Grayscale’s Insight: Why Bitcoin Could Bypass the 4-Year Cycle in 2025

Key takeaways

• The Bitcoin pricing pattern influenced by halving events, which characterized its early history, is diminishing in strength. As more BTC is introduced into the market, the impact of each halving becomes relatively smaller.

• Grayscale reports that the current Bitcoin market is increasingly driven by institutional investment rather than the retail speculation that characterized previous cycles.

• In contrast to the dramatic price surges of 2013 and 2017, Bitcoin’s recent price increase has been more moderated, with Grayscale noting that the following 30% decline resembles a standard bull-market correction.

• Factors like interest-rate expectations, bipartisan US regulatory support, and Bitcoin’s integration into institutional portfolios are increasingly shaping market dynamics.

Since its inception, Bitcoin’s (BTC) price has adhered to a predictable pattern characterized by a programmed halving event that reduces supply and creates scarcity. This has often led to sharp price increases followed by corrections, a pattern known as the four-year cycle, which has significantly shaped investor expectations since Bitcoin’s earliest days.

Recent analysis from Grayscale, supported by on-chain data from Glassnode and market insights from Coinbase Institutional, proposes a different outlook on Bitcoin’s price trajectory. It suggests that Bitcoin’s price action in the mid-2020s may be moving away from this traditional model, with movements driven more by institutional demand and broader economic factors.

This article examines Grayscale’s perspective that the traditional four-year cycle framework is losing its capacity to fully explain price movements. It elaborates on Grayscale’s analysis of Bitcoin cycles, bolstered by evidence from Glassnode, and discusses why some analysts still assert that Bitcoin will adhere to the four-year cycle.

The traditional four-year cycle

Bitcoin halvings occur roughly every four years, halving the issuance of new BTC by 50%. Historically, these supply reductions have consistently preceded major bull markets:

• 2012 halving — peak in 2013

• 2016 halving — peak in 2017

• 2020 halving — peak in 2021.

This pattern emerged from both the inherent scarcity mechanism and investor psychology, where retail traders primarily drove demand, and reduced supply resulted in significant buying.

However, as a larger proportion of Bitcoin’s fixed supply of 21 million is already in circulation, each halving has a diminishing relative impact. This raises questions about whether supply shocks can continue to dominate the cycle.

Did you know? Since 2009, halvings have occurred in 2012, 2016, 2020, and 2024. Each one permanently decreased Bitcoin’s inflation rate and brought annual issuance closer to zero while reinforcing BTC’s digital scarcity narrative among long-term holders and analysts.

Grayscale’s assessment of Bitcoin cycles

Grayscale has determined that the current market environment significantly differs from past cycles in three key areas:

Institutional-focused demand over retail speculation

Previous cycles relied heavily on buying from individual investors on retail platforms. Today, capital flows are increasingly influenced by exchange-traded funds (ETFs), corporate balance sheets, and professional investment funds.

Grayscale notes that institutional vehicles tend to attract patient, long-term capital, contrasting with the rapid, emotion-fueled retail trading seen in 2013 and 2017.

Absence of a preceding rally before drawdowns

The peaks of 2013 and 2017 were characterized by extreme, unstable price gains followed by crashes. In 2025, Grayscale has noted, the price increase has been much more stable, and the subsequent 30% drop resembles a typical bull-market correction rather than the commencement of a multi-year bear market.

Macro environment becomes more influential than halvings

In Bitcoin’s earlier days, price movements were largely unaffected by global economic trends. By 2025, Bitcoin has become responsive to liquidity dynamics, fiscal policies, and institutional market sentiment.

Key determinants mentioned by Grayscale include:

• Expected adjustments in interest rates

• Increasing bipartisan advocacy for US crypto regulation

• Bitcoin’s incorporation into diverse institutional portfolios.

These macro factors influence the market independent of the halving schedule.

Did you know? When block rewards are halved, miners receive fewer BTC for the same effort. This may lead miners facing higher costs to temporarily suspend operations, often resulting in short-term dips in hashrate before the network stabilizes.

Glassnode data indicating a departure from classic cycle patterns

Glassnode’s on-chain analysis reveals that Bitcoin’s price has diverged from historical norms:

• Long-term holder supply is at unprecedented levels: Long-term holders control a greater share of the circulating supply than ever. Ongoing accumulation limits the Bitcoin available for trading, diminishing the supply-shock effect typically associated with halvings.

• Reduced volatility despite corrections: Although notable price corrections occurred in late 2025, realized volatility has stayed well below the levels observed during previous cycle transitions, suggesting that the market is managing significant fluctuations more effectively, often as a result of increased institutional engagement.

• ETFs and custodial demand altering supply distribution: On-chain data indicates an increasing number of transfers into custody wallets associated with ETFs and institutional products. Coins in these wallets typically remain inactive, reducing the amount of Bitcoin readily available for market circulation.

A more adaptable, macro-linked Bitcoin cycle

Grayscale posits that Bitcoin’s price dynamics are gradually becoming detached from the four-year model and responding more to:

• Consistent long-term institutional investment

• Progressing regulatory landscapes

• Global macroeconomic liquidity conditions

• Continual ETF-related demand

• An expanding base of committed long-term holders.

Grayscale emphasizes that while corrections are inevitable and can be significant, they do not necessarily indicate the beginning of a protracted bear market.

Did you know? Following each halving, Bitcoin’s inflation rate decreases sharply. After the 2024 halving, annual supply inflation fell below many significant fiat currencies, enhancing its comparison to scarce commodities like gold.

Why some analysts still maintain faith in halving patterns

Certain analysts, often referring to Glassnode’s historical cycle overlays, continue to assert that halvings remain a crucial driver. They argue that:

• The halving represents a fundamental and irreversible supply reduction.

• Activity from long-term holders continues to cluster around halving events.

• Retail-driven activity may resurface even as institutional participation continues to grow.

These contrasting viewpoints indicate that the debate is far from resolved. Arguments and counterarguments regarding Bitcoin’s adherence to the four-year cycle reflect a continuously evolving market.

An evolving framework for comprehending Bitcoin

Grayscale’s argument against the supremacy of the traditional four-year cycle is grounded in clear structural changes. These include increasing institutional engagement, deeper integration with global macro conditions, and persistent changes in supply dynamics. Complementary data from Glassnode and Coinbase Institutional affirm that today’s Bitcoin market operates under more sophisticated influences than the retail-centric cycles of the past.

Consequently, analysts are placing less significance on rigid halving-based timing frameworks. Instead, they are concentrating on on-chain metrics, liquidity trends, and indicators of institutional flow. This more nuanced perspective better aligns with Bitcoin’s ongoing transition from a niche digital asset to a recognized component of the global financial landscape.