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Which perspective is truly the most well-supported, and how should investors think about the current risk-reward environment?

Bitcoin and Ethereum have fallen sharply in recent days, pushing the Fear & Greed Index down to 10 (extreme fear). At the same time, Bitcoin has just formed a death cross on the daily chart.

source

This has divided investors:
• Some believe we are at the end of the traditional 4-year cycle.
• Others argue the 4-year cycle was always an illusion, and that Bitcoin behaves like a typical risk asset within the global business cycle, meaning this cycle could extend into a five-year phase, making the current pullback a bear trap rather than a true cycle top.

So what is the most well-reasoned interpretation, and how should an investor think about the risk-reward of buying now?

Let’s break it down.

🧠 1. Is the 4-Year Cycle Real or an Illusion?

✔️ The Case for the Traditional Halving Cycle

Historically, the pattern is undeniable:
• 2012 halving → major rally
• 2016 halving → major rally
• 2020 halving → major rally
• 2024 halving → initial ETF-driven rally + current correction

The logic:
– Reduced BTC issuance lowers structural sell pressure
– Price reacts with a delay
– Cycle tops typically occur ~12 to 18 months after the halving

📌 If history repeated perfectly, this cycle would still have room to continue upward.

✔️ The Case That the 4-Year Cycle Is an Illusion and Macro Is King

This group argues that Bitcoin has matured into a macro-driven, risk-on asset, influenced mainly by:
– Liquidity conditions
– Interest rates
– Fed policy (QT vs QE)
– Global risk sentiment

Their thesis:
🔹 Bitcoin now behaves similarly to tech stocks
🔹 The halving has declining statistical impact
🔹 The real cycle is the global economic cycle
🔹 This may simply be a bear trap, not a true peak
🔹 When QE returns, Bitcoin is likely to surge aggressively

🧩 2. Which View Is Better Supported TODAY?

The most grounded answer is a combination of both:

✔️ The halving still matters

Its effect is weaker, but not irrelevant.
On-chain metrics still show meaningful supply shifts after halvings in:
– Miner behavior
– Sell-side pressure
– Long-term holder dominance
– Adjusted stock-to-flow dynamics

However…

✔️ Macro now dominates market structure

Since the ETF era began, Bitcoin has become highly correlated with global liquidity and risk appetite.

When:
– Liquidity tightens → BTC falls
– Macro risk rises → BTC falls
– QE begins → BTC rallies sharply
– Rates fall → capital returns to risk assets

Correlation with the NASDAQ has reached 0.80+ at times.

📌 Conclusion:
Halving influences supply, but macro sets the trend.
The cycle is not over — it is simply functioning within macro constraints.

⚖️ 3. The Real Risk-Reward of Buying Now

📉 Downside Risks

1. The death cross may signal deeper downside
2. Macro conditions remain fragile
3. Altcoins may still capitulate
4. Extreme fear can persist longer than expected
5. QE is not confirmed, only speculated

📈 Upside Potential if This Is a Bear Trap

1. Extreme fear often precedes large reversals
2. Fear & Greed at 10 has historically marked high-quality entry zones
3. ETFs tend to accumulate heavily on dips
4. Long-term holders are selling but institutions are accumulating (confirmed on-chain)
5. If QE returns, Bitcoin is one of the first assets to react
6. ETH is so deeply discounted that upside becomes even more asymmetric

📌 Risk is present, but the asymmetry favors the upside if macro conditions shift.

🟢 4. The Balanced, Non-Emotional Perspective

If you look only at technicals → bearish
If you look at macro + makret sentiment → contrarian bullish

The rational conclusion is:

We are in one of the worst sentiment environments since 2022 bear market, yet the macro structure could reverse sharply once the Fed reintroduces liquidity. This creates a classic asymmetric opportunity.

🧭 5. How We Think About the Risk-Reward

✔️ 1. Buying carries risk, but staying out may carry even more

Historically, Bitcoin’s strongest rallies began when:
– Sentiment was terrible
– Technicals looked awful
– Fear was dominant
– Liquidity was about to turn positive

✔️ 2. Smart positioning is never all-in or all-out

The most effective strategy is:
DCA + small, aggressive entries during periods of extreme fear.

✔️ 3. Do not attempt to catch the exact bottom

We buy when the risk-reward is favorable, even if downside remains possible.

And today…
The risk-reward profile is leaning more positive than negative.

🦾 Final Summary

The 4-year cycle is not dead — it has simply been absorbed into the global business cycle.
With extreme fear, weak technicals, and widespread pessimism, the market looks fragile, yet these are the exact conditions where long-term asymmetric opportunities emerge.
Risk remains, but the potential upside once liquidity expands again is likely greater than the risk of staying sidelined.
Rational strategy: disciplined DCA + opportunistic buys during extreme fear.

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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile.