What is the bitcoin cycle and why is it four years long?
Many analysts notice patterns in the price dynamics of the first cryptocurrency that are tied to halvings. These patterns, known as the "four-year cycle," have become an important psychological factor that often shapes the trading strategies and behavior of crypto industry participants.
Let's examine the main phases of a typical market cycle.
Accumulation
The cycle usually begins with an accumulation phase — it follows the crash after the previous price peak. Volatility and network activity decline, and the mood of market participants remains neutral or negative.
The name of the phase reflects its essence: long-term investors and large players, considering the asset undervalued, methodically build up positions — this is visible in on-chain data.
Retail traders, on the contrary, are usually frightened by deep and protracted corrections, and during such periods their interest in cryptocurrency is minimal. However, gradual "whale" purchases support a smooth recovery in quotes.
The "bull run"
The accumulation phase lasts 12–15 months, after which the market moves into a bullish trend.
Growth often begins before the halving, since the market prices in the reduction of issuance in advance. The expectation of a supply shortage supports demand: the inflow of liquidity intensifies, market sentiment improves and media attention grows.
The halving itself traditionally triggers parabolic growth: quotes rise rapidly, and smooth movements give way to sharp jumps.
At this stage retail investors join en masse. The inflow of fresh capital pushes the price to new all-time highs. In pursuit of quick profit, traders actively resort to high leverage, provoking spikes in volatility.
Correction
The bull market lasts from 12 to 18 months and ends with a deep correction. The positions of margin players are forcibly closed, altcoins fall particularly sharply, pessimism prevails — the bear phase begins.
At this stage some trading participants are forced to sell assets at a loss. Corrections alternate with brief rebounds ("dead cat bounces") and exhausting periods of sideways movement.
Over time the panic subsides and a market bottom forms. Traders' activity and excitement fall to a minimum, yet the development of the ecosystem does not stop: developers continue to release new products.
Why do sharp bitcoin crashes happen?
In the cryptocurrency market, a crash refers to a sharp and unexpected drop in price — when the rest of the assets follow bitcoin downward.
Over its relatively short history the first cryptocurrency has experienced such episodes more than once — it is characterized by high volatility. Short-term corrections are difficult to predict, yet certain patterns can be traced in its long-term price dynamics.
There can be many causes of a crash: on-chain flows, external shocks (wars, changes in the key rate following an emergency Fed meeting). As a rule, it is caused by a coincidence of several factors. But sometimes a simple correction is enough: the price has gone too far up and is returning to average values.
Often a crash is triggered by market overheating due to excessive leverage. Traders take out loans betting on growth, and even a small downward move automatically activates sell orders to repay debt. Margin calls are triggered, positions are forcibly closed, and pressure on the price builds.
This is how a "liquidation cascade" is launched: short positions weigh on the market, quotes fall, and new sales follow. This is exactly what happened on January 29, 2026 — weak financial results from technology companies gave a small push downward, which grew into mass liquidations in the cryptocurrency market.
Global macroeconomics also matter. When central banks tighten monetary policy or liquidity leaves the system, investors reduce positions in risk assets.
Many market participants consider digital gold a safe-haven instrument, yet for most institutional players it is an asset with elevated risk. In 2022, when the Fed began aggressively raising the key rate to fight inflation that had reached a 40-year high, bitcoin lost more than 60% of its value over the year.
Other factors also exert pressure: rumors of bans and restrictions by authorities have historically provoked mass sell-offs. In May 2021, bitcoin fell almost 50% from its April high after China tightened measures against the mining industry.
Crashes also happen for other reasons. On October 10, 2025, a wide range of assets went down simultaneously amid reports of 100% tariffs being imposed on imports from China.
The market collapse provoked a liquidation cascade whose daily volume reached a record $19.3 billion. The first cryptocurrency recorded a daily candle of $20,000 for the first time in history.
A similar picture was observed in March 2020: news of the pandemic crashed bitcoin by 50% within 48 hours as investors hastily exited risk assets.
What happens after a crash?
When bitcoin falls, many other coins often follow it. Altcoins, as a rule, decline more sharply, since they are perceived as riskier assets. Meme tokens during such periods show especially sharp swings in both directions.
A crash washes speculators and proponents of high leverage out of the market. Often it is precisely after this that a bottom forms: investors begin to accumulate positions, and developers resume activity without the frenzy of an overheated market.
The growing presence of institutional players such as BlackRock is changing the industry. Volatility is gradually declining, yet periodic sharp drops still remain an inherent feature of the crypto market.
How is the halving connected to the four-year cycle?
The concept of the four-year cycle rests on the halving — a mechanism that directly affects the price of bitcoin.
Every 210,000 blocks, roughly once every four years, the reward to miners for adding a new block is halved. In 2009 it was 50 BTC, and after four halvings it dropped to 3.125 BTC. If the pace is maintained, issuance will continue until the limit of 21 million coins is reached — approximately by 2140.
This principle was laid down by bitcoin's creator Satoshi Nakamoto in order to limit the asset's supply. The first cryptocurrency appeared at the height of the 2008 financial crisis, partly as a response to government support for banks and the uncontrolled issuance of fiat currencies.
The monetary policy of most states is constantly changing, whereas bitcoin operates according to a predefined algorithm with an unchanging issuance schedule.
In this it resembles gold — one of the oldest instruments for preserving value. The precious metal rises in price as deposits become depleted, while the scarcity of cryptocurrency is programmed from the outset. The lower the inflow of new supply, the higher the asset's rarity.
In the past, after halvings bitcoin, as a rule, entered a strong bull phase, which reinforced its reputation as an asset with limited supply.
What were the previous cycles remembered for?
2013
The first bitcoin cycle took shape mainly in a technical environment: internet forums, cryptographic communities, early enthusiasts. The media agenda of those years was defined by the purchase of two pizzas for 10,000 BTC and the first discussions of cryptocurrency as digital gold.
The main exchange of the era was Mt. Gox: by 2014 more than 70% of all transactions passed through it. In February of that year the trading platform suddenly halted trading — it turned out that 850,000 BTC had disappeared. An investigation later established that the coins had been stolen from the platform's wallet since as early as 2011.
Over the following year digital gold lost 85% of its value, finding a bottom only in January 2015.
2017
By 2017 bitcoin had turned into a truly mass phenomenon. Ethereum, launched in 2015, introduced a broad audience to smart contracts — ether rose over this period from $10 to $1,400.
At the same time ICO mania unfolded: thousands of ERC-20 tokens raised money sometimes on the basis of a single white paper alone. Over 2.5 years bitcoin went from $200 to $20,000, and the topic was picked up by the world's largest media outlets.
The ICO boom became one of the main factors of the crash: projects that had raised funds in Ethereum began actively converting them into fiat currencies, putting pressure on the price. The SEC recognized most token sales as unregistered securities and began prosecuting a whole range of coin issuers — some projects turned out to be outright fraud.
Many traders panicked and locked in losses, while highly leveraged positions were forcibly closed. Bitcoin collapsed by 84% — to ~$3,200.
2021
The cycle coincided with an era of monetary stimulus: in response to the pandemic, governments around the world launched large-scale programs to support the economy.
The growth of global liquidity drove the bull market. Bitcoin firmly established itself as a macro asset: Strategy (formerly MicroStrategy) and Tesla bought it for billions of dollars, while PayPal and CashApp opened access to buying and selling cryptocurrency.
The "DeFi summer" of 2020 and the subsequent NFT mania attracted a new wave of retail investors. Bitcoin reached $69,000.
The end of the cycle resulted in a chain of bankruptcies. The collapse of the UST stablecoin "wiped out" $60 billion of market capitalization within days. Voyager, Celsius, BlockFi and Three Arrows Capital did not survive — each of the companies was directly or indirectly tied to the collapsed assets and to each other's debts.
The final link in the chain was the collapse of the FTX exchange: it emerged that the platform had secretly used client funds in the interests of the associated market maker Alameda Research — both hastily sold off assets in an attempt to settle with users.
In parallel, the Fed wound down stimulus and switched to raising the rate. Bitcoin found the bottom of the bear market near the $15,500 mark.
2025
A characteristic feature of the cycle was institutional demand. In January 2024 the SEC approved spot bitcoin ETFs: BlackRock, Fidelity and VanEck included cryptocurrency in standard investment products. A number of companies followed the Strategy model, adding digital assets to their balance sheets — including Japan's Metaplanet.
The cycle proved atypical: bitcoin set a new all-time high near the $73,000 mark even before the halving in April 2024. Growth was driven by institutional players, while retail participation remained noticeably more modest than in previous cycles.
What else explains bitcoin's cyclicality?
There are also other interpretations of the cyclicality. One of the most popular is psychology and self-fulfilling prophecies: the price of cryptocurrency is largely determined by narratives, crowd behavior and the expectations of market participants.
Unlike traditional instruments — dividend-paying stocks or coupon-bearing bonds — bitcoin has no intrinsic value in the classical sense. Its price is determined by how much people are willing to pay for it in the future.
With each new cycle market participants trade according to its logic more and more willingly — and the more surely it repeats.
Liquidity
Other analysts explain the cyclicality by the dynamics of global liquidity. For example, BitMEX co-founder Arthur Hayes links the key price peaks to monetary policy: the 2013 extreme — to quantitative easing after the global economic crisis, the 2017 peak — to the devaluation of the yen against the dollar, the 2021 high — to monetary stimulus during the pandemic.
Recently the discussion has been fueled by expectations of the end of quantitative tightening and a return to a "cheap money" policy with rate cuts. Some analysts believe that these factors could disrupt the usual pattern in the current cycle.
Source: ForkLog
Новости в мире криптовалют
Random quote about money
"Не почитай денег ни больше, ни меньше, чем они того стоят; это хороший слуга и плохой господин."
Interesting posts in other sections of the blog
* to search the proxy database, just enter a country name, e.g. Russia, USA, Thailand