Why the Bitcoin 4-Year Cycle May Be Evolving and What It Means for Investors Today
If you’d dropped $10,000 into Bitcoin back near the 2015 bear market bottom, you’d have seen it grow to $1 million in just under three years. The same amount invested at the 2018 bottom would have turned into $200,000 over a similar timeframe. Yet, following these historic rallies, Bitcoin plunged over 75% in the next 12 months, demonstrating the painful unwind phase typical of its notorious 4-year cycle. Today’s bull run has already delivered more than 800% returns from the 2022 bottom, with the crucial 35-month mark approaching — historically a pivot point signaling a market top and potential crash.
But, unlike prior cycles, this time key macro and institutional factors may reshape Bitcoin’s trajectory. This article explores the Bitcoin 4-year cycle theory, the role of halving events, and how today’s contrasting monetary policy and institutional demand might be rewriting the rules. We’ll also unpack the risks, metrics, and what it could mean for your crypto portfolio.
Understanding Bitcoin’s 4-Year Cycle: Recovery, Expansion, and Contraction
Bitcoin historically follows a 4-year pattern tied closely to its halving events — programmed reductions in mining rewards that halve the supply of new Bitcoin entering the market. These halvings occur roughly every four years and trigger supply shocks that often impact price.
The Cycle Breakdown
- Recovery and Expansion Phase (first ~35 months post-bottom): Bitcoin price rallies sharply as supply tightens.
- Contraction Phase (following 12 months): A brutal bear market unfolds, often defined by 75%+ price declines.
Let’s look at the last two cycles:
| Cycle | Halving Date | Expansion Duration | Bear Market Duration | Recovery Duration |
|---|---|---|---|---|
| 2015–2018 | July 2016 | ~18 months | 12 months | 17 months |
| 2018–2022 | May 2020 | ~18 months | 12 months | 17 months |
In both cycles, Bitcoin peaked about 18 months after the halving, then endured a significant bear market before beginning recovery.
Current Cycle Status
The most recent halving was in April 2024, approximately 18 months ago, putting Bitcoin right near the historical "danger zone" where a bull market peak often occurs. The timeline suggests a potential top within the next few weeks or months, followed by a possible steep correction.
How Today’s Bitcoin Cycle Differs: Macro and Institutional Forces at Play
Big changes are brewing that could disrupt the traditional 4-year cycle pattern.
1. Monetary Policy: A Fed Pivot from Tightening to Easing
Historical cycles ended alongside monetary tightening. For example:
- 2017 top: The U.S. Federal Reserve raised interest rates from near 0% to 2.5%.
- 2021 top: Early rate hike signals contributed to Bitcoin’s peak and subsequent decline.
Higher rates mean costlier loans, less liquidity, and less capital flowing to speculative assets like Bitcoin.
Today, the setup is reversed. The Fed began cutting rates early in this cycle, signaling looser monetary policy ahead. Lower interest rates generally fuel risk appetite, making it cheaper to borrow and invest in assets like Bitcoin.
By 2026, markets expect a new Fed chair under President Trump, potentially advocating even easier policy. This contrasts sharply with previous cycles and may prolong or alter Bitcoin’s bull run.
2. Institutional Demand Is Surging vs. Limited Supply
Institutional investment in Bitcoin has skyrocketed:
- In 2024, institutions bought over 900,000 BTC, far exceeding new supply from mining (~220,000 BTC).
- In 2025, institutional purchases have already surpassed 975,000 BTC, with new supply only around 135,000 BTC.
This means institutional demand is running 7x the new Bitcoin supply, a dynamic not seen in prior cycles.
This massive institutional accumulation has underpinned Bitcoin’s price strength during this bull run and could mute the severity of typical post-cycle declines.
Price vs. Fundamental Value: No Euphoria Yet
Bitcoin’s price often skyrockets beyond its "on-chain" value—fundamentals derived from network activity, user adoption, and transaction data—before major tops.
- In 2017, the price was nearly 0.9x above its fundamental value.
- In 2021, similar extreme overvaluation appeared.
- Today, Bitcoin is only about 0.6x above on-chain value, suggesting the current market hasn’t yet reached irrational exuberance or classic bubble territory.
This supports the thesis that easier monetary policy and growing institutional demand could extend the cycle, rather than mark an imminent top.
Looking Back: Could This Cycle Be Longer?
Interestingly, Bitcoin’s first full cycle (2011–2015) was almost a year shorter than typical cycles, driven by its small market size and sensitivity to capital flows.
Today, Bitcoin is a mature asset with vastly higher institutional involvement and macro liquidity inputs, potentially making it less prone to abrupt cycle ends.
Answer Box: What Is the Bitcoin 4-Year Cycle and Its Significance to Investors?
The Bitcoin 4-year cycle links price movements to block reward halving events that reduce miner supply every four years. Historically, Bitcoin rallies strongly for about 18 months after halving before entering a 12-month bear market. Understanding this cycle helps investors anticipate price peaks, corrections, and better time their entries and exits.
Data Callout: Institutional Demand Versus Supply Balance
Institutions have bought over 1.8 million BTC since early 2024, compared to just about 355,000 new coins mined in that period — a demand-to-supply ratio of more than 7:1. This overwhelming demand pressure is a key driver of Bitcoin’s resilience in the current cycle.
Risks: What Could Go Wrong?
- Cycle May Still End Soon: Historical cycles show sharp bull market tops and severe drops about 18 months post-halving. The risk of a large correction remains real.
- Changing Fed Policy: If inflation surges unexpectedly, the Fed may resume tightening faster than anticipated, drying up liquidity and hurting risk assets.
- Regulatory Shocks: New restrictions or crackdowns on crypto institutions or exchanges could dent institutional demand abruptly.
- Market Sentiment: Despite strong fundamentals, unexpected shifts in trader psychology can trigger panic sell-offs.
Careful risk management and adaptive strategies remain crucial.
Actionable Summary for Crypto Investors
- Bitcoin’s 4-year cycle historically peaks about 18 months after halving, followed by a steep bear market.
- The latest halving in April 2024 places Bitcoin near the historical top window.
- Neutral to positive factors today include looser U.S. monetary policy and unprecedented institutional demand exceeding new supply.
- Bitcoin’s price hasn’t yet shown euphoria signs typical of prior cycle tops.
- Prepare for volatility and weigh both bullish and bearish signals in your crypto portfolio.
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FAQ: People Also Ask About Bitcoin’s Cycle and Market Outlook
Q: What causes Bitcoin’s 4-year price cycle?
A: Bitcoin’s price cycles link to halving events, which reduce new coin supply by 50% approximately every 4 years, creating supply shocks that drive bull and bear phases.
Q: Why could this Bitcoin cycle be different?
A: Unlike past cycles, current looser monetary policy and massive institutional demand could prolong Bitcoin’s bull run and mute the typically sharp correction phase.
Q: When did the last Bitcoin halving occur and why is it important?
A: The last halving was in April 2024. It’s important because it cuts mining rewards, limiting new supply and historically marking the start of a major price rally.
Q: Should I expect a Bitcoin bear market soon?
A: History suggests a bear market often follows about 18 months after halving. But today’s unique macro factors mean investors must stay vigilant and adaptable.
Q: How can I manage risks in Bitcoin investing today?
A: Use position sizing, set sell alerts near expected cycle tops, and stay informed on macroeconomic and institutional developments that can shift market dynamics quickly.
Disclaimer: This article is educational and not financial advice. Bitcoin and cryptocurrencies are volatile and investing involves risk. Always perform your own research and consider your risk tolerance before investing.
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By Wolfy Wealth - Empowering crypto investors since 2016
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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
