Understanding Bitcoin's Market Patterns: The Shift from Cycles to Continuity

From Cycles to Continuity: Why Bitcoin’s 4-Year Pattern May Be Breaking

As Bitcoin's value has dropped over 30% since early October, the market's psychology has undergone a significant transformation. Initially perceived as a normal correction, many analysts now see it as the potential peak of a cycle. The once optimistic outlook has quickly been replaced with fear and apathy, causing investors to shift towards a defensive stance, anticipating a prolonged bear market akin to previous cycles.

However, a recent report from CryptoQuant presents a counter-argument to this prevalent view. The analysis suggests that Bitcoin may be deviating from its traditional four-year boom-and-bust cycle that has historically characterized its price trends. Instead, the report introduces the concept of a Bitcoin Supercycle, proposing that the classic halving-driven cycle could be giving way to a more prolonged and structurally supported bull market.

The central premise of the supercycle theory is that Bitcoin's market dynamics have fundamentally evolved. Unlike earlier cycles that were primarily influenced by speculative retail investors, the current market is driven by new forces that were absent in the past. These shifts could be changing how price declines, peaks, and recoveries occur, potentially reducing volatility over extended periods.

The Foundations of Bitcoin’s Supercycle

The CryptoQuant report highlights several key elements suggesting a possible Bitcoin supercycle, rooted in structural changes that did not exist in prior market cycles. One of the most notable factors is the significant rise in institutional adoption. Spot Bitcoin ETFs, spearheaded by firms like BlackRock, have established a continuous and regulated source of demand from traditional finance, moving beyond the realm of speculative investments. These institutional vehicles view Bitcoin as a strategic asset, leading to a more stable demand rather than temporary hype.

On-chain data also supports this perspective. The reserves held on exchanges are continuously declining, indicating long-term accumulation and reduced pressure to sell. Additionally, the Spent Output Profit Ratio (SOPR) is stabilizing. Although profit-taking is happening, it lacks the euphoric spikes that typically characterize market tops, reflecting a more mature and disciplined trading environment.

Bitcoin Short-Term Holder SOPR | Source: CryptoQuant

Infrastructure enhancements are another important aspect. While Bitcoin remains the focal asset, improvements in scalability across the broader cryptocurrency ecosystem—such as Ethereum’s Fusaka upgrade and the rapid development of Layer-2 networks—are resulting in faster, cheaper transactions and real-world applications. These advancements bolster Bitcoin's function as a settlement and reserve asset within a growing digital economy.

Finally, the macroeconomic environment remains favorable for Bitcoin. Geopolitical uncertainties and the potential for future monetary easing enhance Bitcoin's attractiveness as a decentralized hard asset. Collectively, these factors provide a robust basis for the idea of an extended supercycle, although the report warns that unexpected external shocks could still disrupt this trend.

Current Market Structure and Price Action

Bitcoin's short-term market structure appears fragile, as illustrated on the 4-hour chart. The price is currently trading below the key psychological level of $90,000, with multiple failures to reclaim important moving averages fueling a bearish sentiment. The 200-period moving average (shown in red) is trending downward and functions as a dynamic resistance around the $92,000–$93,000 region, while the 100- and 50-period averages (green and blue) have compressed and rolled over, indicating weakening momentum.

BTC short-term price range | Source: BTCUSDT chart on TradingView

Following a steep sell-off earlier this month, Bitcoin attempted to bounce back but struggled beneath descending resistance. Consequently, it has formed a pattern of lower highs and lower lows, confirming a short-term downtrend. The ongoing consolidation around the $86,000–$87,000 range reflects uncertainty, yet the diminishing strength of upward bounces indicates limited demand during relief rallies.

From a technical standpoint, the $85,000–$86,000 area acts as a crucial support zone. A sustained drop below this level could trigger a deeper correction. Conversely, for bulls to regain control, they would need to decisively reclaim $90,000 and hold above the descending moving averages to shift momentum. Until that occurs, the chart suggests a preference for consolidation with a notable downside risk.

Key Takeaways:

Bitcoin has experienced a significant price drop, leading to a shift in market sentiment.
Analysts are debating whether Bitcoin is entering a new market cycle, referred to as a Supercycle.
Institutional adoption and structural market changes are fundamentally shifting the dynamics of Bitcoin's price behavior.
Current short-term price action shows weakness, with key support and resistance levels playing critical roles in future momentum.