The traditional narrative of the four-year cycle is gradually losing its explanatory power.
Since its birth in 2009, the price of Bitcoin has long been regarded as closely linked to the 'four-year halving cycle.' Whenever the block reward halves, the new supply significantly decreases, and the market usually experiences a strong upward trend in the following year; the bull markets of 2013, 2017, and 2021 have all validated this pattern.
However, as the circulating supply of Bitcoin approaches its fixed cap, the relative impact of each halving on overall supply and demand is diminishing. Grayscale's latest research indicates that the supply shock caused by halving is no longer as pronounced as in the past, and the market is no longer entirely driven by retail sentiment, causing the traditional four-year cycle narrative to gradually lose its ability to dominate the market.
Institutional-driven price rhythm replaces retail-driven
Grayscale believes that the biggest difference between the current market and past cycles is that the capital structure has completely changed.
In the early days, Bitcoin prices relied on quick buying by retail investors on trading platforms, and emotional trading amplified the halving effect, causing exaggerated gains and subsequent crashes. However, starting in 2024, ETFs, corporate treasuries, and large asset management companies have become the most important sources of capital for Bitcoin. This type of capital has a longer investment horizon and is less influenced by short-term fluctuations.
In Grayscale's view, this more mature capital composition makes price increases in 2025 relatively stable, and makes subsequent corrections of about thirty percent appear more like normal bull market adjustments rather than the beginning of a new bear market.
Macroeconomic factors become dominant
Bitcoin was initially seen as a fringe asset decoupled from the global economy, but Grayscale points out that today's Bitcoin is deeply integrated into the financial system. Its price has become increasingly sensitive to interest rate policies, global liquidity, fiscal stimulus, and even the U.S. Congress's legislative attitude towards cryptocurrencies.
For example, market expectations of interest rate adjustments, the bipartisan attitude towards cryptocurrency regulation in the United States, and the trend of large institutions increasing their Bitcoin holdings in their portfolios can all be directly reflected in prices in a short period of time. These macro forces will not be reset by halvings, thus making Bitcoin's market rhythm increasingly irregular. Overall, the price trend is forming a more resilient, macro-oriented market rhythm. Halvings still hold symbolic significance, but are no longer the sole reason for the drastic price fluctuations every four years.
On-chain data shows that Bitcoin's trend has deviated from past patterns
Glassnode's on-chain analysis supports Grayscale's viewpoint. First, the supply ratio of long-term Bitcoin holders has reached a historic high, meaning that more Bitcoin is being locked in the hands of long-term investors, making the circulating supply scarcer. Secondly, even if there is a significant correction in 2025, Bitcoin's volatility remains far lower than the peaks of past cycles, reflecting an increase in market maturity.
In addition, a large amount of Bitcoin absorbed by ETFs and custodians continues to remain in cold storage wallets, rather than flowing into the trading market. These changes collectively weaken the immediate impact of halvings on market supply and demand.
There are still supporters of the traditional four-year cycle
Although Grayscale believes the influence of the four-year cycle is waning, some analysts point out that the supply shock from halvings has fundamental economic significance, and the behavior of long-term holders still exhibits some regularity before and after halvings, with retail sentiment potentially returning at specific points. The clash of these two viewpoints reflects that the Bitcoin market is moving from early simplistic cyclical explanations to a more complex multidimensional framework.
Reference Source
Source
