Analyzing Bitcoin's Evolving Cycle: Is the 4-Year Pattern Coming to an End?

Bitcoin has historically operated on a recognizable four-year cycle, characterized by significant price movements associated with Bitcoin's halving events. However, recent trends suggest this cycle may be losing its relevance.

Key Takeaways

Bitcoin’s historical four-year price cycle appears to be diminishing in significance.
Post-October highs, Bitcoin prices have declined by 30%.
Investors are observing correlations between Bitcoin and economic indicators like global liquidity and the US Purchasing Managers’ Index (PMI).
Investor sentiment plays a crucial role in Bitcoin price fluctuations, particularly in the absence of traditional valuation metrics.
A growing economy could be beneficial for Bitcoin, though external factors significantly impact market behavior.

Following the 2024 halving, Bitcoin prices saw an upward trend; however, by 2025, there were no indications of a classic speculative blow-off top, which typically signals the beginning of an altcoin season. The absence of this pattern has resulted in a stagnation across the cryptocurrency market.

Is the Renowned Bitcoin Cycle Coming to an End?

Bitcoin has experienced a 30% decline since its peak in early October, casting doubt on the validity of its well-established four-year price cycle. This change makes sense, as Bitcoin is maturing as an asset class. Increasing institutional interest suggests that Bitcoin’s price movements may soon align more closely with broader economic trends.

Investors have begun to notice a strong correlation between Bitcoin and global liquidity. Historically, this relationship has been firm. However, that trend has been disrupted in recent months. If the correlation reestablishes itself, Bitcoin's price could rise, potentially kick-starting altcoin season.

Prominent investor Michael Saylor has declared the four-year cycle "dead," predicting a significant repricing soon. His aggressive acquisition of Bitcoin this year may provide insight into his confidence in future price increases. Yet, liquidity is not the only influential factor.

The Role of Economic Activity

Some market participants are examining the link between Bitcoin prices and the US Purchasing Managers’ Index (PMI), which gauges the health of the manufacturing sector. A PMI above 50 signifies economic growth, while a reading below indicates contraction. Currently, Bitcoin’s macro fair value is around $140k as the PMI shows signs of weakening.

The year 2025 has proven tumultuous for Bitcoin, with investors gravitating toward more promising assets like AI, gold, and small-cap stocks rather than Bitcoin.

Theoretically, a strong PMI signals economic growth, which can influence Bitcoin prices through various channels. However, PMI has limitations as a definitive indicator for Bitcoin and the cryptocurrency cycle. Bitcoin sometimes acts as a "risk-on" asset, correlating positively with stocks, while at times, it serves as a "risk-off" safe haven, resembling digital gold during uncertain periods. Therefore, Bitcoin's response to PMI can vary considerably over time.

Understanding Bitcoin’s Sensitivity to Indicators

Bitcoin's reaction tends to be more attuned to monetary policy decisions than to traditional economic indicators such as the PMI. While PMI might influence Bitcoin indirectly, assessing Fed policy and liquidity conditions can provide clearer indications. In booming economic scenarios, Bitcoin may rise even amid tightening monetary conditions.

Key Factors Influencing Market Sentiment

Unlike traditional assets, cryptocurrencies like Bitcoin lack conventional valuation anchors, such as earnings or dividends. As a result, market sentiment plays a pivotal role in determining price. Research indicates that social media activity, trending searches, and news sentiment have a greater impact on Bitcoin’s short-term price movements than similar metrics do for traditional assets.

Market dynamics within cryptocurrency amplify sentiment-driven trading, including high retail participation, continuous trading hours, and swift information dissemination through crypto communities. The cycles of fear and greed can lead to rapid changes in market behavior.

However, what appears to be pure sentiment often incorporates assessments of fundamental factors. For instance, excitement surrounding institutional adoption may reflect changing supply/demand dynamics, while concerns about macroeconomic conditions might lead investors to Bitcoin for protection.

In calmer market phases, influences may be distributed as follows: approximately 40% from macro conditions (Fed policies, inflation, currency strength), 30% from supply/demand fundamentals (e.g., adoption metrics, on-chain activity, halving cycles), and 30% from sentiment/speculation. During bullish markets or sharp declines, sentiment can dominate, temporarily skewing prices away from rational valuations.

Academic studies reveal that sentiment indicators can explain 20-40% of price variance in stable conditions, with spikes during extreme market phases. Moreover, the cryptocurrency space often exhibits stronger "momentum" and "herding" behaviors compared to traditional markets, underscoring the significance of sentiment-driven trading.

Conclusion

Clearly, there isn’t a singular signal or trend to guide investors in forecasting Bitcoin cycles. A thriving economy generally supports rising Bitcoin prices, while a contracting economy tends to do the opposite unless liquidity surges. Factors like global liquidity, credit market conditions, business conditions, and investor sentiment will all influence market dynamics.

Beyond Bitcoin, other cryptocurrencies tackling real-world challenges will rise or fall based on their potential. Meme coins, by contrast, are subject to rapid fluctuations based on trends and social media buzz.

Nevertheless, even as Bitcoin may be moving past its established four-year retail cycle, the core concept remains intact. As Bitwise CIO Matt Houghton recently stated: “The reason Bitcoin’s price has surged ~28,000% over the last decade is the growing desire for individuals to store digital wealth without reliance on companies or governments.”

When Bitcoin rebounds, altcoins are likely to follow suit.