Deck: Why neither the classic 4-year Bitcoin cycle nor extended business cycle theories fully explain today’s market — and what investors should watch next.
Introduction
If you’ve been tracking Bitcoin cycles, you’ve probably noticed two big camps arguing over what’s next. The first insists that the classic 4-year halving cycle is still king, while the second bets on a longer, macro-driven extended cycle peaking next year. But what if both are missing key factors explaining Bitcoin’s recent price behavior? In this article, we break down why short-term holders’ selling, US dollar strength, and government liquidity issues are all acting as hidden forces right now. We’ll also explore what these mean for the Bitcoin cycle going forward, so you can spot signals others might be missing.
The Classic 4-Year Cycle Crowd: Why It Might Break Down Soon
Many investors rely on Bitcoin’s roughly 4-year halving cycle. Historically, each halving cut supply growth, followed by a massive run-up, peak, and correction. The recent new all-time high in Q4 2023 has some convinced that the top is in or only one final leg remains.
The Flip Side: Three Hidden Factors Holding Bitcoin Back
The recent Bitcoin price stagnation isn’t just a typical 4-year cycle correction. Three main factors have dampened momentum:
- The Bitcoin IPO Moment: Profit-Taking by Early HoldersInspired by macro investor Jordi Visser's “Bitcoin IPO moment” theory, Bitcoin is acting like a company going public. Early believers—the “OGs” who held Bitcoin for years—are now cashing out as institutional liquidity arrives. This mirrors founders and venture capitalists selling shares after initial coin offerings (ICOs) in traditional finance.On-chain data confirms large amounts of long-dormant coins (5 to 10 years old) are moving again. Galaxy Digital even disclosed helping a client sell nearly $9 billion in Bitcoin. This methodical distribution explains why Bitcoin lags compared to gold or stocks recently.But this phase won’t last forever. Long-term holder selling is flattening, while ETFs and institutional buyers quietly absorb supply. This shift signals the end of distribution and a forthcoming freer market for Bitcoin price action.
- US Dollar Strength (DXY) as a HeadwindThe US Dollar Index (DXY) has rallied recently, strengthening the greenback. Historically, a strong dollar pressures risk assets like Bitcoin since investors prefer safer or dollar-denominated assets.However, this DXY rally appears more like a short-lived spike than a sustained trend. The Federal Reserve’s upcoming end to quantitative tightening (QT) and anticipated interest rate cuts should weaken the dollar again. Plus, technical resistance is halting further dollar gains.Once the dollar reverses, Bitcoin’s main macro headwind could disappear, sparking renewed upside momentum.
- US Government Shutdown Impact on LiquidityA recent US government shutdown curtailed Treasury payments and limited short-term bill issuance, freezing cash flow into the banking system. This squeezed bank reserves and overall market liquidity, reducing capital for risk assets like Bitcoin.With the shutdown over (likely by your reading), Treasury spending and payments resumed. This will inject fresh liquidity into markets, often triggering rapid asset price rallies. Since Bitcoin’s price has been suppressed during this liquidity drought, a bounce fueled by new cash flows is probable.
Extended Cycle Followers: The Macro Thesis With a Caveat
The other camp points to Bitcoin’s evolving role as an institutional asset tied closely to macroeconomics — interest rates, liquidity, and especially the broader business cycle.
They use indicators like the ISM (Institute for Supply Management) manufacturing index to suggest Bitcoin’s next peak will align with a business cycle peak, possibly in Q2 2025. ### Why That May Fall Short
The problem? The ISM manufacturing index no longer behaves like it used to. Pandemic-related supply chain shocks and other structural shifts have turned what was once a fairly rhythmic cycle into a sideways, grindy pattern.
This means expecting a clean “peak and valley” business cycle shape like before might mislead investors. Instead, Bitcoin could experience a more drawn-out or irregular cycle tied to evolving macro conditions.
Answer Box: What Is the “Bitcoin IPO Moment”?
The “Bitcoin IPO moment” is a theory where long-term holders act like company insiders unlocking their shares post-IPO. As institutional liquidity increases, early Bitcoin investors begin methodical profit-taking — selling gradually rather than panic selling. This selling pressure can temporarily hold back Bitcoin’s price until these coins fully distribute and new buyers absorb the supply.
Data Callout: On-Chain Evidence of the Bitcoin IPO Moment
On-chain metrics show increasing movement of coins held dormant for 5 to 10 years, signaling early holders are actively selling. At the same time, ETF inflows are quietly accumulating, balancing supply and demand. Galaxy Digital reported assisting a client in selling nearly $9 billion in Bitcoin, underscoring the scale of this “distribution phase.” This dynamic is key to understanding recent Bitcoin price stagnation.
Risks: What Could Go Wrong
- Extended Distribution Period: Profit-taking by OG holders could last longer than expected, delaying Bitcoin’s price recovery.
- Unexpected Macro Shocks: New US economic surprises, geopolitical turmoil, or Federal Reserve actions could prolong dollar strength, continuing to pressure Bitcoin.
- Liquidity Mismatch: If government spending delays persist or risk asset appetite wanes, fresh liquidity might not flow into Bitcoin as hoped.
- Overreliance on On-Chain Data: While useful, on-chain signals can mislead without context — for example, coins moving between wallets doesn’t always mean sell pressure.
Invest wisely, monitor evolving macro trends, and consider risk management strategies.
Actionable Summary
- Recent Bitcoin stagnation is driven less by the classic 4-year cycle and more by three key factors: long-term holder profit-taking, a strong US dollar, and a temporary liquidity freeze from a US government shutdown.
- The “Bitcoin IPO moment” explains a controlled distribution phase where early investors sell methodically, temporarily capping price gains.
- The dollar’s recent rally is likely a short spike; upcoming Fed rate cuts and technical resistance suggest a reversal that could lift Bitcoin.
- US Treasury spending resumption post-shutdown should inject liquidity, possibly sparking a surprise Bitcoin surge.
- The extended business cycle thesis is valid broadly but misreads the changing shape of macro indicators like the ISM index, suggesting more irregular future Bitcoin cycles.
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Frequently Asked Questions (FAQs)
Q1: What is the difference between the 4-year Bitcoin cycle and the extended cycle theory?
The 4-year cycle focuses on Bitcoin’s halving events causing predictable bull and bear runs roughly every 4 years. The extended cycle links Bitcoin’s price to broader macroeconomic and business cycles which can stretch beyond 4 years.
Q2: How does the strength of the US dollar impact Bitcoin?
A stronger US dollar typically pressures Bitcoin and other risk assets, as investors prefer safer or dollar-based assets. A weakening dollar often leads to more capital flowing into Bitcoin.
Q3: Why are long-term Bitcoin holders selling now?
With institutional liquidity entering the market, early holders (sometimes called OGs) are taking profits in a controlled way, similar to how company insiders sell shares after a public offering.
Q4: How did the US government shutdown affect Bitcoin?
The shutdown froze Treasury payments and limited short-term bill issuance, reducing liquidity in the banking system. This led to less capital flowing into risk assets like Bitcoin, suppressing its price temporarily.
Q5: Should I rely solely on on-chain data to predict Bitcoin’s price?
While on-chain data offers valuable insights into holder behavior, it should be combined with macroeconomic context and technical analysis for balanced investing decisions.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry risk, and you should conduct your own research or consult a professional before making decisions.
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
