Bitcoin's 2025 Post-Halving Dilemma: Is the 4-Year Cycle Theory Losing Its Luster?

The Bitcoin halving of May 2024 marked a pivotal moment in the cryptocurrency's history, yet its aftermath has defied expectations. For decades, the four-year cycle theory-rooted in the idea that Bitcoin's price surges post-halving due to reduced supply-has guided investor behavior. But as 2025 draws to a close, the data paints a more complex picture. Bitcoin closed the year in the red for the first time post-halving, challenging the narrative that scarcity alone drives price action. This article examines the technical and structural forces reshaping Bitcoin's market dynamics, evaluates the validity of the 4-year cycle, and explores whether institutional demand and macroeconomic shifts can catalyze a 2026 rebound.

The 2024 Halving: A Deviation from Historical Patterns

Bitcoin's price trajectory post-2024 halving diverged sharply from prior cycles. By November 2024, the asset had risen 41.2% to $90,446, underperforming the 53.3% and 122.5% gains seen after the 2016 and 2020 halvings, respectively according to analysis. While the price surged to $126,000 by October 2025, it ultimately closed the year at $88,300-a 13.5% decline from its November peak according to data. This outcome marks the first time a post-halving year ended with negative returns, signaling a breakdown in the traditional cycle's predictive power.

The absence of a "blow-off top"-a hallmark of previous cycles-further complicates the narrative. Instead of speculative frenzies, Bitcoin's 2025 rally was driven by institutional adoption and macroeconomic tailwinds. The launch of U.S. spot Bitcoin ETFs in early 2025 injected $50 billion in inflows, while Federal Reserve rate cuts and easing inflation improved liquidity for risk assets. These factors decoupled Bitcoin from retail-driven volatility, creating a new paradigm where institutional demand and macro trends dominate price action.

Technical and Structural Market Analysis: A Bearish Undercurrent

On-chain metrics and technical indicators reveal a bearish undercurrent despite Bitcoin's structural strength. By December 2025, daily active addresses had fallen to a one-year low according to data, while the Network Value to Transaction (NVT) ratio-a valuation metric-remained elevated, suggesting overvaluation. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) also signaled overbought conditions in late 2025, followed by a sharp correction according to technical analysis.

Structurally, Bitcoin's hash rate hit an all-time high in April 2025 according to research, reflecting sustained miner confidence. However, this growth did not translate into price appreciation, squeezing profit margins for smaller miners and accelerating industry consolidation. Meanwhile, wallet distribution data highlights a stark divide: whales holding 1,000+ BTC engaged in sustained selling, while smaller holders (under 1,000 BTC) remained in accumulation mode according to market analysis. This divergence suggests a shift from retail-driven cycles to institution-driven dynamics, where large players dictate price action.

The 4-Year Cycle Theory: A Broken Framework?

The 4-year cycle theory, which assumes Bitcoin's price peaks 12–18 months post-halving, has lost explanatory power in 2025. Historically, halvings have triggered short-term price spikes due to reduced supply, but the 2024 event coincided with a broader shift in market structure. U.S. spot ETFs and corporate treasuries now absorb large Bitcoin supply blocks without triggering panic selling according to market analysis, while macroeconomic factors like interest rates and inflation have become dominant drivers.

This evolution challenges the notion that Bitcoin's price is solely a function of its supply schedule. Instead, demand-side dynamics-particularly institutional adoption-are now paramount. As noted by 21Shares, "The cycle is not broken; it's just being redefined by new market participants and regulatory frameworks according to research."

Can 2026 Deliver a Rebound?

Despite 2025's underperformance, the outlook for 2026 remains cautiously optimistic. Bitwise forecasts a surge in ETF inflows as regulatory clarity improves, while J.P. Morgan and Bernstein predict Bitcoin could reach $150,000–$170,000 according to analysis. These projections hinge on two key factors:

1. Macroeconomic Tailwinds: Easing inflation and Fed rate cuts are expected to improve liquidity for risk assets, including Bitcoin according to market analysis. If the U.S. economy avoids a recession, Bitcoin's correlation with equities (e.g., S&P 500) could strengthen its case as a portfolio diversifier according to research.
2. Structural Scarcity: Exchange reserves are at multi-year lows according to data, and a growing portion of Bitcoin is locked in long-term wallets and ETFs. This tightening of supply, combined with sustained institutional demand, creates a foundation for appreciation.

However, risks persist. Regulatory uncertainty-particularly around stablecoins and derivatives-could disrupt flows according to market analysis, while a global macroeconomic downturn might suppress risk appetite.

Conclusion: A New Era for Bitcoin Cycles

Bitcoin's 2025 performance underscores a fundamental shift in its market dynamics. The 4-year cycle theory, once a cornerstone of crypto analysis, is being redefined by institutional adoption, macroeconomic forces, and evolving on-chain behavior. While the asset closed 2025 in the red, the structural underpinnings-ETF growth, reduced supply, and institutional demand-suggest a potential rebound in 2026. Investors must now navigate a landscape where cycles are less about scarcity and more about demand-side innovation.