Bitcoin 4-year cycle and the reasons for cryptocurrency fluctuations: Is the pattern still continuing

At the beginning of 2026, Bitcoin’s price hovers just above $90,000, about 30% shy of its previous all-time high of $126,080. Behind this figure lies an eternal question that has troubled the cryptocurrency market for years: Why does Bitcoin follow an almost perfect 4-year cycle, and is this pattern coming to an end?

Cryptocurrency price fluctuations are complex and far more than just supply and demand. From stock-to-flow ratios to global liquidity, from institutional participation to retail psychology, each factor plays a different role at various times. To understand Bitcoin’s current market position—its circulating market cap reaching $1.80 trillion—one must delve into the essence of this cycle.

How the cycle works: the trilogy of accumulation, explosion, and retracement

Bitcoin’s standard cycle is typically divided into four clear stages. First is the Accumulation Phase, which usually begins after a price peak from the previous cycle crashes, lasting 12 to 15 months. During this period, market sentiment is subdued, on-chain activity is relatively light, but long-term holders quietly build positions. Most retail investors are still licking their wounds from the last crash and show little interest in buying Bitcoin.

Next is the Expectancy Phase. This often occurs a few months before the halving, as the market begins to digest the good news that “supply will decrease.” Media attention heats up, liquidity starts to flow back, and sentiment shifts from neutral to optimistic.

Then comes the Explosion Phase, often the most intense. After the halving event, a new wave of investors floods in, retail investors are overwhelmed by FOMO, and traders leverage up. Historically, this stage often sets new all-time highs, as fresh capital continuously enters the market. However, over-leveraged participants also lay the groundwork for subsequent liquidations.

Finally is the Collapse Phase. When prices surge too far, leveraged traders are forced to liquidate, triggering chain liquidations. Altcoins tend to fall even more sharply. A bear market ensues, many investors sell at a loss, and market activity drops significantly. Although retail investors have exited, dedicated builders continue to innovate and prepare for the next cycle.

How halving drives cryptocurrency price movements

To understand the reasons behind crypto price swings, one must start with the core mechanism of halving. Bitcoin halving refers to the event where mining rewards are cut in half every 210,000 blocks (roughly every 4 years). In 2009, the reward was 50 BTC per block. Since then, four halving events have occurred, with the most recent in April 2024 reducing the reward from 6.25 BTC to 3.125 BTC.

Following this rhythm, halving will continue until around 2140, when the total supply reaches the cap of 21 million BTC. This design is a clever imitation of gold’s scarcity—just as the difficulty of gold mining increases as deposits are exhausted, Bitcoin achieves this through mathematical scarcity.

Reduced supply → increased scarcity → rising prices. This logic seems simple but has been repeatedly confirmed by history. Each halving doubles the stock-to-flow (S2F) ratio of Bitcoin, meaning Bitcoin becomes relatively scarcer. Currently, Bitcoin’s S2F is about 110, far above gold’s 60, making it a more scarce asset in terms of scarcity metrics.

Retrospective of four cycles: from $1 Bitcoin to $126K story

2013 Cycle: The Niche Enthusiasts’ Carnival

Bitcoin’s first complete cycle belonged to the era of tech geeks. Online forums and cryptography meetups were the main channels of dissemination. Mt. Gox was the largest Bitcoin exchange globally, handling over 70% of the world’s trading volume in 2014. However, in 2014, Mt. Gox suddenly announced a suspension of service, followed by the scandal of 850,000 BTC stolen. This event directly shattered market confidence, causing Bitcoin’s price to plummet 85%, ushering in a bear market.

2017 Cycle: The Era of Retail Adoption

If 2013 was an elite game, 2017 marked the awakening of retail investors. After Ethereum launched in 2015, the concept of smart contracts entered the mainstream, and the ICO boom erupted. Thousands of ERC-20 token projects launched, and as long as there was a white paper, funds poured in. Ethereum’s price soared from $10 to $1,400, and Bitcoin also rose from $200 to $20,000 driven by new capital inflows.

However, the ICO boom also planted the seeds of collapse. As project teams began selling accumulated Ethereum and Bitcoin for cash, selling pressure mounted. Coupled with the U.S. SEC’s crackdown—charging many projects as unregistered securities or outright Ponzi schemes—market sentiment rapidly reversed. Over-leveraged investors were forced to liquidate, causing Bitcoin to crash 84% to $3,200.

2021 Cycle: The Birth of Macro Assets

2021 coincided with a flood of liquidity during the COVID-19 pandemic. Governments worldwide launched fiscal stimulus, central banks implemented quantitative easing, and market liquidity reached historic highs. The most notable feature of this cycle was Bitcoin’s transformation—from “digital currency” to “macro asset.”

Companies like MicroStrategy began purchasing billions of dollars worth of Bitcoin as a treasury reserve, PayPal and CashApp started supporting Bitcoin transactions. The DeFi craze of 2020 and the NFT frenzy of 2021 further attracted retail participation, with institutions and retail investors jointly pushing prices higher. Bitcoin briefly hit a high of $69,000.

However, this cycle’s end was particularly brutal. Luna’s stablecoin UST collapsed in a short time, evaporating $60 billion in market value. Institutions like Voyager, Celsius, BlockFi, and Three Arrows Capital faced insolvency and declared bankruptcy. The final blow was FTX’s collapse—once a shining star in crypto—forced into liquidation amid massive fraud. Meanwhile, the U.S. Federal Reserve tightened monetary policy, raising interest rates sharply and draining liquidity from markets. All these factors caused Bitcoin to plunge to $15,500.

2026 Cycle: A New Pattern Led by Institutions

In the current cycle, the biggest change is the massive entry of institutional investors. In January 2024, spot Bitcoin ETFs were approved, with traditional giants like BlackRock, Fidelity, and VanEck offering Bitcoin as a standard investment product. Many companies followed MicroStrategy’s example, incorporating cryptocurrencies into their balance sheets.

Interestingly, the peak of this cycle ($126,080) occurred before the 2024 halving, creating a subtle deviation from historical patterns. More critically, retail participation has not yet reached previous cycle levels; the current price is mainly driven by institutional capital rather than retail FOMO.

Deep analysis of four reasons behind crypto price swings

Understanding the causes of crypto price fluctuations involves grasping four key dimensions:

1. Stock-to-Flow Ratio: Mathematical proof of scarcity

The stock-to-flow model compares existing supply (stock) with annual new supply (flow) to measure scarcity. The higher the ratio, the scarcer the asset. Bitcoin’s fixed total supply and periodic reduction in supply cause its S2F to rise continuously. Currently, S2F is about 110, meaning it would take 110 years at current production rates to produce another 1 BTC. In comparison, gold’s S2F is only 60. From this metric, Bitcoin is arguably the most scarce asset in human society.

2. Psychological factors and self-fulfilling prophecy

Bitcoin has no intrinsic value; its price depends entirely on market participants’ expectations of its future worth. This makes Bitcoin highly reflexive—sensitive to narratives, rumors, and expectations. Since the 4-year cycle has occurred multiple times, investors tend to trade based on historical patterns, creating self-fulfilling prophecies. When enough people believe “price will rise before halving,” that expectation itself pushes prices higher.

3. Global liquidity tides

Arthur Hayes, founder of BitMEX, pointed out that Bitcoin’s cycle is highly correlated with global liquidity. The peak in 2013 was driven by monetary expansion after the 2008 financial crisis; the 2017 peak related to yen depreciation; the 2021 high was due to massive liquidity injections post-COVID. When central banks implement easing policies, risk assets like Bitcoin tend to rise; when they tighten, Bitcoin faces pressure. In a sense, Bitcoin has evolved into a macro liquidity indicator.

4. Changes in participant structure

The balance between retail and institutional forces directly influences the volatility of cycles. Retail investors are more emotion-driven, prone to FOMO buying, panic selling, and frequent leverage use. Institutional investors are more disciplined, with longer investment horizons and stricter risk management. When retail dominates, markets are highly volatile with clear cycle features. As institutional participation increases, volatility is gradually suppressed, and cycle patterns may become blurred.

Retail vs. Institutions: Who is leading cycle changes?

In the 2013 and 2017 cycles, retail investors were the dominant players. They created FOMO waves, pushing prices to extremes, then suffered losses in panic sell-offs. Their behavior caused extreme volatility—drops of 85% or more are common.

Starting from the 2021 cycle, a subtle shift occurred. Traditional financial giants like BlackRock and Fidelity began participating, making decisions based on macroeconomic analysis and risk models rather than emotion. By 2026, institutional capital has become the main driver of prices.

This structural change has profound implications. Institutional investors buy according to predetermined schedules, use reasonable leverage, and strictly control risk exposure. This behavior tends to smooth out price fluctuations rather than amplify them. As a result, current cycle volatility is significantly lower than in previous cycles, and the cycle pattern itself is becoming less distinct.

Is the cycle dead? Phenomena and signs

There is intense debate in the industry about whether Bitcoin’s cycle has already ended.

Arguments supporting the idea that the cycle is dead include:

First, increased institutional participation has changed the market ecosystem. Through ETFs, corporate treasuries, hedge funds, and other channels, institutional funds have become the main players. Their behavior constrains volatility, gradually suppressing cyclical fluctuations.

Second, the impact of halving itself is diminishing. The first halving from 50 BTC to 25 BTC cut the reward by 50%. The latest halving from 6.25 BTC to 3.125 BTC also cut by 50%, but the absolute numbers are smaller. Moreover, the marginal effect of supply reduction on price diminishes each year—when new supply accounts for a tiny fraction of total, the stimulative effect of supply reduction is diluted.

Third, Bitcoin is increasingly linked to macroeconomic factors. Federal Reserve policies, interest rate trends, inflation expectations—all these macro variables influence Bitcoin more than halving cycles. The Fed has no fixed 4-year policy cycle, so the driving forces behind Bitcoin’s price are shifting from “halving cycles” to “macro liquidity cycles.”

Arguments that cycles still exist include:

However, each cycle has unique features. The April 2024 halving did not trigger a traditional “parabolic rally,” suggesting that Bitcoin may have priced in halving expectations early. This could mean the nature of cycles is changing, not disappearing.

Additionally, retail participation, though diminished, has not vanished. As long as retail remains in the crypto market, extreme volatility will persist. Certain moments—such as sudden events or explosive growth of new projects—may still trigger retail-driven market surges.

Key signs to judge whether the cycle has ended:

• If, in subsequent cycles, Bitcoin fails to show the typical parabolic rise within 12-18 months after halving, the cycle pattern is indeed breaking down.
• If future cycles do not see declines exceeding 70%, but instead experience milder corrections, the cycle pattern is fading.
• If Bitcoin’s price movements align perfectly with global liquidity changes, it may have become a macro asset, and the cycle concept will be fundamentally undermined.
• If retail participation remains weak in future cycles, the extreme nature of the cycle will inevitably diminish.

Conclusion

Bitcoin’s 4-year cycle was once the most reliable pattern in the crypto market. From a $1 price to over $90,000 today, from a niche forum topic to a Wall Street investment target, Bitcoin has gone through four complete cycle phases. Each cycle consists of accumulation, explosion, and collapse, reflecting the characteristics of different eras’ participants.

The reasons for crypto price swings have evolved from a single technical factor (halving) to a complex interplay of multiple factors: scarcity, liquidity tides, psychological dynamics, macroeconomic environment. This increasing complexity is itself a sign of market maturity.

Currently, Bitcoin is in a critical transitional period. The large-scale entry of institutional capital has changed the game, and retail dominance has waned. The marginal effect of halving is diminishing, but its psychological impact persists. The importance of macro liquidity is rising, yet the pursuit of scarcity has never disappeared.

Is the cycle dead? The current answer is: not yet, but it is sick. It is evolving, weakening, and being reshaped by new forces. The future cycle may be entirely different from the past—not driven by extreme emotions and explosive rises and falls, but by patient long-term holders gradually accumulating; not by retail chasing highs and panicking lows, but by rational institutional allocation.

Only time will tell the final answer. But regardless of how cycles evolve, understanding Bitcoin and its participants’ history will always be the key to grasping its future.