Analysts are observing changes in Bitcoin’s behavior. There’s a growing consensus among market analysts that Bitcoin’s four-year cycle, characterized by the rhythmic alternation of bull and bear markets, no longer holds true.
However, not all analysts agree. According to Markus Thielen of research firm 10x Research, the cycle still exists. But it’s not the Bitcoin halving that drives the cycle; other factors play a more significant role, he argues.
Four-Year Bitcoin Cycle Still Exists #
For years, the halving was considered the primary driver of the Bitcoin cycle. The halving is a predetermined event where the reward for miners, who add new bitcoins to the network, is cut in half. This occurs approximately every four years. Because fewer new bitcoins enter circulation after such a halving, it can lead to higher prices.
Meanwhile, voices are increasingly suggesting that this four-year cycle is no longer intact, and that the market is increasingly driven by macroeconomic factors.
Thielen spoke about this four-year cycle on The Wolf of All Streets podcast, stating that it is indeed still intact.
“The four-year cycle is still alive and well,” Thielen said.
However, it’s not the halving that drives the cycle, but the US midterm elections, Thielen says. These midterm elections are often accompanied by uncertainty about policy and budgets. Investors then become more cautious.
American Politics Drives the Cycle #
Thielen points out that previous market peaks in 2013, 2017, and 2021 all occurred in the fourth quarter of those years. This is remarkable because the timing of the halving has actually shifted over the years.
According to Thielen, these peaks are much better explained by political uncertainty and election years in the United States than by Bitcoin’s technical structure itself.
The cycle is therefore driven much more by politics and macroeconomic factors than by Bitcoin’s supply itself, Thielen believes.
US presidential elections, budget discussions, and power dynamics in Congress create uncertainty in financial markets, and this affects risky assets like cryptocurrencies.
Market Moves More Maturely #
Nevertheless, it remains difficult to predict how markets will react to macroeconomic developments. Although the Federal Reserve recently lowered interest rates, Bitcoin could barely benefit from it.
Earlier this year, long-awaited interest rate cuts led to strong recoveries in financial markets. However, this was not the case after last week’s rate cut.
According to Thielen, this is because institutional parties now dominate the crypto market. These investors react less impulsively and look closely at contradictory signals from central banks.
At the same time, the inflow of new capital into Bitcoin is lower than last year, meaning there is simply a lack of buying pressure for a new explosive rise. The result is a market that grows or declines gradually, instead of parabolic rises or crashes.