Why Grayscale believes Bitcoin will ignore the four-year cycle this time

Author: Dilip Kumar Patairya, Source: Cointelegraph, Translated by: Shaw Jinse Finance

Key Takeaways

• The halving-driven price pattern in Bitcoin's early development is gradually losing its influence. As more Bitcoins enter circulation, the relative impact of each halving is decreasing.

• Grayscale states that the Bitcoin market today is more influenced by institutional capital than by retail speculation as it was in earlier cycles.

• Unlike the surges of 2013 and 2017, Bitcoin's recent price increases have been more stable. Grayscale points out that the subsequent 30% drop is similar to a typical bull market correction.

• Interest rate expectations, progress in US bipartisan negotiations on cryptocurrency regulation, and Bitcoin's integration into institutional portfolios are increasingly influencing market behavior.

• Since its inception, Bitcoin's price movements have followed a predictable pattern. A pre-ordained event halves the supply of Bitcoin, creating scarcity. This is often followed by a price surge and subsequent pullback. This recurring cycle, widely known as the four-year cycle, has strongly influenced investor expectations since Bitcoin's inception. A recent analysis by Grayscale, based on on-chain data from Glassnode and market structure insights from Coinbase Institutional, offers a different perspective on Bitcoin's price movements. The analysis suggests that Bitcoin's price movements in the mid-2020s may be transcending traditional price patterns. Bitcoin's price volatility appears to be increasingly influenced by factors such as institutional demand and broader economic conditions. This article explores Grayscale's view that the four-year cycle framework is gradually losing its ability to fully explain price volatility. The article discusses Grayscale's analysis of Bitcoin cycles, supporting evidence provided by Glassnode, and why some analysts believe Bitcoin will continue to follow the four-year cycle. The traditional four-year cycle: Bitcoin halvings occur approximately every four years, each reducing the supply of new Bitcoins by 50%. Historically, these supply reductions have preceded major bull markets: 2012 halving – peaked in 2013; 2016 halving – peaked in 2017; 2020 halving – peaked in 2021. This pattern stems from both the inherent scarcity mechanism and investor psychology. Retail investors are the primary driver of demand, while reduced supply leads to strong purchasing power. However, since a significant portion of Bitcoin's fixed supply of 21 million coins has already entered circulation, the relative impact of each halving is gradually decreasing. This raises the question: can supply shocks alone continue to dominate Bitcoin's cycles? Grayscale's assessment of Bitcoin cycles concludes that the current market differs significantly from past cycles in three aspects. Institutional-Driven Demand, Not Retail Frenzy: Previous cycles relied on strong buying from retail investors on the platform. Now, capital flows are increasingly driven by exchange-traded funds (ETFs), corporate balance sheets, and professional investment funds. Grayscale observes that institutional investors are able to attract patient, long-term capital. This is a stark contrast to the rapid, emotion-driven retail trading seen in 2013 and 2017. No Rebound Before the Decline: Bitcoin's peaks in 2013 and 2017 were accompanied by extreme and unsustainable price surges followed by sharp declines. Grayscale points out that Bitcoin's price increase in 2025 is more stable, and the subsequent 30% drop looks more like a normal correction in a bull market than the start of a multi-year bear market. Macroeconomic Environment More Important Than Halving Bitcoin's early price movements were largely unaffected by global economic trends. However, by 2025, Bitcoin's price began to be influenced by liquidity conditions, fiscal policy, and institutional risk sentiment. Grayscale identified the following key influencing factors: Expected Interest Rate Changes; Increasing Bipartisan Support for US Cryptocurrency Legislation; Bitcoin's Inclusion in Diversified Institutional Portfolios. These macroeconomic factors have an impact independent of the halving event. Glassnode Data Shows Classic Cyclical Patterns Have Broken Glassnode's on-chain research indicates that Bitcoin prices have deviated from historical normal levels multiple times: **Long-Term Holders' Bitcoin Supply at Historical Highs:** Long-term holders control a higher proportion of the circulating supply than ever before. This continuous accumulation limits the amount of Bitcoin available for trading and reduces the supply shock effect typically associated with halvings. **Despite Pullbacks, Volatility Has Decreased:** While a significant price pullback occurred at the end of 2025, actual volatility remains well below previous cycle turning points. This suggests the market is more effectively managing large fluctuations, often due to increased institutional participation. **ETF and Custody Demand Reshaping Bitcoin Supply Distribution:** On-chain data shows increasing funds flowing into custody wallets associated with ETFs and institutional products. Bitcoin in these wallets often remains dormant, reducing the amount of Bitcoin actively circulating in the market. A More Flexible, Macroeconomically Linked Bitcoin Cycle According to Grayscale, Bitcoin's price movements are gradually moving away from the four-year cycle model and becoming more influenced by factors such as: Stable Long-Term Institutional Capital Improved Regulatory Environment Global Macroeconomic Liquidity Sustained ETF-Related Demand A Growing Group of Long-Term Holders Grayscale emphasizes that market corrections are still inevitable and could still be significant. However, a correction does not necessarily signal the start of a prolonged bear market. Why Some Analysts Still Believe in the Halving Pattern Some analysts frequently cite Glassnode's historical cycle analysis, still believing that halving is the primary driving factor. They argue that: Halving remains a fundamental and irreversible reduction in supply. Trading activity by long-term holders remains concentrated during halving periods. Even with increasing institutional participation, retail-driven trading activity is likely to re-emerge. These differing viewpoints suggest that this debate is far from over. The debate about whether Bitcoin ignores the four-year cycle reflects the ongoing evolution of the market. Understanding the Framework for Bitcoin's Evolution Grayscale's argument against the traditional four-year cycle dominance is based on apparent structural shifts. These shifts include increased institutional participation, deeper integration with the global macroeconomic environment, and persistent changes in supply dynamics. Data from Glassnode and Coinbase Institutional also confirms that the Bitcoin market today is governed by more complex factors than in the past, when it was primarily driven by retail investors. Therefore, analysts are placing less emphasis on time models based on fixed halving cycles and focusing instead on on-chain metrics, liquidity trends, and institutional fund flows. This more refined approach better reflects Bitcoin's transformation from a peripheral digital asset to a recognized component of the global financial landscape.