The widely recognized “4-year cycle” theory, which has traditionally explained the fluctuations in the crypto market, may no longer hold true.
In a recent blog post, Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, contended that the 4-year cycle will not apply in this bull run, citing fundamentally different conditions.
US and China’s Monetary Policy Matters
Hayes argues that Bitcoin’s price is now influenced by shifts in the global money supply rather than halvings or market maturity. According to him, Bitcoin’s price will only drop when major nations initiate monetary tightening, not strictly following a four-year schedule.
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Hayes suggests that the US and China are countries to monitor closely. He believes the value of Bitcoin has always been significantly affected by the liquidity of the US dollar and the Chinese yuan.
- 2009-2013: In the aftermath of the 2008 financial crisis, the US and China both implemented substantial liquidity measures. The US initiated unlimited quantitative easing, while China increased credit-based infrastructure spending. By 2013, these expansionary tactics had placed a burden on both the Fed and the People’s Bank of China.
- 2013-2017: The second cycle was driven by an increase in Chinese yuan liquidity. The rise of Ethereum and the ICO boom allowed cryptocurrencies to directly benefit from this liquidity influx.
- 2017-2021: The third cycle coincided with the COVID-19 pandemic, fueled by US liquidity. The US government recorded the largest government subsidies since the New Deal in the 1930s. During this time, China’s anti-crypto stance didn’t significantly dampen the price surge. This cycle also concluded with the Fed’s tightening policy in late 2021.
The New Driver: Populism
Hayes identifies political populism as the defining feature of the current fourth cycle. He states that both President Joe Biden and President Donald Trump have tackled rising asset prices with a similar approach: increasing the money supply.
Trump has recently proposed lowering the US federal funds rate to 1% and decreasing home mortgage rates to release trillions in home equity.
Arthur Hayes also pointed out that Chinese President Xi Jinping is looking to escape the severe deflation currently affecting China. He believes that China typically resorts to money printing under significant economic strain and predicts that even if China eschews active monetary easing, it won’t obstruct the US from doing so.
Will Bitcoin’s Price Fall in 2026?
Under the “4-year cycle,” Bitcoin’s price is expected to start declining by the end of 2025. However, Hayes claims that making such predictions is challenging in today’s liquidity climate, thus he believes the 4-year cycle is unreliable this time.
Hayes is not the only one sharing this perspective. Other crypto analysts are echoing similar views. Bitwise CIO Matthew Hougan recently mentioned that the 4-year cycle is over and that the theory can be considered obsolete if Bitcoin’s price stays positive through 2026.
K33 Research, a crypto analytics firm, asserted that Bitcoin is now in a phase where its price is influenced by structural forces rather than just a narrow group of retail investors. Vetle Lunde, Head of Research at K33, added that if Grayscale incorporates staking into its Ethereum product, it might boost interest in the ETF.
He also indicated that a post-lockdown market could drive interest in altcoins, suggesting that Bitcoin’s price is likely to either stabilize or climb rather than decline.
