Bitcoin 4-Year Cycle Evolution: From Stablecoin Collapse to Cyclical Changes

Bitcoin’s price movements have always followed a certain rhythm. Many market observers have found that this rhythm is closely linked to Bitcoin’s halving events, forming the so-called “4-year cycle”—a psychological cycle that deeply influences crypto traders’ mindset. However, with the impact of stablecoin collapses, this seemingly solid pattern is facing unprecedented challenges. This article will trace the evolution of Bitcoin cycles, especially how stablecoin crashes have rewritten market rules.

The Three Acts of the Cycle: Accumulation, Boom, Liquidation

Bitcoin’s standard cycle can be divided into three distinct phases. First is the “Accumulation Phase,” usually starting after the previous cycle’s price peak. During this time, market sentiment is cold, trading activity and on-chain data are subdued, but long-term holders begin building positions at lows. This phase typically lasts 12 to 15 months, with prices gradually recovering.

Next is the “Expectancy Phase.” As the market begins to digest the upcoming halving benefits, retail and institutional buying gradually increase, and media attention rises accordingly. Liquidity warms up, market sentiment shifts from neutral to optimistic. Once the halving actually occurs, prices often enter a parabolic rise, sometimes slow and sometimes explosive. A large influx of retail investors chase gains, leverage traders invest heavily, and exchange volumes hit new highs.

The final is the “Liquidation Phase.” Historically, bullish runs tend to last 12 to 18 months before ending with sharp price declines. Over-leveraged investors get liquidated, causing larger drops in altcoins, market sentiment turns to panic, and a bear market ensues. Yet, it is during this phase that steadfast builders continue product innovation, laying the groundwork for the next cycle.

Halving: The Timekeeper of the Cycle

To understand the driving force behind Bitcoin’s 4-year cycle, one must delve into the halving mechanism. Bitcoin halving refers to the event where the block reward for miners is cut in half every four years. This design occurs every 210,000 blocks, roughly every four years.

In early 2009, the reward was 50 BTC per block. After four halvings, the current reward is 3.125 BTC. At this pace, halving will continue until around 2140, when the total supply reaches the cap of 21 million BTC.

Halving is a scarcity mechanism carefully crafted by Satoshi Nakamoto. Bitcoin was born during the 2008 financial crisis, designed to counteract inflation caused by unlimited central bank issuance. Compared to governments constantly adjusting monetary policy and weakening fiat confidence, Bitcoin achieves scarcity through mathematical algorithms—mimicking the increasing difficulty of gold mining. As new supply diminishes step by step, Bitcoin’s scarcity intensifies, creating supply-demand imbalances that push prices higher. Historically, each halving has driven price increases, making halving events the clockwork of the cycle.

Comparing the Three Cycles: From Niche to Mainstream to Crisis

2013 Cycle: A Feast for Tech Enthusiasts and Early Adopters

2013 marked Bitcoin’s first complete cycle, mainly driven by the tech community—forum discussions, cryptography meetups, open-source developers. Media attention was still limited but some landmark events appeared, such as the “Pizza Transaction” (buying two pizzas with 10,000 BTC) and discussions around “Digital Gold.”

At that time, Mt. Gox was the world’s largest Bitcoin exchange, handling over 70% of global transactions in 2014. However, in 2014, Mt. Gox suffered a security breach, losing 850,000 BTC, and subsequently shut down. Since liquidity was heavily reliant on Mt. Gox, this disaster directly shattered market confidence. Bitcoin’s price plummeted 85%, and the first cycle ended in a bear market.

2017 Cycle: ICO Bubble and Retail Frenzy

2017 marked the turning point where Bitcoin entered the retail spotlight. After Ethereum’s launch in 2015, the concept of smart contracts gained public recognition, followed by a wave of ICOs sweeping the crypto world. ETH surged from $10 to $1,400, and thousands of ERC-20 tokens launched, with any project having a whitepaper attracting funding.

Bitcoin also benefited from new capital inflows, soaring from around $200 to $20,000 in two and a half years. During this period, industry headlines frequently appeared in mainstream media. However, the ICO craze also planted the seeds for a crash. Projects began selling ETH and BTC after raising funds, creating selling pressure. The US SEC later cracked down on ICOs, labeling many as unregistered securities or Ponzi schemes. Over-leveraged investors panicked and sold off, causing Bitcoin to crash 84% to $3,200.

2021 Cycle: Institutional Entry and Stablecoin Collapse

The context of the 2021 cycle was entirely different—massive liquidity flooding the markets during the COVID-19 pandemic. Governments worldwide launched fiscal stimulus, and quantitative easing inflated all assets. Companies like MicroStrategy and Tesla bought billions worth of Bitcoin, PayPal and Cash App supported Bitcoin trading. Institutional investors were no longer bystanders but became market protagonists.

The DeFi boom in 2020 and NFT craze in 2021 attracted retail investors in droves. Bitcoin reached an all-time high of $69,000, and markets reveled in unprecedented liquidity. Yet, the end of this cycle was markedly different, with the collapse of the stablecoin ecosystem serving as a key trigger.

How Stablecoin Collapses Break the Cycle Rhythm

In 2022, Luna’s UST stablecoin de-pegged, evaporating $60 billion in a short time. This was not just a failure of a single project but triggered a chain reaction. Institutions like Voyager, Celsius, BlockFi, and Three Arrows Capital, with direct or indirect exposure to Luna, and interconnected bets on market directions, declared bankruptcy.

This crisis was unique because it broke the traditional rhythm of the cycle. Previously, liquidations mainly stemmed from leveraged traders getting wiped out, but the 2021-2022 cycle’s liquidations were driven by systemic risks in the stablecoin ecosystem. BlockFi initially tried to rescue itself via FTX’s credit lines, but as FTX’s fraud was exposed and assets liquidated, BlockFi also went bankrupt.

Meanwhile, the Fed ended its easing policies, aggressively raising interest rates, causing global liquidity to contract rapidly. The stablecoin collapse combined with policy shifts led Bitcoin to plunge to $15,500, creating a new cycle low.

Retail FOMO vs. Institutional Rationality

Retail and institutional investors play vastly different roles in driving the cycle. Retail investors often FOMO (fear of missing out), buying on hype with leverage, amplifying gains but also risks. They tend to push prices higher in late stages, creating extreme market conditions.

In contrast, institutional investors are more disciplined, with longer-term horizons, often buying during panic to bottom out the market. Their risk management and cautious approach tend to dampen volatility. The 2021 cycle was unique because simultaneous participation of retail and institutions created unprecedented highs, but the complexity of the stablecoin ecosystem also accumulated risks to uncontrollable levels.

Has the Cycle Disappeared? Emerging Evidence

Some market participants claim the 4-year Bitcoin cycle is a thing of the past, based on observations such as:

Institutional participation changing market structure. After the approval of spot Bitcoin ETFs in January 2024, top financial firms like BlackRock, Fidelity, VanEck began offering Bitcoin as a standard investment product. Many companies adopt MicroStrategy’s digital asset reserve model, including cryptocurrencies on their balance sheets. These institutional participation methods—regular buying, strict stop-loss, long-term holding—essentially suppress cyclical volatility.

Rising dominance of macroeconomic factors. Bitcoin’s correlation with Federal Reserve policies, interest rate changes, and global liquidity increases, diminishes the relative importance of halving events. The Fed’s decisions are often unpredictable, reducing the predictive power of the traditional 4-year cycle.

Diminishing marginal effect of halving. The first halving cut supply from 50 to 25 BTC—reducing issuance by 50%. The latest halving from 6.25 to 3.125 BTC also reduces issuance by 50%, but on a smaller base. As Bitcoin supply approaches the cap, the actual impact of halving on new supply weakens further.

New Features of the Current Cycle: Institutional Dominance, Retail Absence

The 2025 cycle shows a distinct pattern. Bitcoin hit a new high of $73,000 before the 2024 April halving, breaking the traditional “big rally after halving” rhythm. Currently, BTC fluctuates around $90,000, not reaching the previous peak of $126,000 but remaining relatively resilient.

The most significant change is the much lower retail participation compared to previous cycles. Media interest is no longer as intense as in 2021, community sentiment is less frenzied, and no new ICO or NFT craze is driving retail entry. Instead, institutional buying dominates, providing steady support but limiting explosive rallies.

In this scenario, the traditional “cycle volatility” is indeed shrinking. If the latter half of the cycle continues without retail participation surges, large-scale leverage liquidations may also decrease, and the “crash magnitude” of the cycle could be far less than past declines of over 70%.

Key Signals to Watch for Future Cycles

To determine whether the 4-year cycle is truly dead, focus on these indicators:

Price behavior: Past cycles typically reached new highs within 12-18 months after halving. If the current cycle surpasses this window without new highs, the stimulative effect of halving is weakening. Historically, each cycle ended with declines exceeding 70%. If future corrections are milder, it indicates a fundamental change in the cycle.

Liquidity synchronization: If Bitcoin’s price begins to perfectly track global liquidity—falling during quantitative tightening and rising during easing—then it will evolve from a “halving cycle asset” to a “macro asset,” with macro factors replacing the cycle.

Retail participation: Past cycle late stages saw retail surges and altcoin booms. If current and future cycles lack these signals, it suggests the cycle is mainly driven by institutional buying, with less volatility, making the cycle more blurred.

Conclusion: Evolution, Not Extinction, of the Cycle

Bitcoin is indeed undergoing an evolution from a “halving cycle” to a “macro asset.” The 4-year cycle was once the rhythm of the crypto market, but now it is increasingly eroded by institutional participation, policy influences, and stablecoin ecosystem risks. The stablecoin collapses serve as a reminder: the future of the cycle is no longer driven solely by supply reduction but by complex ecosystem risks, institutional behavior, and macroeconomic environment.

Each cycle is unique, and future cycles may differ radically from the past. The 4-year cycle may not disappear but will likely manifest in new forms. Understanding this evolution is crucial for predicting Bitcoin’s future trends—not by blindly applying past patterns but by deeply understanding market participants, risk factors, and policy changes. Whether the cycle persists or subtly transforms, continuous observation and deep thinking are essential to grasp the true operating logic of crypto assets.