Summary 2025 both broke and echoed the four-year cycle: it delivered an unprecedented negative return in the post-halving year, yet still produced a late-2025 peak consistent with historical rhythm. Under traditional cycle theory, 2026 is viewed as a major bear-market year, and while we believe the four-year cycle narrative remains relevant, its impact is likely to be more moderated than in past cycles. In 2026, Institutional demand provides consistent bid in a market where long-term holders are distributing their coins to them. It remains unclear which force will ultimately dominate, and the most likely scenario is that this year is still a tug-of-war between accumulation and distribution. In 2026, institutional demand continues to provide a steady bid in a market where long-term holders distribute their coins, setting up a market defined by an unresolved tug-of-war between accumulation and distribution. 2025 both broke and echoed the four-year cycle: it delivered an unprecedented negative return in the post-halving year, yet still produced a late-2025 peak consistent with historical rhythm. Under traditional cycle theory, 2026 is viewed as a major bear-market year, and while we believe the four-year cycle narrative remains relevant, its impact is likely to be more moderated than in past cycles. In 2026, Institutional demand provides consistent bid in a market where long-term holders are distributing their coins to them. It remains unclear which force will ultimately dominate, and the most likely scenario is that this year is still a tug-of-war between accumulation and distribution. Breaking the Pattern, Not the Cycle Bitcoin's ( BTC-USD ) price has long been characterized by a four-year cycle tied to its supply halving schedule. Roughly every four years, the block rewards for miners are cut in half. Each halving historically sparked a powerful bull run, followed by a sharp crash and a prolonged bear market. In 2012 halving, Bitcoin ran from about $12 up to over $1,150 in late 2013 (the post-halving year), then dropped 85% in 2024. In 2016 halving, its price climbed from $650 to nearly $20,000 in 2017 (the post-halving year), followed by 80% collapse in 2018. In 2020 halving, Bitcoin rallied from $8,700 to $69,000 by late 2021 (the post-halving year), followed by a 75% drawdown in 2022. This boom-and-bust cycle became a roadmap for traders, and many viewed the post-halving year bull market top as almost a law to Bitcoin. However, the year 2025 (the post-halving year of 2024 cycle) did not follow the typical script. While the price peaked at $126,000 in October, the whole year ended with a negative annual return of -6%. This marked the first-ever down year in the post-halving year. Source: Simon Dixon X profile From the perspective of full-year performance in the post-halving year, the four-year cycle “law” appears to have been broken. Nonetheless, the broader cycle chronology still held. Bitcoin’s price peak did arrive in Q4 2025, roughly on schedule. Although there is no euphoria and blow-off top in 2025, Bitcoin topped exactly in roughly 18 months post-halving. From this point of view, the cycle theory is still alive despite the trajectory of the market being different from past cycles. In short, 2025 both broke and at the same time echoed the four-year cycle. It delivered a first-ever negative return in the post-halving year, yet still produced a late-2025 peak consistent with historical rhythm. 2026? The Cycle will Remain in a Moderate Form There are many strong arguments claiming that the four-year cycle is dead. The impact of halvings, cutting new coin issuance in half every four years, has diminished over time. By the 2024 halving, roughly 94% of all Bitcoin had already been mined, meaning the April 2024 event reduced Bitcoin’s annual supply inflation from about 1.7% to just 0.85%. At the same time, greater regulatory clarity and rising mainstream adoption have enabled more consistent capital inflows from institutional investors. Vehicles such as spot Bitcoin ETFs and Bitcoin treasury companies now provide a persistent bid in the market, in contrast to the historically liquidity-driven, retail-fueled boom-and-bust cycles of prior eras. That said, we still think the four-year cycle narratives remain relevant. Bitcoin's value is driven largely by investor expectations (since it has no earnings or cash flows), making its price highly reflexive. The four-year cycle pattern played out reliably in all previous times, and Bitcoin peaked again in Q4 2025. Investors, especially those who have remained in the market across multiple cycles, have come to expect this rhythm. That very expectation can, in turn, influence investor behavior and reinforce the cycle itself. Bitcoin Top in Every Q4 of Post-halving Year Bitcoin 1-year+ holding wave reflect this dynamic. This metric refers to the proportion of Bitcoin supply that has not moved for at least one year. A declining 1-year+ holding wave suggests long-term holders are distribution coins. These long-term holders know the four-year cycle playbook, and started to distribute their coins in every post-halving year, i.e. 2017, 2021, and 2025. In the 2024 cycle, long-term holders started selling much earlier than prior cycles. We explain the reason for this shift in detail in the article. Whale’s Digital Asset View: Top Two at a Crossroad Long-term Holders Distributing Coin Long-term Bitcoin holders who have lived through multiple cycles most likely still believe in the four-year cycle and thus view 2026 as a traditional bear market year. In contrast, Bitcoin’s newer source of demand, capital from traditional finance, largely dismisses the cycle theory. They either view Bitcoin as a long-term hedge to money debasement or allocate a certain small percentage of portfolio (like 4%) to Bitcoin for diversification purposes. Both investment objectives focus more on long-term performance rather than short-term price fluctuation. Therefore institutional demand provides consistent bid in a market where long-term holders are distributing their coins to them. It remains unclear which force will ultimately dominate in 2026, and the most likely scenario is that this year is a battle year between the two forces. While the analysis above focuses primarily on supply-and-demand dynamics within the Bitcoin market, a broader macro perspective does not support the conditions typically associated with a bull year as well. A Complex Macro Backdrop Brings More Uncertainty Bitcoin price is highly sensitive to global liquidity conditions. Bitcoin moves in the direction of global liquidity 83% of the time in any given 12-month period, which is higher than any other major asset class, according to a study by Lyn Alden. Many sell-side predictions paint a rosy picture for 2026, arguing liquidity will greatly improve thanks to the U.S. Fed pivots from tightening to easing. However, in our view, major central banks are not gearing up for broad easing; at best, we only see pockets of tactical relief. In the United States, the Federal Reserve did end the quantitative tightening in December 2025 after shrinking its balance sheet from nearly $9 trillion to about $6.6 trillion. However, ending QT is far cry from starting new QE. The announced $40 billion monthly purchase of Treasury bills starting from December is only a technical operation to maintain an ample level of bank reserve in the financial system and prevent potential liquidity strains after years of quantitative tightening. Indeed, the U.S. entered an interest rate-cutting cycle which has brought the policy rate down to the mid-3% range, but the latest Fed interest rate projection suggests no return to near-zero rate in the foreseeable future. Short-term rates are widely expected to maintain around 3% given persistent inflation, with just one or two rate cuts anticipated in 2026. Source: BlackRock Long-term rate expectations suggest an even more restrictive environment. Most forecasts point to the U.S. long-term rate to stay flat, or even edging slightly higher in 2026, due to sticky inflation and resilient economic growth. In other words, the era of ultra-cheap money is over. Source: tradingeconomics Across the Atlantic, the picture is even less accommodating. Both the European Central Bank and Bank of England are still in quantitative tightening, and neither of them are planning to open the liquidity taps in 2026. At best, they may end further tightening by late 2026 according to some estimates. The situation in Japan is even more restrictive. The Bank of Japan has pivoted to a tightening bias after years of QE in 2025. In December 2025, BOJ raised its policy rate to 0.75%, the highest level in three decades. This tightening stance in Japan stopped an important source of global liquidity, triggering an unwinding of the yen-based carry trades that had funneled cheap Japanese money into global markets for years. Given the above, 2026 is to be a year of fragmented and tactical liquidity infusion. Any liquidity injection into the market is likely to be reactive, aiming to resolve any funding strains when emerge. Such tactical liquidity can give Bitcoin short-lived boost, but sustained upward momentum may be harder to maintain. Disclaimer: The information provided herein does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and should not be treated as such. All content set out below is for informational purposes only. Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
