Bitcoin ETF fund virality is creating a new 2-year cycle.

Bitcoin is breaking out of its historic 4.5-year halving cycle. However, this does not mean that market cycles have disappeared. On the contrary, the “viral meaning” has fundamentally changed. In the past, viral was a psychological phenomenon driven by news and FOMO attracting retail investors. Now, it has evolved into a mechanism dominated by fund managers’ capital flows that steer the market.

From Supply Constraints to Capital Flows: The Fundamental Change in the Bitcoin Market

Traditional Bitcoin cycles had a clear structure. Halving reduces new mining supply, which pushes weaker miners out of the market. As a result, the marginal cost of new Bitcoin rises, and passionate investors entering the market become psychologically driven by this predictable halving story. This self-fulfilling cycle repeated patterns of initial positioning → sharp price increases → media coverage → retail FOMO → leverage frenzy → sharp declines.

But the current Bitcoin market is different. With large-scale institutional capital inflows, the importance of supply factors has significantly diminished. Now, ETF capital flows influence price movements far more strongly than halving narratives.

The 1-2 Year Evaluation Cycle of Fund Managers Is the New Rule

Institutional asset managers no longer evaluate Bitcoin returns based on a 4-year cycle. Most review their portfolios on a 1-2 year basis. The target annual return they need to justify to investment committees is about 25-30%, so they strictly monitor whether their Bitcoin positions meet this goal.

In 2024, Bitcoin has risen over 100%. Based on Michael Saylor’s projected 30% average annual growth over the next 20 years, this achievement corresponds to roughly 2.6 years of performance in just one year. However, from early 2025 to now(January 2026), the situation is different. Currently, Bitcoin is down 7% from the start of the year, with a price of $89.01K. Over the past year, it has experienced a -12.83% decline.

Viral Capital Flows Decide Profit-Taking

Fund managers base their decisions on three key factors. First is the “common ownership risk” — the risk when all institutions hold the same asset. When all institutions buy or sell Bitcoin simultaneously, liquidity concentrates in one direction, dramatically increasing volatility. Second is the profit and loss situation compared to the start of the year. Hedge funds, in particular, set fees based on December 31, so as year-end approaches, managers become more sensitive to locking in gains or recovering losses. Third is the opportunity cost moving forward.

From October 2024, when Bitcoin was $70,000, to November 2024 at $96,000, inflows of institutional capital peaked. Since January 2025 to now, almost all ETF net fund flows have been outflows(except March). What does this imply?

Investors who entered at the end of 2024 will face a crucial moment at the end of 2026, the end of their 2-year performance evaluation cycle. If they haven’t achieved sufficient returns, they will need to generate over 80% gains next year or achieve over 50% growth over the next two years. This is practically difficult. Therefore, rational fund managers will consider realizing gains now or reallocating to other higher-yield opportunities.

Inflection Point: Institutional Investors’ Decision-Making at $84,000-$91,000

Bitcoin is currently oscillating near the $89.01K level, close to the key price point of $84,000, which is the total cost basis since ETF launches. This is not just a technical resistance; it closely aligns with the average entry price of thousands of institutional portfolios.

A 10% drop could bring the assets managed by Bitcoin ETFs back to early-year levels. If that happens, it will signal to the market that “this investment was ineffective.” Conversely, a rebound here would strengthen the viral psychology that “the 2-year cycle is back in action.” But the 2-year cycle is different from the past 4-year cycle. It is far less predictable and can reverse suddenly depending on fund managers’ return targets and cost structures.

The Future of Bitcoin: Capital Efficiency Rather Than Viral

The 4-year cycle is definitely over. But a new cycle, more precisely a “dynamic 2-year cycle,” is now influencing Bitcoin’s price. This cycle is driven not by mechanical supply factors like halving but by fund managers’ annual return targets and profit-taking timing.

Interestingly, if Bitcoin simply moves sideways without rising or falling, it ultimately harms Bitcoin in the era of institutional investors. Because fund managers tend to withdraw capital if returns are below 30%. Asset management is a “relative opportunity” business, and if Bitcoin stalls, capital will flow into other higher-yield opportunities.

Ultimately, the new viral in the Bitcoin market is not supply constraints and psychological FOMO, but capital flows and capital efficiency within the context of cost structures. Investors who understand this will find it more important to track fund managers’ portfolio rebalancing points than the halving calendar. This is the core of Bitcoin investing in the 2-year cycle era.