However, many analysts believe that the classic four-year cycle will be broken due to institutional adoption and other factors.
While some market observers believe that the traditional crypto four-year cycle is about to be broken, analysts told Decrypt this week that they believe some traders are still following the classic rulebook — and selling due to the expectation of falling prices ahead.
That cohort may be partly accounting for crypto’s weekly decline, with Bitcoin dropping over 9%, Ethereum falling 6%, and XRP showing a 15% dive — with some altcoins down even worse. Crypto prices plunged last Friday following President Trump’s latest China tariffs threat, prompting a record $19 billion worth of daily liquidations, and have ticked down further this week.
Historically, Bitcoin’s price movements have followed a four-year cycle, often soaring one year after its halving — the quadrennial slashing of BTC miner rewards that’s baked into Bitcoin’s code — and then crashing soon after.
With Bitcoin setting a then-record price of $67,000 in November 2021 before declining in the months thereafter, that should mean that the cycle is soon coming to an end. And some traders may be betting on that outcome.
“I believe some of the sell-off is due to a cohort of market participants stuck to the four-year cycle,” Matthew Nay, a research analyst at Messari, told Decrypt. “If you look at the timing, it’s almost exactly four years since we topped last cycle, and when you throw in trade war uncertainty, it allows them to defend their positions more aggressively.”
Jonathan Morgan, the lead crypto analyst at trading app Stocktwits, added that this is likely the result of “mechanical selling” from traders who simply buy and sell based on the expectation of a four-year cycle.
“A lot of retail still trades off that old playbook: buy before the halving, sell when it doesn’t moon,” Jasper De Maere, desk strategist at Wintermute, told Decrypt. “When BTC underperforms post-halving, it shakes their conviction, and you get some forced selling.”
“But in my opinion, that strategy’s outdated,” he added. “The halving just doesn’t move the needle anymore; miner rewards are tiny compared to total trading volume.”
De Maere isn’t alone in this thinking. Nay from Messari, for example, said that his personal belief is that Bitcoin could return to all-time highs before the end of the year. Other analysts previously told Decrypt that they expect the cycle will be broken, thanks in part to growing Wall Street and institutional adoption, along with a trend-breaking fresh high price being set before last year’s halving.
Cycle skeptics argue that the crypto landscape has evolved beyond it due to its convergence with traditional finance, the growing value and importance of altcoins, and the lessened impact that miners have on Bitcoin’s supply. It’s simply not the same industry anymore.
“I respect anyone who has structure, but the halving model is basically an echo of a younger market,” Morgan from Stocktwits said. “Back when miner rewards dictated supply, it mattered. Now, ETFs, institutional flow, and derivatives dwarf that effect. ”
There’s also a plethora of other factors to consider when dissecting crypto’s recent decline. Just last week, for example, the biggest liquidation event in crypto history took place on the back of President Trump reigniting his trade war with China.
“Personally, I think while [the four-year cycle] is an interesting concept,” De Maere added, “the core drivers once used to explain the dynamic of the four-year cycle have just become more irrelevant as BTC and our entire space matures.”
