Bitcoin predictions are collapsing: why did the halving cycle stop working?

By mid-January 2026, the price of Bitcoin hovers around $90.51K, well below the optimistic forecasts that just a year ago predicted reaching $200,000. Tom Lee, the well-known Wall Street bull, has already lowered his year-end target to “maybe $125,100,” tacitly admitting the collective failure of the entire market prediction system.

What went wrong? The answer lies not only in temporary volatility but in a profound structural shift that has redefined the forces driving Bitcoin’s price.

From Mining Economics to Institutional Psychology: The New Market Driver

For years, the four-year cycle theory based on halving was the most reliable framework in crypto. The logic seemed solid: mechanical reduction of supply → weak miners exit → decreasing selling pressure → price increase. However, 2025 data reveal that this mechanism has lost relevance.

The 2024 halving reduced Bitcoin’s daily issuance to just 450 coins, approximately $40 million daily at previous prices. Let’s compare this with institutional reality: ETF inflows/outflows typically move $1-3 trillion in a single week.

The result? Institutional buying exceeded mining production by a ratio of 7.4 to 1. In 2025, institutions accumulated 944,330 bitcoins while miners produced only 127,622 new coins. The calculation is simple but revolutionary: mining supply is no longer the dominant factor.

Now, the true price anchor is the average cost basis of US spot ETF holders, currently around $84,000. This number has become the most important psychological bottleneck in the market.

The Two-Year Institutional Cycle: A New Pattern Emerges

With the massive influx of professional capital, Bitcoin has generated a completely different cycle from the four-year halving. This new pattern is governed by two forces:

1. The ETF cost basis acts as a psychological anchor
2. Performance pressure from professionally managed funds evaluated annually

Funds are assessed over 1-2 year periods and pay fees on December 31. This creates predictable behavior: as the year-end approaches without enough “locked-in” gains, managers sell higher-risk positions. The typical pattern is:

• Year 1: Accumulation and price rally. New capital enters ETFs, pushing the price above the cost basis.
• Year 2: Distribution and rebalancing. Performance pressure drives profit-taking, leading to a correction until a new, higher cost basis is established.

This two-year cycle is dramatically different from what market participants and analysts predict using models based on four-year halvings.

The Fed is the True “Market Maker”

While investors debated mining and retail FOMO, the real dominant force was another: the Federal Reserve.

By late 2024 and early 2025, the market expected a gradual rate-cut cycle. This expectation was a key driver of the previous price rally. However, recent economic data and official statements refuted this thesis: although employment and inflation in the US are slowing, they do not yet justify aggressive easing. Some officials even signaled “prudent rate cuts.”

This reversal of expectations directly impacted: it reduces the discounted value of future cash flows, compressing risk asset valuations. Bitcoin, being highly volatile, was the first to be affected.

Silent Token Redistribution Reveals Strong Hands vs. Weak Hands

By late 2025, the market was not experiencing mass abandonment but accelerated redistribution. On-chain data tell a clear story:

Recent net sellers:

• Medium-sized whales (10-1,000 BTC): likely long-term investors taking profits

Contracyclical buyers:

• Super whales (>10,000 BTC): accumulating on dips
• Strategic long-term entities: buying against the trend

Retail behavior also differed: novice users sold in panic, but experienced long-term retail investors took advantage of the opportunity.

On-chain conclusion: selling pressure came from weak hands. Tokens were concentrated in strong hands.

The Fear Index Reached 2020 Levels

While Bitcoin hovered around $90,000+, market sentiment collapsed to extreme fear levels not seen since the pandemic: the fear and greed index hit 16 points.

This extreme divergence between price and sentiment reflects a structural differentiation: the price remains at technical support, but psychological confidence has evaporated.

Technical Battle at the $92,000 Bottleneck

Analysts agree: if Bitcoin does not stay above $92,000, the bullish rebound could be over. This level is critical:

• Break upward: pushes the entire crypto market
• Fall: retests November lows at $80,540, potentially down to $74,500 (annual low 2025)

Bitcoin currently forms an ascending wedge technical pattern, a bearish figure after a downtrend. Derivatives also show pressure: extreme concentration of puts at $85,000 and calls at $200,000, reflecting deep division on future direction.

The Shadow of the AI Bubble Compresses Crypto Valuations

In 2025, artificial intelligence became the central force determining global risk prices. Its volatility directly affects Bitcoin through risk budgets and liquidity.

The deepest impact: the AI narrative directly suppressed the crypto narrative space. Even with healthy on-chain data and an active developer ecosystem, crypto struggles to recover valuation premiums. When the AI bubble adjusts, it could release liquidity, risk appetite, and resources that may flow back into crypto.

The Big Revelation: Market Without Predictable Halvings

The collective failure of 2025 predictions reflects a profound transformation. Not calculating halving dates anymore is key—it’s about tracking global liquidity tides and numbers in institutional income statements.

From mechanical mining economics to spreadsheet-managed professional funds. From four-year cycles to two-year institutional cycles. From retail FOMO to performance pressure from managers.

With BTC currently at $90.51K (-2.68% in 24h), the market stands at a crossroads: either break upward from this technical bottleneck or retreat to psychologically weaker levels. What’s certain: those expecting $200,000 based on halvings need to learn to read institutional financial statements.