Key insights
The halving-triggered pricing trend that was pivotal in Bitcoin’s early stages is diminishing. As more BTC is introduced, each halving exerts a smaller proportional effect.
Grayscale claims that the current Bitcoin market is more influenced by institutional investment rather than the retail speculation that characterized previous cycles.
In contrast to the dramatic price spikes of 2013 and 2017, Bitcoin’s recent price growth has been steadier. Grayscale indicates that the following 30% decline is typical for a bull-market adjustment.
Market dynamics are increasingly influenced by expectations around interest rates, bipartisan regulatory movements in the US, and Bitcoin’s role in institutional investment portfolios.
Since its inception, Bitcoin’s (BTC) price trajectory has been predictable, particularly during halving events that halve new supply and induce scarcity. Historically, this pattern has been succeeded by sharp price rises and subsequent corrections, forming what is commonly known as the four-year cycle, which has heavily swayed investor outlooks since Bitcoin’s creation.
Recent research from Grayscale, supported by on-chain data from Glassnode and insights from Coinbase Institutional, suggests a departure from this well-known model for Bitcoin’s price movement. The study shows that Bitcoin’s pricing in the mid-2020s may increasingly be driven by institutional demand and broader economic conditions.
This article delves into Grayscale’s perspective that the four-year cycle framework is losing its effectiveness in fully accounting for price dynamics. It examines Grayscale’s insights on Bitcoin cycles, corroborating evidence from Glassnode, and explores the rationale behind why some analysts still advocate for the four-year cycle.
The classic four-year cycle
Bitcoin halvings, occurring roughly every four years, cut the issuance of new BTC by 50%. Historically, these reductions in supply have consistently foreshadowed significant bull markets:
2012 halving — peak in 2013
2016 halving — peak in 2017
2020 halving — peak in 2021.
This trend emerged from a combination of scarcity mechanisms and the psychology of investors. Retail traders primarily drove demand, with limited supply leading to significant buying pressure.
However, with a growing share of Bitcoin’s fixed supply of 21 million already circulated, each halving now has a diminishing influence. This raises doubts about the sustainability of supply shocks as a dominant force in the cycle.
Did you know? Since 2009, halvings have occurred in 2012, 2016, 2020, and 2024. Each event has permanently reduced Bitcoin’s inflation rate and approached zero annual issuance while reinforcing the narrative of BTC’s digital scarcity among long-term holders and analysts.
Grayscale’s evaluation of Bitcoin cycles
Grayscale has determined that the current market contrasts greatly with previous cycles in three key aspects:
Institutional demand superseding retail frenzy
Earlier cycles relied heavily on substantial purchases from individual retail investors. In contrast, today’s capital influx is markedly influenced by exchange-traded funds (ETFs), corporate reserves, and professional investment firms.
Grayscale notes that institutional vehicles gather patient, long-term capital, differing significantly from the fast-paced, emotion-fueled retail trading experienced in 2013 and 2017.
Lack of a rally before the downturn
Bitcoin’s peaks in 2013 and 2017 were characterized by extreme unsustainable surges followed by steep declines. In contrast, Grayscale highlights that the price surge in 2025 has been more measured, with the subsequent 30% drop resembling a normal bull-market correction rather than the onset of a multi-year bear market.
Macro conditions outweighing halvings
In Bitcoin’s formative years, price fluctuations seemed largely unaffected by external economic trends. By 2025, Bitcoin is increasingly responsive to liquidity conditions, fiscal policies, and institutional risk appetite.
Key factors highlighted by Grayscale include:
Predicted shifts in interest rates
Bipartisan support for US crypto legislation is growing
Bitcoin’s role within diversified institutional portfolios.
These macroeconomic aspects significantly influence the market, independent of the halving schedule.
Did you know? When block rewards are halved, miners earn fewer BTC for the same effort. This may lead miners with higher operational costs to temporarily halt operations, resulting in short-term dips in hashrate before the network stabilizes.
Glassnode data illustrating deviations from traditional cycle patterns
Glassnode’s on-chain analysis indicates that Bitcoin’s price has deviated from historical behavior:
Long-term holder supply is at record levels: Long-term holders command a larger share of the circulating supply than ever, limiting the amount of Bitcoin available for trading, thus reducing the supply-shock effects usually seen during halvings.
Decreased volatility despite corrections: Even with notable price corrections in late 2025, the realized volatility remains significantly lower than observed during previous cycle turning points, suggesting that the market is absorbing large movements more effectively, likely due to heightened institutional engagement.
ETFs and custodial demand are changing supply distribution: On-chain data shows increasing transfers to custody wallets linked to ETFs and institutional products. The coins in these wallets typically remain inactive, lowering the circulation of Bitcoin in the market.
A more adaptive, macro-connected Bitcoin cycle
Grayscale argues that Bitcoin’s price dynamics are gradually disengaging from the four-year model and are becoming increasingly influenced by:
Stable long-term institutional capital
Improving regulatory frameworks
Global macroeconomic liquidity trends
Sustained demand linked to ETFs
An expanding base of dedicated long-term holders.
Grayscale emphasizes that while corrections will remain a reality and can be severe, they do not automatically indicate the commencement of a prolonged bear market.
Did you know? After each halving, Bitcoin’s inflation rate decreases sharply. Following the 2024 halving, annual supply inflation dropped below that of many major fiat currencies, enhancing its comparison with scarce commodities such as gold.
Why some analysts maintain faith in halving patterns
Some analysts, frequently referencing Glassnode’s historical cycle analysis, continue to hold that halvings are the principal driving force. They contend that:
The halving is an essential and irretrievable supply reduction.
Long-term holder actions are still concentrated around halving events.
Retail-driven trading could emerge again even as institutional engagement expands.
These contrasting views highlight that the discussion is not resolved. The arguments regarding Bitcoin’s departure from the four-year cycle illustrate an evolving market landscape.
A developing framework for comprehending Bitcoin
Grayscale’s argument against the predominance of the traditional four-year cycle relies on distinct structural changes, including increased institutional involvement, deeper integration with global macroeconomic factors, and enduring shifts in supply dynamics. Supporting evidence from Glassnode and Coinbase Institutional confirms that the contemporary Bitcoin market operates under more complex influences than the retail-focused cycles of yesteryear.
Consequently, analysts are increasingly de-emphasizing rigid halving-centric timing models. Instead, the focus is shifting toward on-chain metrics, liquidity trends, and indicators of institutional flow. This more nuanced perspective better reflects Bitcoin’s ongoing evolution from a niche digital asset to a recognized segment of the global financial system.
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