‘This time is different,’ believes Cathie Wood of Ark Invest. According to her, the four-year cycle no longer applies because the crypto market is increasingly driven by institutional players. A massive crash like in the past is therefore unlikely, she suggests. The bottom may already be behind us, she thinks. Read on to find out why.
The Four-Year Cycle #
The four-year cycle is a pattern that seemed to repeat itself in the past. It involved the price finding a bottom around the time of a Bitcoin halving, followed by a multi-year price rally culminating in a spectacular new all-time high. This was consistently followed by a crash of 80% or more, until the next Bitcoin halving kicked off the process again.
Many investors have become accustomed to this pattern and adjust their investments accordingly. Some believe the top of this cycle has already been reached and that a bear market has begun.
‘This Time Is Different’ #
This time, however, is different, said Cathie Wood of investment firm Ark Invest in an interview with FOX Business. According to her, the four-year cycle is being broken because the dynamics of the crypto market have changed with the arrival of institutional investors.
Price volatility has significantly decreased, she noted, by around 30%. Institutional players are also increasingly viewing Bitcoin less as a safe-haven (‘risk-off’) asset and more as a growth-oriented (‘risk-on’) investment.
Therefore, a massive crash like in the past is unlikely, according to Cathie Wood:
“We think the entry of institutions into this new asset class will prevent much more downside from here. We may have seen the bottom a few weeks ago.”
Is It Really Different This Time? #
Cathie Wood is far from the only one who thinks the four-year cycle is over. Michael Saylor, CEO of the world’s largest Bitcoin investment company Strategy, has often expressed this view, as has Tom Lee of BitMine, the world’s largest Ethereum investment company. Various analysts also agree.
Yet, in the past, that thinking has always proven to be a pitfall: in every cycle, people thought it would turn out differently that time, but it never did. Thinking that this time is different may just be part of the pattern itself.
Some analysts, therefore, stick to the four-year cycle theory and continue to warn of a repeat. As always, time will tell if it’s really different this time.