Written by: Aylo
Translated by: Saoirse, Foresight News
Let's first consider a question: Do you think you can sell precisely at the market's peak? The answer is quite clear—almost no one can do that, including me, and there's no need to force it. The formation of a cycle top has a characteristic: it appears quickly in a short time frame, but it is difficult to accurately identify before it manifests in higher time frames (HTFs).
Those focusing on short-term trading may capture some signals, but they have repeatedly called out 'the top has arrived,' and after numerous calls, those judgments naturally lose significance—after all, they are not paying attention to the macro market background.
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 adjust with new data, serving merely as a reference.
Arguments supporting the 'four-year cycle top'
Pattern recognition arguments:
Looking back at historical charts, a clear pattern cannot be ignored: December 2013, December 2017, and November 2021 (all saw cycle tops). The consistency of the four-year cycle is significant, and market patterns often persist until disrupted by fundamental changes.
Reasons this pattern may continue:
Deep-rooted psychology: The four-year cycle has been deeply ingrained in the consciousness of cryptocurrency market participants;
Self-fulfilling prophecy: The widespread awareness of cycles may trigger coordinated selling pressure, compounded by hidden leverage in the system (such as DATs);
Halving correlation: Bitcoin halving triggers supply shocks, and historically, peaks usually occur 12-18 months after halving (though in this cycle, it resembles a narrative more than a strict pattern);
Occam's razor principle: The simplest explanation is often the closest to the truth—three instances of validation; why complicate matters?
We are clearly no longer in the early stages of this cycle—Bitcoin has already risen significantly since the bottom. According to this pattern, we should be approaching the peak range.
Arguments against the 'four-year cycle top' (the argument for cycle continuation in 2026)
Fundamental change arguments:
I pose a simple question: Will a cycle led by institutions really be completely consistent with the previous two cycles led by retail investors?
I generally agree that there are cycles in the market, so I won't speak lightly of a 'super cycle,' but I believe cycles may be lengthened or shortened due to other factors.
Reasons this cycle may differ:
1. Differences in behavior patterns between institutions and retail investors.
The flow of funds for spot ETFs and traditional exchanges has created a new liquidity pattern;
Institutional systematic profit-taking is smoother and does not trigger panic selling as easily as retail investors do;
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-led market;
Institutional participation fundamentally changes the definition of 'overextension';
When priced in gold, Bitcoin's current price has not even exceeded the high point of the last cycle—far from the bubble range;
3. A complete transformation of the regulatory environment
The regulatory environment of this cycle is completely different; the U.S. and the SEC are more accepting of cryptocurrencies, creating a clear framework for institutional participation.
The end of previous cycles partly stemmed from regulatory shocks (such as the crackdown on ICOs in 2018);
The risk of a systematic, sudden end to the cycle has now significantly decreased;
4. Macroeconomic and Federal Reserve dynamics
Federal Reserve Chair Powell's term will end in May 2026, and Trump may announce his successor at the end of 2025;
The dynamics of the 'shadow Federal Reserve chair' weaken the effectiveness of current policies, and if the market expects Trump to nominate a dovish chair, it may trigger early buying pressure;
The first FOMC meeting of the new Federal Reserve chair is scheduled for June 17-18, 2026—potentially a market catalyst.
The transition period may maintain a 'Goldilocks environment' (an ideal state where the economy is neither too hot nor too cold).
(Note: The 'Goldilocks environment' is a common term in financial markets, originating from the fairy tale (Goldilocks and the Three Bears), referring to the concept of 'not too hot, not too cold, just right.' It implies that during the transition period, economic and policy conditions may remain stable, providing support for continued market increases.)
Historical patterns of Federal Reserve chair transitions: Looking back at past transitions, an obvious pattern emerges:
Both transitions displayed the same sequence—nominations triggered market increases, and the rally continued until the transition was completed, but the S&P 500 index precisely retraced when the new chair took office.
When Yellen took office, the S&P 500 dropped about 6% in January-February 2014; when Powell took office, the index retraced about 12% in February 2018. This suggests that after Trump announces his nominee at the end of 2025, the bull market may continue until the transition is completed, and volatility is likely to occur around the transition in May-June 2026—possibly coinciding with the timing of the cycle top.
5. Changes in market structure
Concerns about currency depreciation have spawned new demand drivers, no longer limited to shifts in risk appetite;
Stablecoin market cap 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 could lead to an early end of the cycle or a repeat 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 crush buyers and alter market structure. However, there is a distinction between losing buying demand (mNAVs dropping to 1) and becoming a forced seller that triggers a 'crash.'
Nevertheless, the loss of purchasing power in major DATs is evidently significant. Many speculate that this situation has already occurred—Strategy and major ETH DAT companies' mNAVs have significantly dropped. I am not ignoring this, and you should keep a close eye on it.
Macroeconomic risk: The resurgence of inflation is a real macro risk, but there are currently no signs of it. Cryptocurrencies are now highly correlated with the macro economy, and we are still in a 'Goldilocks environment.'
Elements missing from the cycle top
Market euphoria has not yet emerged:
The market has not yet broken free from the 'wall of worry'—every 5% pullback triggers speculation about a cycle top (which has lasted for 18 months);
There has not yet been sustained euphoria, nor is there a market consensus on subsequent increases;
There are no 'blow-off top' characteristics (though they are not essential characteristics).
If cryptocurrencies surge significantly later this year and outperform the stock market, this 'blow-off top' signal may suggest that the top for cryptocurrencies occurs far earlier than the business cycle that could extend to 2026.
Leading indicators for stablecoins
A highly informative indicator: the growth of stablecoin market cap.
In traditional finance, the growth of M2 money supply often precedes asset bubbles. In the cryptocurrency market, the role of stablecoin market cap is similar—it represents the total amount of 'dollars' available within the crypto ecosystem.
Major cycle tops often coincide with a stagnation in stablecoin supply occurring 3-6 months prior. As long as the stablecoin supply continues to grow significantly, the market may still have upward momentum.
My current view
To be honest, based on current observations, I believe there won't be a major cycle top before 2026 (this view may change at any time due to new developments).
The historical data points of the four-year cycle are limited (only three times), and institutional participation represents a fundamental change in market structure. The dynamic of Federal Reserve chair transitions alone may extend the 'Goldilocks environment' to 2025—this is particularly important, especially with the unprecedented closeness of cryptocurrency to macroeconomic correlations.
In this cycle, cryptocurrency market participants have a deeper understanding of the four-year cycle, which makes me feel that the outcome may be slightly different. When has the public's judgment ever been entirely correct?
Will everyone sell according to the four-year cycle pattern and then exit completely?
However, I also acknowledge that the consistency of the four-year cycle pattern is significant, and market patterns often persist until they are broken. The public's perception of cycles may also become a self-fulfilling prophecy that leads to their end.
As the market cap share of Bitcoin declines, I will continue to gradually take profits on those overbought altcoins; however, I will hold onto 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 moment.
Final thoughts
The four-year cycle pattern is the strongest argument supporting a top in 2025—it has validated three times, and simplicity often prevails. However, changes in market structure led by institutions, the dynamics of Federal Reserve transitions, and the absence of euphoric signals all suggest that this cycle may extend to 2026.
Conditions may change dramatically in the coming months; therefore, there's no need to cling too tightly to one’s views.
Regardless, one must accept that they cannot sell precisely at the peak and develop a systematic exit strategy.
The right position size is one that allows you to sleep soundly. If you have already made substantial profits, 'selling too early' is perfectly fine.
