Justin Arzadon
5 minutes reading time
For over a decade, Bitcoin has followed a pattern of four-year cycles. These cycles, tied to Bitcoin’s unique halving mechanism, have been associated with significant price movements, often driving the cryptocurrency to new all-time highs.
Bitcoin halvings, which occur roughly every four years, halve the rewards miners receive for adding new blocks to the blockchain. This built-in scarcity mechanism can lead to price increases if market conditions remain stable. However, these cycles have also been marked by subsequent corrections, with Bitcoin’s value historically pulling back by 50-80% from its peaks.
The most recent halving occurred on April 19, 2024, reducing block rewards from 6.25 to 3.125 Bitcoin. Looking ahead, the next halving is anticipated in April 2028.
But as the market matures and grows, some investors and analysts are asking: Are these cycles still relevant?
Source: What is a Bitcoin halving, River.com
Mainstream adoption
It was only a year ago, in January 2024, that Bitcoin ETFs were finally approved, with more than 10 ETFs entering the market. This provided investors with a way to gain exposure without relying on lesser-known crypto exchanges or managing self-custody wallets – avoiding the risks of wallets being hacked or lost private keys.
The ETFs have been a resounding success, surpassing even the most bullish predictions.
As of January 1, 2025, the top five ETFs in the US alone hold over USD$126 billion, with BlackRock’s IBIT in the number one spot at $47.7 billion1. With more investors participating and easier access to Bitcoin, cryptocurrency is expected to become less volatile, as a larger pool of buyers may step in during significant price drawdowns.
Lowering of regulation barriers for crypto
Republican Mark Uyeda has been named acting chair of the SEC. On the second day for the Trump administration, efforts to lower regulatory barriers for crypto had already begun. A “crypto task force” was announced, aimed at “developing a comprehensive and clear regulatory framework for crypto assets”. This task force will be responsible for developing a clear set of rules and addressing issues related to the registration of coins2.
On 5th June 2026, it is expected that former SEC Commissioner Paul Atkins will assume the permanent chair role. Known for his pro-business stance and cryptocurrency support, Atkins contrasts with former SEC Chair Gary Gensler, whose regulation-by-enforcement approach reportedly cost the crypto industry over $400 million in legal defences and stifled jobs, innovation and investment. This figure, based on a sample of Blockchain Association members, reflects just a fraction of the industry’s losses3.
We are already starting to see that the industry will have greater regulatory clarity and simpler guidelines. This should encourage capital flow and innovation in lieu of overregulation. The US is also attempting to become a leader in the crypto industry rather than driving innovation abroad. The price of Bitcoin and other cryptocurrencies have surged since Trump’s election, with Bitcoin surpassing $100,000 for the first time in late November.
Impending supply shock
About 450 BTC are mined daily. According to on-chain analysis firm CryptoQuant, the total amount of Bitcoin available for sale as at 20 December 2024 was at its lowest level since October 2020, and demand is growing at a monthly rate of 228,000 Bitcoin since September4.
In addition, accumulator addresses – wallets that consistently buy Bitcoin but have never sold any – are increasing their holding at a record-breaking pace, according to Binance5. And you have Microstrategy, the world’s largest corporate holder of bitcoin with 461,000 tokens as at 23rd January 2025, announcing a “21/21 Plan” to raise $46 billion via equity and fixed income securities to buy even more Bitcoin6.
Demand is being absorbed by new investors through ETFs and other funds, while existing investors continue to accumulate. Meanwhile, state governments and corporations are starting to purchase Bitcoin with the intention of holding it on their balance sheets. With most Bitcoin holders currently in profit, reduced selling prices could drive prices higher. And with three more years until the next halving, the current cycle has already delivered gains of 5.75x since the previous cycle’s lows of $16,000 in November 2022. Much higher prices in the short-term could still be in the cards before any significant pullback.
Bitcoin in 2025
Of course, investors should not get ahead of themselves when it comes to allocations to this asset class. Digital assets remain highly volatile and as a result should only form a very small part of an overall portfolio. Investors should generally look to build a diversified portfolio core around Australian and international equities as well as bonds. Depending on their circumstances, investors might then consider including a small allocation to digital assets within the alternatives component of their portfolio.
Bitcoin itself has become a significant investable asset. The total value of all Bitcoins in existence currently sits at US$1.88 trillion, just behind the US2.3 trillion market capitalisation of Amazon7. Barriers to entry have collapsed, raising the possibility that the four-year cycle will no longer hold true.
Instead, Bitcoin prices could become more influenced by macroeconomic factors, such as the interest rate cycle, global economic performance and the pace of adoption. If the four-year cycle does persist for now, the volatility or percentage of the drawdown may be more muted compared to past cycles.
All of which points to Bitcoin and cryptocurrencies maturing while continuing to bring the unexpected.
Crypto-assets are highly speculative in nature and should be considered very high risk. Investment in crypto-assets may only suit investors with a very high tolerance for risk and the capacity to absorb a rapid loss of some of their investment.
Sources:
1. Bitcoin ETF Tracker, as of 10 March 2025, https://blockworks.co/bitcoin-etf
2. Trump’s SEC launching ‘crypto task force’ to develop clear regulations for industry, Jeff Cox, CNBC, published 21 January 2025, https://www.cnbc.com/2025/01/21/trumps-sec-launching-crypto-task-force-to-develop-clear-regulations-for-industry.html
3. Blockchain Association, 31 October 2024, https://theblockchainassociation.org/chair-genslers-sec-regulation-by-enforcement-regime-cost-crypto-industry-more-than-400-million-dollars-and-counting/
4. Bitcoin market experiencing supply shock: CryptoQuant, Tanzeel Akhtar, Cryptonews, published 20 December 2024, https://cryptonews.com/news/bitcoin-market-experiencing-supply-shock-cryptoquant/
5. Bitcoin wallets holding at least $100 near all-time highs: Binance, Mehab Qureshi, Cointelegraph, published 26 January 2025, https://cointelegraph.com/news/bitcoin-wallets-holding-100-near-all-time-highs-binance
6. Microstrategy Shareholders clear the way for even more Bitcoin buys, Mat Di Salvo, decrypt, published 22 January 2025, https://decrypt.co/302144/microstrategy-shareholders-clear-way-bitcoin-buys
7. Top Assets by Market Cap, Companiesmarketcap.com, As of 10 March 2025, https://companiesmarketcap.com/assets-by-market-cap/
