Bitcoin’s Wild Ride: Has the Famous Four-Year Cycle Finally Been Broken?

When Bitcoin crossed the $100,000 threshold in December, many investors were convinced that the cryptocurrency was poised for a parabolic surge. That belief was reinforced when Bitcoin soared to an all-time high of $109,000 in January. Yet, just months later, the digital asset has plummeted to $83,000, leaving many questioning long-held investment theses, particularly the widely accepted “Bitcoin Cycle.”

Decoding the Bitcoin Cycle Investment Thesis

For years, Bitcoin has appeared to follow a predictable four-year cycle driven by a mechanism called “halving.” This cycle consists of four distinct phases:

• Accumulation phase: Bitcoin trades at relatively low prices as long-term investors accumulate holdings.
• Growth phase: Prices begin to rise, typically following a Bitcoin halving event.
• Bubble phase: Market enthusiasm pushes Bitcoin to record highs.
• Crash phase: A steep decline wipes out speculative excess, often erasing up to 80% of Bitcoin’s value.

Historically, this pattern has repeated itself like clockwork. The most recent cycle seemed to follow this structure as well, with the 2020 halving triggering an explosive rally that culminated in Bitcoin hitting $69,000 in November 2021 before crashing to $16,000 by 2022. But with Bitcoin’s recent decline, investors are beginning to wonder if the cycle is still in play.

Are We in the Crash Phase, or Is Something Else Happening?

The current state of Bitcoin is anything but clear-cut. Just a few months ago, hitting $100,000 seemed to confirm that the market was in either the late Growth or early Bubble phase. Optimists predicted Bitcoin would surge beyond $1 million. Now, with a 20% drop from its peak, some analysts warn that the dreaded Crash phase has already begun.

Could Bitcoin fall further? History suggests that if a true Crash phase is unfolding, Bitcoin might tumble as low as $20,000. That would be an 80% drop from its January high, mirroring past downturns. Unsurprisingly, some investors are already shifting their holdings into gold as a hedge against further declines.

Did ETFs and Trump Break the Cycle?

One major anomaly in this cycle was Bitcoin’s reaction to its April 2024 halving. Traditionally, halving events serve as catalysts for explosive price growth. This time, however, Bitcoin barely moved. Instead, the price rally occurred months earlier, driven by the introduction of Bitcoin spot ETFs in January 2024.

These ETFs funneled billions of dollars into Bitcoin, front-loading gains that would have traditionally come post-halving. The result? A major disruption to the expected cycle.

Adding to the uncertainty is the role of politics. Some believe Donald Trump’s return to the White House could reshape Bitcoin’s trajectory, particularly if his administration embraces cryptocurrency-friendly policies. That scenario could lead to a “Goldilocks period” of sustained, moderate gains—neither too extreme nor too stagnant.

Will Bitcoin Evolve Beyond Its Boom-Bust Cycle?

With so much unpredictability, investors are split on what happens next. There are two main camps:

1. The Bitcoin Super Cycle Theory: Some argue that Bitcoin is entering a new era where institutional adoption will drive continuous growth without major crashes. They believe Bitcoin’s historical boom-bust pattern is no longer relevant.
2. The Traditional Bitcoin Cycle Believers: Others insist that, despite temporary disruptions, Bitcoin will still experience another painful drawdown before resetting for another four-year cycle.

What This Means for Investors

Right now, Bitcoin’s price movements are proving harder to predict than ever before. Those attempting to time the market based on past cycles may be in for a rude awakening.

The safest approach? If you believe in Bitcoin’s long-term potential, short-term cycles shouldn’t dictate your investment decisions. Whether the four-year cycle still holds or is evolving into something new, holding Bitcoin for the long haul may still be the best bet.