What is the 4-year Bitcoin cycle that many people are talking about?

JAKARTA - In recent years, many crypto activists and analysts have talked about the 4-year cycle of Bitcoin. This pattern is touted as the natural rhythm of the BTC market movement that has been repeated since its inception.

Interestingly, discussions about this cycle always arise when the bitcoin price enters a high volatility phase, both during a major rally and when the market corrects sharply. The question is, what is the meaning of the 4-year pattern and is it still relevant?

The 4-year Bitcoin cycle is a market theory that says that the price movement of BTC tends to follow a repeating pattern every four years, coinciding with an event called halving.

Halving is a moment when the reward of Bitcoin miners is cut in half every 210,000 blocks or about every four years. In 2024, the reward will drop to 3.125 BTC per block. This supply reduction is considered to be the main trigger of the cycle.

In general, this cycle pattern consists of four phases that are clearly visible in the 2013, 2017, and 2021 cycles. Among them:

1. Accumulation Phase

It happens after the market has experienced a major crash. Sentiment is usually negative, volatility is low, and long-term investors start buying quietly.

2. Early Phase of Bull Market (Pre-Halving)

Prices are starting to rise as the market anticipates the effects of reduced supply. Optimism is slowly returning.

3. Parabolic Phase (Post-Halving)

Prices have soared sharply, often hitting new record highs. Retail participation has increased dramatically.

4. Bear Market Phase

After the euphoria, the market corrected big. Leverage liquidation occurred, sentiment deteriorated, and prices fell significantly.

There are several main theories that explain this phenomenon:

The first is the factor of scarcity of supply. Every halving reduces the number of new Bitcoins entering the market. In theory, supply-demand, when supply decreases while demand is stable or rising, the price is pushed up.

The second is the psychological factor. Because this pattern has happened several times, many investors believe in it. This collective trust creates a self-fulfilling prophecy effect. Expectations of the cycle actually make the cycle happen.

The third is the global liquidity factor. Some analysts argue that the peak of the cycle is more influenced by macro conditions, such as interest rate policy and dollar liquidity, than the halving itself.

Therefore, discussions about the cycle now often appear in various crypto news when there are changes in global monetary policy.

This is where the debate begins. Since 2024, Bitcoin has undergone a structural change in the market.

The approval of spot ETFs, increased institutional participation, and the entry of corporate funds make the market dynamics different from previous eras.

Some parties assess that institutions that buy on a scheduled and disciplined basis can dampen extreme volatility. This means that the cycle can be more "flat" than before.

However, historical data shows that after the post-halving peak, Bitcoin still experienced a major correction. In the previous cycle, the drawdown after the peak reached 50% to 80%. This makes many analysts still believe that the cycle has not really died.

How Do We Know When a Cycle Is Over?

There are several signs that can be observed: ● If Bitcoin fully follows global liquidity without a halving pattern. ● If there are no more parabolic spikes 12 - 18 months after the halving. ● If retail participation no longer triggers a big euphoria. ● If extreme volatility is further reduced due to institutional dominance.

If these patterns change completely, then the 4-year cycle theory can be considered no longer relevant.

Bitcoin's 4-year cycle is a historical pattern closely related to halving and market psychology. For more than a decade, this pattern has helped many analysts understand the accumulation phase, bull market, to the big correction.

But the market continues to evolve. With the entry of institutions and global macro factors that are increasingly dominant, the relevance of this cycle is now being tested.

Will history repeat itself, or will the market enter a new era? The answer will be seen from how the current cycle develops in the next few years.