Will cycles led by institutions really be completely consistent with the previous two cycles led by retail investors?
Written by: Aylo
Translation: Saoirse, Foresight News
It might be worth considering a question first: do you think you can sell at the market's highest point precisely? The answer is quite clear — almost no one can do this, including me, and there is no need to force it. The formation of a cycle peak has a characteristic: it appears quickly within a short time frame, but is difficult to accurately identify before it manifests in higher time frames (HTFs).
Those focused on short-term trading may catch some signals, but they have repeatedly shouted 'the top has been reached,' and after so many times, these judgments naturally lose significance — after all, they do not pay attention to the macro market context.
Therefore, regarding market cycles, you need to observe and judge for yourself, making suitable financial decisions. After all, the market is ever-changing, and my views will also adapt to new data, provided for reference only.
Arguments supporting the 'Four-Year Cycle Peak'
Pattern recognition arguments:
Reviewing historical charts, a clear pattern cannot be ignored: December 2013, December 2017, and November 2021 (all saw cycle peaks). The consistency of the four-year cycle is significant, and market patterns often persist until disrupted by fundamental changes.
Reasons this pattern may continue:
Psychological deep-rootedness: The four-year cycle has been deeply ingrained in the cognition of cryptocurrency market participants;
Self-fulfilling prophecy: widespread recognition of the cycle may trigger coordinated selling pressure, compounded by hidden leverage in the system (such as DATs);
Halving correlation: Bitcoin halving causes supply shocks, and historically, peaks usually occur 12-18 months after halving (though in this cycle, it seems more like a market narrative);
Occam's razor: The simplest explanation is often closest to the truth — why complicate a pattern that has been validated three times?
We are clearly no longer at the beginning of the current cycle — Bitcoin has risen significantly since the bottom. According to this pattern, we should be approaching the peak range.
Arguments against the 'Four-Year Cycle Peak' (the argument for the continuation of the cycle into 2026)
Arguments for fundamental shifts:
I pose a simple question: will cycles led by institutions really be completely consistent with the previous two cycles led by retail investors?
I generally agree that the market has cycles, so I won't talk about 'super cycles,' but I believe cycles might be extended or shortened due to other factors.
Reasons this cycle may be different:
1. Differences in behavior patterns between institutions and retail investors
The flow of funds into spot ETFs and traditional exchanges has created a new liquidity pattern;
Institutional systematic profit-taking is smoother and does not easily trigger panic selling like retail investors;
2. Traditional indicators may fail
We have many cycle analysis tools (such as NVT, MVRV, etc.), but their historical data range is based on a retail-driven market;
The participation of institutions fundamentally changes the definition of 'overextension';
When priced in gold, Bitcoin's current price has not even surpassed the previous cycle's high — far from a bubble range;
3. A complete overhaul of the regulatory environment
The regulatory environment in this cycle is dramatically different; the US and SEC are more accepting of cryptocurrencies, forming a clear framework for institutional participation;
The end of previous cycles was partly due to regulatory shocks (such as the crackdown on ICOs in 2018);
The risk of a systematic, abrupt end to the cycle has now significantly decreased;
4. Macro and Federal Reserve dynamics
Federal Reserve Chairman Powell's term will end in May 2026, and Trump may announce his successor at the end of 2025;
The dynamics of the 'shadow Fed chairman' weaken the effectiveness of current policies, and if the market expects Trump to nominate a dovish chairman, it could trigger early buying pressure;
The first FOMC meeting of the new Fed chairman is scheduled for June 17-18, 2026 — potentially a market catalyst
The transition period may maintain a 'Goldilocks environment' (an ideal state of the economy that is neither too hot nor too cold)
(Note: 'Goldilocks environment' is a commonly used expression in financial markets, originating from the fairy tale (Goldilocks and the Three Bears), meaning 'not too cold, not too hot, just right.' It indicates that economic and policy conditions during a transition period may remain stable, providing support for ongoing market rises.)
Historical patterns of Fed chairman transitions: A review of past transitions reveals a clear trend:
Both transitions exhibited the same sequence — nomination news triggered market rises, and the uptrend continued until the transition was completed, but the S&P 500 index would precisely correct when the new chairman took office.
When Yellen took office, the S&P 500 fell about 6% in January-February 2014; when Powell took office, the index corrected about 12% in February 2018. This suggests that after Trump announces his nomination at the end of 2025, the bull market may continue until the transition is complete, while volatility is likely to occur around the transition in May-June 2026 — potentially coinciding with the cycle peak timing.
5. Changes in market structure
Concerns about currency devaluation are giving rise to new demand drivers, no longer limited to shifts in risk appetite;
The market cap of stablecoins can serve as a leading indicator — it is still growing (this is our 'dry powder' indicator);
The sources of demand for Bitcoin are more diversified than in previous cycles: ETFs, DATs, pension funds, etc.
What factors might lead to an early end of the cycle or a reoccurrence of the four-year cycle?
DAT leverage risk: I believe the main bearish factor is that DAT companies may close positions faster than expected. Large-scale forced selling could overwhelm buyers and alter market structure. However, there is a difference between losing buying demand (mNAVs dropping to 1) and becoming a forced seller causing a 'crash.'
Nevertheless, the loss of purchasing power from major DATs has a significant impact. Many speculate this situation has already occurred — the mNAVs of Strategy and major ETH DAT companies have significantly declined. I am not blind to this, and you should pay close attention.
Macro risk: Renewed inflation is a genuine macro risk, but there are currently no signs. Cryptocurrencies are now highly correlated with the macro economy, and we are still in a 'Goldilocks environment.'
Missing elements of the cycle peak
Market euphoria has not yet occurred:
The market has not yet escaped the 'wall of worries' — every 5% pullback triggers speculation about cycle peaks (this has persisted for 18 months);
There has not yet been sustained euphoria, nor is there a market consensus on subsequent price increases;
There are no characteristics of a peak indicating a 'blow-off top' (though not a necessary characteristic).
If there is a significant rise in cryptocurrencies later this year, and the increase significantly outpaces the stock market, this 'blow-off top' signal may suggest that the peak for cryptocurrencies comes much earlier than the business cycle that could extend into 2026.
Leading indicators of stablecoins
A highly valuable reference indicator: the growth of stablecoin market cap.
In traditional finance, the growth of the M2 money supply often precedes asset bubbles. In the cryptocurrency market, the role of stablecoin market cap is similar — representing the total amount of 'dollars' available within the crypto ecosystem.
Major cycle peaks often coincide with a stagnation in stablecoin supply 3-6 months prior. As long as stablecoin supply continues to grow significantly, the market may still have upward momentum.
My current viewpoint
Honestly, based on current observations, I believe a major cycle peak will not occur before 2026 (this view may change at any time due to new circumstances).
The historical data points for the four-year cycle are limited (only three), while institutional participation represents a fundamental change in market structure. Just the dynamic of the Federal Reserve chairman transition could extend the 'Goldilocks environment' until 2025 — this is particularly important, especially given the unprecedented correlation between cryptocurrencies and the macro economy at present.
In this cycle, participants in the cryptocurrency market have a deeper understanding of the four-year cycle, making me feel that the outcome could be somewhat different. When has the public's judgment ever been completely correct?
Will everyone sell according to the four-year cycle pattern and exit completely?
However, I also acknowledge the significant consistency of the four-year cycle pattern; market patterns often persist until they are broken.
As Bitcoin's market cap share declines, I will continue to gradually take profits from altcoins that have surged excessively; but I will hold Bitcoin because I believe it will reach new highs in 2026. It is important to note that regardless of the overall market cycle, the altcoins you hold could peak at any time.
Final thoughts
The four-year cycle pattern is the strongest argument supporting a peak in 2025 — it has been validated three times, and simplicity often wins. However, the changes in market structure led by institutions, the dynamics of the Federal Reserve's leadership transition, and the absence of euphoria signals all suggest that this cycle may extend into 2026.
The situation may change drastically in the coming months, so there is no need to be overly stubborn in your views.
In any case, accept that you cannot sell at the exact peak, and develop a systematic exit strategy.
A suitable position is one that allows you to sleep well. If you have already made substantial profits, there is nothing wrong with 'selling too early.'
