The Four-Year Cycle Debate

There has been extensive discussion about Bitcoin’s four-year bull and bear cycles. This pattern—exponential surges, dramatic crashes, and subsequent new highs—has defined much of Bitcoin’s history. However, compelling evidence suggests this cyclical规律 may now be nearing its end.

Why the Four-Year Cycle?

Three key factors explain this phenomenon:

1. The Halving Effect

Every time 210,000 blocks are mined (roughly every four years), Bitcoin’s mining reward is halved. This mechanism creates supply scarcity, historically driving price increases in the following years.

Asset scarcity is often measured by the stock-to-flow (S2F) ratio—the total existing supply divided by annual new supply. For gold, a scarce asset, the S2F ratio is around 60 (with minor fluctuations due to new discoveries). Bitcoin’s current S2F ratio is approximately 120, meaning its annual new supply is half that of gold. This number will rise with each subsequent halving.

2. Global Liquidity Cycles

The correlation between Bitcoin and global M2 liquidity has been highlighted by us and other institutions. Notably, many believe liquidity itself follows a roughly four-year cycle. While less precise than Bitcoin’s halving "metronome," this linkage exists. If valid, Bitcoin’s synchronization with liquidity becomes logically sound.

3. Psychological Dynamics

Each parabolic bull run sparks a new wave of adoption. Human behavior mirrors Gandhi’s adage: "First they ignore you, then they laugh at you, then they fight you, then you win." This cycle repeats roughly every four years, with growing acceptance of Bitcoin’s value and legitimacy. Overexcitement leads to crashes, restarting the cycle.

Are These Factors Still Driving Bitcoin’s Price?

1. Diminishing Halving Impact

Post-halving, the proportional reduction in new Bitcoin supply becomes increasingly marginal. While a drop from 25% to 12.5% of total supply was significant, today’s decline from ~0.8% to 0.4% carries far less practical weight.

2. Evolving Liquidity Influence

Global liquidity remains relevant but is transforming. Bitcoin’s shift from retail to institutional dominance has altered trading behavior. Institutions accumulate long-term, making them resilient to short- or mid-term price drops. Thus, while liquidity still affects Bitcoin, its sensitivity to M2 fluctuations will continue to wane. Moreover, institutional over-the-counter (OTC) purchases reduce volatility—a true sign of Bitcoin’s maturing confidence. Unchecked fiscal spending will be absorbed by Bitcoin, fueling its upward trajectory.

3. Psychological Stabilization

As adoption widens, Bitcoin’s psychological anchoring strengthens. Retail sell-offs lose impact, and institutional dominance further dampens price volatility driven by散户.

The Big Picture

Bitcoin remains one of the world’s most promising assets, but its growth model is evolving—from cyclical surges to (logarithmic) linear growth. Global liquidity now dominates the market. Unlike most assets, which trickle down from institutions to retail, Bitcoin has permeated mainstream finance from the ground up. This explains its stabilizing maturity and increasingly orderly evolution.

The Four-Year Cycle Debate

There has been extensive discussion about Bitcoin’s four-year bull and bear cycles. This pattern—exponential surges, dramatic crashes, and subsequent new highs—has defined much of Bitcoin’s history. However, compelling evidence suggests this cyclical规律 may now be nearing its end.

Why the Four-Year Cycle?

Three key factors explain this phenomenon:

1. The Halving Effect

Every time 210,000 blocks are mined (roughly every four years), Bitcoin’s mining reward is halved. This mechanism creates supply scarcity, historically driving price increases in the following years.

Asset scarcity is often measured by the stock-to-flow (S2F) ratio—the total existing supply divided by annual new supply. For gold, a scarce asset, the S2F ratio is around 60 (with minor fluctuations due to new discoveries). Bitcoin’s current S2F ratio is approximately 120, meaning its annual new supply is half that of gold. This number will rise with each subsequent halving.

2. Global Liquidity Cycles

The correlation between Bitcoin and global M2 liquidity has been highlighted by us and other institutions. Notably, many believe liquidity itself follows a roughly four-year cycle. While less precise than Bitcoin’s halving "metronome," this linkage exists. If valid, Bitcoin’s synchronization with liquidity becomes logically sound.

3. Psychological Dynamics

Each parabolic bull run sparks a new wave of adoption. Human behavior mirrors Gandhi’s adage: "First they ignore you, then they laugh at you, then they fight you, then you win." This cycle repeats roughly every four years, with growing acceptance of Bitcoin’s value and legitimacy. Overexcitement leads to crashes, restarting the cycle.

Are These Factors Still Driving Bitcoin’s Price?

1. Diminishing Halving Impact

Post-halving, the proportional reduction in new Bitcoin supply becomes increasingly marginal. While a drop from 25% to 12.5% of total supply was significant, today’s decline from ~0.8% to 0.4% carries far less practical weight.

2. Evolving Liquidity Influence

Global liquidity remains relevant but is transforming. Bitcoin’s shift from retail to institutional dominance has altered trading behavior. Institutions accumulate long-term, making them resilient to short- or mid-term price drops. Thus, while liquidity still affects Bitcoin, its sensitivity to M2 fluctuations will continue to wane. Moreover, institutional over-the-counter (OTC) purchases reduce volatility—a true sign of Bitcoin’s maturing confidence. Unchecked fiscal spending will be absorbed by Bitcoin, fueling its upward trajectory.

3. Psychological Stabilization

As adoption widens, Bitcoin’s psychological anchoring strengthens. Retail sell-offs lose impact, and institutional dominance further dampens price volatility driven by散户.

The Big Picture

Bitcoin remains one of the world’s most promising assets, but its growth model is evolving—from cyclical surges to (logarithmic) linear growth. Global liquidity now dominates the market. Unlike most assets, which trickle down from institutions to retail, Bitcoin has permeated mainstream finance from the ground up. This explains its stabilizing maturity and increasingly orderly evolution.