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Bitcoin 's historical "cycle" is showing signs that it might be breaking as a changing profile of investors and supportive regulation reshapes market dynamics. If this often predictable pattern is broken, it would have significant implications for the way investors assess the cryptocurrency's price action and the potential timing of when to invest in bitcoin. "It's not officially over until we see positive returns in 2026. But I think we will, so let's say this: I think the 4-year cycle is over," Matthew Hougan, chief investment officer at Bitwise Asset Management, told CNBC.
What is the bitcoin cycle?
Generally, the bitcoin cycle refers to a four year pattern of price movement that revolves around a key event known as the halving, a change to mining rewards that is written in bitcoin's code. The halving happens roughly every four years, with the last one taking place in April 2024 and the one prior to that was in May 2020. When the halving occurs, the rewards in the form of bitcoin that are given to so-called "miners" — entities that keep the bitcoin network functioning — are cut in half. This reduces the supply of bitcoin into the market. Therefore, there will only ever be 21 million bitcoin in existence. Typically, bitcoin would rally in the months after halving to eventually reach a fresh all-time high. Then bitcoin would crash, dropping roughly 70% to 80% from its peak leading to the onset of a "crypto winter," a prolonged period of depressed digital coin prices. The price of other cryptos would also fall dramatically in this period. Bitcoin would then trade within a range for a while, and as the next halving approaches, it generally sees its price appreciate. Then the cycle repeats.
Stock Chart Icon Stock chart icon Bitcoin's price typically has moved in 4-year cycles.
What's happened to the bitcoin cycle?
There was unprecedented market reaction around the last halving as Bitcoin hit a fresh all-time high of above $73,000 in March 2024, about a month before the halving, rather than reaching new heights after the celebrated event as expected. "In every previous cycle, new all-time highs came 12-18 months after the halving," Saksham Diwan, research analyst at CoinDesk Data, told CNBC. The main factor was the U.S. approval of bitcoin exchange-traded funds (ETFs) which began trading in January 2024. ETFs track the price movement of bitcoin without an investor actually having to own the cryptocurrency itself.
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Big inflows into ETFs, and the hope that this could bring more traditional institutional investors who had previously stayed away from crypto, helped boost the price of bitcoin. "This time, spot Bitcoin ETF demand essentially front-ran the typical post-halving price discovery. This was indeed the first clear indication that institutional flows could alter traditional cycle dynamics," Diwan said.
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