Is the Low Already Behind Us? Exploring Cathie Wood’s Perspective on the New Bitcoin Cycle

Bitcoin is currently experiencing significant volatility, prompting discussion about its future trajectory. Cathie Wood, CEO of ARK Invest, suggests that traditional Bitcoin market patterns may be changing due to increased institutional participation. This article explores her insights and the evolving dynamics of Bitcoin's market cycle.

Key Takeaways

Bitcoin is undergoing a challenging period, leading some analysts to label it the worst fourth quarter on record.
Cathie Wood believes that institutional adoption is disrupting Bitcoin's traditional four-year cycle.
Historical patterns indicate Bitcoin usually crashes 75–90% post-Halving events, but Wood argues this may not hold true anymore.
Institutions are viewing Bitcoin as a risk-on asset, making it more relatable to stocks and real estate.
Experts from Bernstein and VanEck share similar sentiments about the end of the traditional Bitcoin cycle.
Standard Chartered has revised its Bitcoin price predictions sharply downward for 2025, reflecting broader market shifts.

Cathie Wood on BTC Four-Year Cycle

Understanding Bitcoin's Current Landscape

Bitcoin has reached a precarious point, with many analysts deeming the current fourth quarter as historically poor, characterized by significant leverage liquidation and stark declines from previous all-time highs.

For over ten years, Bitcoin [BTC] has followed a predictable pattern known as the "crypto cycle," which includes a Halving event followed by a rally to new highs and then a steep price drop of 75–90%. This cycle has significantly influenced the mindset of traders, embedding a "crypto winter" mentality.

Cathie Wood's Viewpoint on the Cycle

In contrast to these established patterns, Cathie Wood, CEO and CIO of ARK Invest, believes that the old rules may not apply anymore. Speaking with Fox Business, Wood emphasized that institutional adoption is “disrupting” traditional notions of the Bitcoin cycle. She noted that the rising interest in U.S. Spot Bitcoin ETFs is altering how BTC reacts to market volatility, as evidenced by its declining two-year volatility trend over the past five years, which points to the asset maturing.

Possibly Losing the Old Cycle Pattern

Wood's perspective challenges over a decade of established beliefs surrounding Bitcoin's four-year cycle. Historically, the evidence supporting this cycle is substantial. For example:

The 2012 Halving led Bitcoin to rise from under $10 to about $1,100.
The 2016 Halving spurred its increase from $400 to nearly $20,000.
In the 2020 Halving, Bitcoin soared from $8,500 to a peak of approximately $69,000.

Each of these price rallies was followed by sharp declines of 70% to 85%, resetting market expectations for future growth. The latest cycle, triggered by the April 20, 2024, Halving, was perceived as the continuation of this predictable pattern, but current events feel increasingly uncertain.

What Concerns Wood?

Wood posits that Bitcoin is now trading more closely to broader risk-on assets, moving in alignment with stock markets and real estate. Despite the prevailing uncertainty, she remains optimistic, suggesting that “the volatility’s going down,” and adds, “We may have seen the low a couple of weeks ago.”

According to Wood, institutional investments are likely to prevent further declines in Bitcoin’s price. Historically, Bitcoin has acted as a safe haven during times of financial crisis, such as during the European debt crisis and the banking turbulence in the U.S. in 2023. However, she notes that institutional investment has shifted its identity, making Bitcoin more correlated with risk-on market indicators.

Insights from Bernstein and VanEck

Following Wood's remarks, the global research and brokerage firm Bernstein echoed her thoughts, declaring that the traditional Bitcoin cycle is effectively over. Similarly, Matthew Sigel from VanEck remarked, “We believe the Bitcoin cycle has broken its four-year pattern and is now in an elongated bull cycle, with stronger institutional buying countering retail panic selling.”

Recently, Bitcoin was trading near $90,256, experiencing a minor drawdown of 2.46% over the past 24 hours. Nonetheless, inflows into U.S. Spot Bitcoin ETFs remain robust, with $223.5 million recorded on December 10, according to Farside Investors.

Bitcoin Predictions by Standard Chartered

This shift in market dynamics has ramifications for bulls as well. Multinational banking firm Standard Chartered significantly revised its Bitcoin price expectations, slashing its 2025 target from $200,000 to $100,000. Moreover, it postponed its long-term projection of $500,000 from 2028 to 2030, reinforcing the sentiment that the period of rapid price surges followed by steep crashes may be concluding.

Final Thoughts

As the Bitcoin landscape continues to evolve, the traditional cycles that investors have relied on may be changing. The increasing institutional influence and shifts in trading behavior suggest that the future of Bitcoin could look quite different from its past. Investors will need to stay informed and adaptive as these changes unfold.