forecast. As a result, the four-year cycle has shown remarkable constancy even under changing market conditions.

Has anyone seen the bull market?
Many investors speculated on a repeat of previous bull markets during the price surge last November and December. However, a setback followed in recent months: Bitcoin fell about 25 percent, while altcoins lost even all of their gains from after Donald Trump's election victory. Popular AI tokens such as ai16z and various memecoins collapsed by more than 90 percent. Market observers are now searching for explanations and increasingly doubt that the familiar pattern is over for good.

A commonly cited reason for the weak altcoin season is the overwhelming supply of new tokens. Platforms such as pump.fun have exploded the number of new cryptocurrencies, spreading the available capital across too many different tokens. This is especially true for speculative investors ("Degens") who chase short-term profits without fundamental analysis.

Newer retail investors are unlikely to seek out obscure coins en masse, but rather trade through established apps such as Robinhood. As a result, established projects such as Ripple, Cardano and Tron do benefit somewhat from the influx of capital, but their growth falls short of previous prediction.

Is money supply more important than the halving event?
According to many analysts, the financial markets currently lack the liquidity to further push up the overall market value of crypto. Bitcoin and the broader crypto market are highly correlated with changes in M2 money supply and other liquidity indicators. While the Quantitative Tightening program is expiring, significant liquidity injections or further interest rate cuts from the U.S. central bank are unlikely for now. Despite improved fundamentals due to measures taken by the Trump administration, there is simply not enough money available for risky investments.

Moreover, many experts believe that halvings have now become less relevant because of the exponential decline in new Bitcoin issuance. After all, more than 90 percent of all Bitcoins are already in circulation. Opponents of this, however, argue that precisely because of the "HODL" behavior of Bitcoin owners, even small supply reductions have disproportionately large price effects.

Bitcoin is coming of age
A consensus among analysts is that Bitcoin used to be largely detached from traditional markets, but now it responds as a full-fledged asset to macroeconomic factors such as money supply and geopolitical events.

Bitcoin has established itself internationally. With the entry of major financial institutions such as BlackRock and Fidelity and the emergence of state reserves in Bitcoin, the crypto currency is gaining acceptance and recognition. At the same time, its current size of over $1.7 trillion means that extremely rapid price increases are becoming more difficult. In contrast, the broader recognition of its fundamental value has also significantly reduced downside risk.