The Bitcoin 4-Year Cycle: Why It Exists and Why It Keeps Repeating
Bitcoin’s 4-year cycle is a remarkable phenomenon in the cryptocurrency world. Since its creation, Bitcoin has followed a consistent rhythm of bull and bear markets, closely tied to its halving events. This predictable cycle raises important questions: Why does this cycle exist? Why does it keep repeating with such precision, down to the days? And why hasn’t this pattern been arbitraged out by an efficient market?
What Is Observed in the Bitcoin 4-Year Cycle
Currently, Bitcoin is in its fourth full cycle, and the following patterns have been consistently observed:
- Market tops and bottoms have occurred on almost identical weeks across three previous cycles.
- Market phases have been remarkably similar: recovery, consolidation, price discovery, and correction.
What Is the Skepticism?
- Why hasn’t this pattern been arbitraged or front-run, given its predictability?
- Despite vastly different global macro environments across cycles, why hasn’t the pattern been disrupted?
Abstraction of Facts: Fixed Supply but Flexible Demand Driven by Adoption and Emotion
Bitcoin has a fixed supply, capped at a terminal limit of 21 million coins. This scarcity, combined with its growing reputation as a store of value (often compared to stored human energy), positions Bitcoin uniquely in financial markets.
Over time, Bitcoin has consistently demonstrated resilience and utility, attracting a growing base of users who view it as store of value. Unlike most commodities or equities, Bitcoin’s fundamentals and supply remain mostly unchanged, which creates a unique dynamic.
As demand rises while supply stays constant, prices naturally increase. This predictable relationship often fuels speculative buying, as many anticipate future price growth.
A bubble occurs when people are so confident that prices will keep rising that everyone rushes to buy. Eventually, there are no new buyers in the short term, and most participants are left holding the asset without realizing a profit.
“Insiders” (those who understood Bitcoin’s dynamics and invested early) often begin selling their holdings during these peaks. While they believe in Bitcoin’s long-term value, they take advantage of short-term market conditions.
This selling triggers a sharp decline as prices fall rapidly. The market continues to drop until a consensus price is reached through extended consolidation and high trading volumes. This phase sets the stage for the next market cycle.
Why Is the Timing So Precise Every 4 Years?
There are fundamental patterns deeply ingrained in the physical world and human behavior. There are four seasons in a year. Most people change jobs at the start of the new year after receiving their annual bonuses. Families often go vacations during the summer when the weather is warm. The secondary car market sees a spike in activity before Christmas as people reward themselves or buy gifts for loved ones.
With Bitcoin’s market being large and decentralized, no single individual can significantly alter its trajectory.
Markets, consists of people, need time to recover: Financial and emotional recovery after significant losses requires consistent effort over time. Rebuilding savings and regaining confidence doesn’t happen overnight — it’s similar to how healing from heartbreak takes time.
These dynamics drive Bitcoin into four distinct phases: a year to recover, a year of consolidation, a year of price discovery, and a year of correction or crash.
Will the Cycle Repeat This Time?
Breaking a long-standing macro pattern is not easy and often takes considerable time. Despite ongoing skepticism, the Bitcoin cycle is likely to persist, driven by its key underlying factors intact: fixed supply, the psychological significance of halving events, participants’ sentiment cycle, and adoption in wave.
