It has long been assumed that Bitcoin's four-year cycle is intrinsically linked to Halving events when block rewards are cut. However, another theory has emerged that suggests this may not be entirely the case.
The previous three major market cycles for Bitcoin and cryptocurrencies occurred fairly regularly around every four years, then peaked the year after the Halving.
However, according to the latest theories appearing on social media, Bitcoin's four-year cycle and the Halving events may have no connection with each other. It could simply be a coincidence. This opinion was expressed by a Pledditor user on September 5 on social network X “Bitcoin's 4-year cycle is just a coincidence and has nothing to do with the block reward halving.”
In turn, this person said that the cycles are strongly correlated with global M2 money supply cycles. “Recently, the global M2 money supply has actually had its own “four-year cycles” and those cycles have been reflected in most risk assets, including Bitcoin.”
M2 is a broad measure of the money supply. It includes currencies and a variety of deposits in bank mutual funds and relatively liquid money markets. According to the chart, the three most recent Bitcoin cycle peaks also coincide with the largest changes in the global M2 money supply.
For example, the last cycle occurred in 2021 and 2022, when M2 grew at a record pace during the pandemic. This is when central bank money printers release cash into the market as a stimulus. Last year, GMI CEO Raoul Pal suggested the same thing in that the BTC cycle was connected to macro patterns and M2 growth.
Now that the global money supply is dwindling, the Bitcoin and cryptocurrency markets also remain deep in bear territory. Is this a coincidence or just another novel theory? Earlier this week, multiple sources reported that U.S. household savings are falling and are about to be completely depleted. This will impact the excess funds available for high-risk investments like Bitcoin.
Is there any connection to the Bitcoin Halving events?
Author Vijay Boyapati, who wrote The Bullish Case for Bitcoin, also questioned whether Bitcoin's four-year cycle is still relevant in a recent podcast with Stephan Livera. He noted that the amount of money that must pour into the Bitcoin market daily to maintain the current price is much higher.
However, after the Halving takes place, “the financial energy needed to maintain the price is not much left”, which will push the price up. “Bitcoin finds a new price point… where the halving still has an impact just by virtue of the fact that the total market capitalization has increased significantly.”
The next Bitcoin halving event will take place around mid to late April 2024. Analysts remain confident that a recovery and a new bull cycle will take place by the end of 2024.
