The End of Bitcoin's 4-Year Cycle and the Dawn of a Macro-Driven Bull Market

The Bitcoin narrative has long been tethered to its enigmatic 4-year cycle-a pattern of halving events, supply scarcity, and retail-driven volatility. Yet, as we approach the midpoint of 2025, this narrative is fracturing. The 2024 halving, once expected to catalyze a parabolic bull run, delivered a mere 100% rally from post-halving lows, far below the 1,000%+ surges of prior cycles. Meanwhile, Bitcoin's price action has grown increasingly entangled with macroeconomic forces: Federal Reserve liquidity, global monetary expansion, and institutional capital flows. The era of the halving-driven cycle is ending. In its place, a new paradigm is emerging-one where Bitcoin's price is dictated not by algorithmic scarcity but by the pulse of global liquidity and policy.

The 4-Year Cycle's Demise: A Supply Story No More

Bitcoin's historical cycles were rooted in supply-side mechanics. Each halving event-reducing block rewards by 50%-created artificial scarcity, driving up demand and prices. This dynamic fueled the 2012, 2016, and 2020 bull runs, followed by sharp corrections. However, the 2024 halving deviated sharply from this script. While Bitcoin surged to an all-time high of $126,198 in October 2025, the rally was muted compared to prior cycles, and a 32% drawdown followed. Analysts like Morgan Stanley argue this correction signals the end of the bull phase, but the broader issue is clear: the 4-year cycle's predictive power is waning.

Why? The answer lies in the influx of institutional capital. Spot Bitcoin ETFs, regulatory clarity (e.g., the U.S. GENIUS Act), and improved custody solutions have transformed Bitcoin from a speculative asset into a mainstream portfolio staple. Institutional investors, prioritizing risk management, have dampened volatility and shifted Bitcoin's price dynamics toward macroeconomic fundamentals. As a result, Bitcoin's price is no longer a function of retail FOMO or halving hype but of global liquidity and policy decisions.

Macroeconomic Liquidity: The New Market Driver

The Federal Reserve's 2025 policy shifts have been pivotal. Despite cutting rates and injecting $40 billion in liquidity via Treasury bill purchases, Bitcoin failed to rally as expected. This disconnect highlights a critical nuance: the Fed's reverse repo facility has not funneled funds into commercial banks, where they could be rehypothecated to fund speculative positions. Instead, Bitcoin's price has become more correlated with traditional assets. Its 60-day correlation with the S&P 500 now stands at 0.72, reflecting its evolution into a macro asset rather than a speculative outlier.

Global monetary expansion further amplifies this trend. Central banks' accommodative policies have driven liquidity into Bitcoin as a store of value and inflation hedge. The U.S. dollar's weakening trajectory-driven by diverging rate expectations between the U.S. and Eurozone-has accelerated this shift. Meanwhile, the Fed's potential balance-sheet expansion (projected to inject $45 billion monthly into the economy) could reignite institutional flows into Bitcoin, particularly if Kevin Hassett or Kevin Warsh assumes the Fed chair and adopts a dovish stance.

Institutional Adoption: A Structural Shift

Institutional adoption has redefined Bitcoin's market structure. BlackRock's iShares Bitcoin Trust (IBIT) alone amassed $18 billion in assets under management by Q1 2025, while sovereign wealth funds and corporate treasuries are methodically accumulating Bitcoin as a geopolitical hedge. These entities are not speculators-they are long-term holders, tightening Bitcoin's supply and forcing existing holders to sell at higher prices.

Regulatory clarity has been the catalyst. The GENIUS Act's framework for stablecoin issuance and improved compliance tools have lowered barriers for institutional entry. As a result, 68% of institutional investors now hold or plan to hold Bitcoin ETPs, and Bitcoin's annualized volatility has dropped by 75% from historical peaks. This stabilization has made Bitcoin attractive to conservative institutions like pension funds and insurers, further entrenching its role in macro portfolios.

The Road Ahead: A Macro-Driven Bull Market

Bitcoin's technical indicators suggest a consolidation phase above $90,000, with potential for a move toward $96,500–$100,000 if the Fed confirms its balance-sheet expansion. Analysts project a medium-term target of $100,000–$120,000 by mid-2026, contingent on continued institutional participation and liquidity transmission. However, the path is not without risks. Trump's proposed tariffs and inflationary pressures could trigger short-term volatility, but the broader trend-toward macroeconomic integration-is irreversible.

For investors, the implications are clear: Bitcoin's future is no longer tied to halving events but to the Federal Reserve's policy levers, global liquidity trends, and institutional demand. The 4-year cycle is dead. In its place, a new era of macro-driven cycles is emerging-one where Bitcoin's price is a barometer of global monetary policy, not just algorithmic scarcity.