Bitcoin has officially exceeded the duration from cycle low to cycle high observed in prior bull markets. The cycle from 2018 to 2022 reached its peak 1,059 days following the previous bear market low, and now, the current cycle has surpassed that timeframe. Analyzing the elapsed time from the last two complete market cycles, it appears that Bitcoin has already surpassed the historical average and is poised to exceed the duration of the 2017 cycle in the near future. The growth of BTC since its cycle lows indicates that the current cycle is extending beyond the lengths of the previous two 4-year cycles. Historically, Bitcoin’s four-year cycle has been closely tied to its halving events, during which the block reward—and consequently the inflation rate—is reduced by half. Every halving has resulted in a significant supply shock, leading to substantial bull markets. However, this cycle has exhibited distinct behavior. In the wake of the latest halving, Bitcoin has undergone five months of sideways consolidation, a stark contrast to the explosive post-halving rallies observed in prior cycles. Despite the price achieving significant increases, the momentum appears to be lacking, prompting questions about the potential diminishing impact of the halving.
The current Circulating Supply has surpassed 95% of Bitcoin’s ultimate total supply of 21 million, indicating that the impact of further supply reduction may be diminishing. Currently, miners are generating approximately 450 new BTC each day, a quantity that can be readily absorbed by a select group of institutional buyers or ETFs. The halving may no longer serve as the primary catalyst for Bitcoin’s market cycles. A clear pattern emerges when examining Global M2 Money Supply against BTC on a year-on-year basis. Every significant Bitcoin bottom has coincided nearly flawlessly with the lowest point of Global M2 liquidity growth. When we juxtapose the Bitcoin halvings with the M2 troughs, it becomes evident that halvings generally follow the liquidity cycle. This indicates that it is the expansion of liquidity, rather than the halving events themselves, that could be the real driving force behind Bitcoin’s price surges. This phenomenon isn’t exclusive to Bitcoin. Gold has exhibited consistent behavior over the decades, with its price movements closely reflecting the fluctuations in the rate of Global M2 expansion or contraction.
A crucial element of this liquidity narrative centers around the U.S. Dollar Strength Index. Historically, the relationship between BTC and DXY on a year-on-year basis has shown an almost perfect inverse correlation. When the dollar shows strength on a year-over-year basis, Bitcoin often finds itself in bear market territory. As the dollar shows signs of weakness, Bitcoin appears to embark on a fresh bull market. This inverse relationship is evident in the dynamics between Gold and equity markets, highlighting the overarching debasement cycle thesis: as fiat currencies diminish in purchasing power, hard assets tend to appreciate swiftly. At present, the DXY is experiencing a short-term uptrend, which aligns with Bitcoin’s recent consolidation phase. However, the index is now nearing a significant historical resistance zone, one that has previously indicated major turning points and preceded extended declines in the DXY. If this pattern persists, the upcoming significant decline in dollar strength might ignite a fresh uptrend for Bitcoin.
Recent remarks from Federal Reserve Chair Jerome Powell suggested that the phase of balance sheet contraction (quantitative tightening) could be approaching its conclusion. Analyzing the Fed Balance Sheet in relation to BTC reveals that the initiation of balance sheet expansion and a return to quantitative easing have typically aligned with significant upward trends in both Bitcoin and equity markets. In the aftermath of prior Fed balance sheet expansions, the S&P 500 has historically delivered an impressive average return of 47% over the subsequent two years, significantly outpacing the average performance during neutral periods by more than five times. If we are indeed entering a new easing phase, it could not only prolong Bitcoin’s current cycle but also set the stage for a liquidity-driven melt-up across risk assets. Bitcoin has now surpassed the durations of its last two cycles, prompting a wave of speculation about the continued relevance of the four-year pattern. However, upon closer examination, an alternative narrative comes to light—one influenced not by artificial scarcity, but by global liquidity, fiat debasement, and macro capital flow. The “four-year cycle” might not be shattered; rather, it appears to have transformed. Should the U.S. Dollar experience a decline, the Federal Reserve decide to halt its tightening measures, and Global M2 growth picks up speed, it appears that Bitcoin may have further potential for growth. For now, as always, the optimal strategy continues to be: react, don’t predict. Remain focused on data, exercise patience, and maintain awareness of liquidity.