Is Bitcoin breaking its four-year cycle?

By Matt Crosby, Chief Analyst, Bitcoin Magazine Pro; Translated by Shaw Jinse Finance. Has Bitcoin finally broken free from its four-year cycle pattern, or is this bull market in its final stages? By examining historical growth rates, liquidity data, and macroeconomic correlations, we can better understand whether the current cycle is truly diverging and what this means for investors in the coming months. Cycle Duration. Analyzing Bitcoin's gains since the cycle low, we see that Bitcoin has now officially surpassed the duration from cycle low to cycle high in previous bull markets. The 2018-2022 cycle peaked 1,059 days after the previous bear market low, and the current cycle has now surpassed this duration. Averaging the duration of the past two complete market cycles, Bitcoin has already surpassed the historical average and is poised to surpass the 2017 cycle in the coming days. Figure 1: BTC growth since the cycle low indicates the current cycle has lasted longer than the previous two four-year cycles. Diminishing Impact Historically, Bitcoin's four-year cycles are rooted in its halving events, which halve both the block reward and inflation rate. Each halving triggers a dramatic supply shock, fueling significant bull market rallies. However, this cycle is behaving differently. Following the most recent halving, Bitcoin experienced five months of sideways trading, rather than the strong rallies seen after previous halvings. While prices have since risen, the momentum has been weak, leading many to question whether the halving has lost its impact. Figure 2: Bitcoin's Circulating Supply and Diminishing Marginal Inflationary Impact. With the current circulating supply exceeding 95% of Bitcoin's eventual total supply (21 million), marginal supply reductions may no longer be as significant. Currently, miners issue approximately 450 newly mined Bitcoins per day, a quantity easily absorbed by a small number of institutional buyers or exchange-traded funds (ETFs). This means that the halving itself may no longer be the primary driver of Bitcoin's market cycles. When we look at global broad money supply (M2) and Bitcoin year-over-year, we see a clear pattern. Each major Bitcoin bottom has almost perfectly coincided with a trough in global M2 liquidity growth. Figure 3: Global M2 and BTC (Year-over-Year) have historically tracked almost perfectly. If we juxtapose Bitcoin halving events with M2 troughs, we see that halvings typically lag liquidity cycles, suggesting that liquidity expansion, rather than halvings, is the true catalyst for Bitcoin's gains. This isn't unique to Bitcoin. Gold has exhibited the same behavior for decades, with its price performance closely tied to the rate of global M2 expansion or contraction. Negative Correlation Key to this liquidity story lies in the US Dollar Index (DXY). Historically, Bitcoin and DXY have exhibited an almost perfect year-over-year negative correlation. When the dollar strengthens year-over-year, Bitcoin tends to enter a bear market. Conversely, when the dollar weakens, Bitcoin embarks on a new bull market. This inverse relationship also applies to gold and equities, highlighting the broader theory of currency debasement cycles, whereby hard assets rapidly appreciate as the purchasing power of fiat currencies declines. Figure 4: BTC's Strong Negative Correlation with the DXY (Year-Over-Year) and Major Market Turns. Currently, the US Dollar Index is in a short-term uptrend, coinciding with Bitcoin's recent consolidation. However, the index is approaching a key historical resistance area that has previously marked major turning points and signaled a prolonged decline in the US Dollar Index. If this pattern persists, the next significant move lower in the US dollar could trigger a new upcycle for Bitcoin. Recent comments from Federal Reserve Chairman Jerome Powell suggest the era of balance sheet reduction (quantitative tightening) may be coming to an end. Comparing the Fed's balance sheet with Bitcoin shows that historically, balance sheet expansions and the launch of new rounds of quantitative easing have often coincided with significant rallies in Bitcoin and the stock market. Figure 5: Inflection points in the Fed's balance sheet have historically coincided with expansions in Bitcoin's bull market cycles. In the two years following the Fed's previous balance sheet expansions, the S&P 500 returned an average of 47%, more than five times the average two-year return during a neutral period. If the Fed truly enters a new phase of easing, this could not only extend Bitcoin's current cycle but also set the stage for a liquidity-driven rally in risk assets. Bitcoin has now surpassed the time spans of its previous two cycles, leading many to question whether the four-year cycle still holds true. But stepping back reveals a different story, driven not by assumed scarcity but by global liquidity, debasement of fiat currencies, and macro capital flows. The four-year cycle may not be broken, but it may simply be evolving. If the dollar weakens, the Fed pauses tightening, and global M2 growth accelerates, Bitcoin may still have room to rise. For now, as always, the best strategy is to react, not predict. Stay data-driven, exercise patience, and keep a close eye on liquidity.