Bitcoin four-year cycle breaks as institutional crypto flows take over
Institutional flows, derivatives and treasury-company buying are weakening the market power of Bitcoin’s programmed supply shocks
Crypto’s old four-year rhythm is losing its grip as digital assets move from a retail-led Bitcoin market into a broader institutional asset class shaped by liquidity, derivatives and balance-sheet flows.
The change does not mean cycles have disappeared. It means the old calendar built around Bitcoin halvings can no longer explain how the market rises, falls or allocates risk.
“The four-year cycle is an artifact of an early market structure,” Anatoly Crachilov, chief executive and founding partner of Nickel Asset Management, said. “The whole narrative emerged from the early days when the market was dominated by one single asset.”
He said there was a mechanical supply shock coming every four years, the whole market was retail-driven and there was very limited institutional balance-sheet participation.
“The cycle has given way to regime,” he added. “Regime is defined by liquidity and balance-sheet provision, not by a mechanical four-year calendar.”
That marks a significant shift for investors who still treat Bitcoin as if it were governed mainly by its programmed supply schedule. In earlier markets, the halving shaped sentiment because a large cut in fresh supply hit a thinner, more speculative market.
Today, crypto has become a multi-asset market. Bitcoin remains the reference point, but it is no longer the only force setting the tone for the entire asset class.
The price history underlines that volatility:
• Bitcoin traded near US$38,000 in May 2021.
• It peaked near US$67,500 in November 2021.
• It fell below US$20,000 in 2022.
• It rose above US$100,000 in late 2024.
• It topped US$125,000 in October 2025, then slid in early 2026.
• It stood at about US$78,335 on May 16, 2026.
Institutional flows, derivatives positioning, treasury-company buying and macro liquidity now play a larger role. Digital assets are also increasingly exposed to the same forces that affect other risk assets, including interest rates and balance-sheet capacity.
Yves Choueifaty, president and chief investment officer of TOBAM, said the historical cycle was real. Bitcoin tended to peak about 18 months after each halving, then fall toward a bottom roughly 24 to 36 months later.
But investors must separate past correlation from future causation. The drivers that made the cycle look mechanical are weakening as the market becomes deeper, more liquid and more complex.
In Choueifaty’s view, earlier bull markets often contained the seeds of their own decline. When momentum strengthened, traders looking for higher beta sold some Bitcoin and bought more fragile tokens.
More mature derivatives and listed vehicles now give investors other ways to increase exposure. Instead of relying mainly on fragile tokens to chase beta, they can use options, treasury companies and other instruments.
That turns the debate from a simple question about whether the Bitcoin cycle is dead into a more useful question for allocators: which liquidity regime are they entering, and who controls the marginal flow of capital?
Halving loses force
The comments were made in London during “Crypto’s Four Year Cycle: Is It Dead?”, a panel at Digital Assets Forum 2026, an event organized by European Blockchain Convention. The discussion was moderated by Stuart MacDonald, chairman of Level III Capital.
The clearest change is the declining power of Bitcoin’s halving. It still matters to market psychology, but several panelists said its direct supply effect has become less important.
“At some stage in the early days, it was a significant part of the daily supply,” Crachilov said. “But now, mathematically, it is completely irrelevant. It is completely dwarfed by ETF [exchange-traded fund] flows, basis trades and treasury acquisitions.”
The reason is partly built into Bitcoin’s design. Each halving reduces new issuance by a smaller absolute amount than the previous one. As trading volumes and institutional flows grow, the new supply shock becomes a smaller part of the market.
“By definition, it is a halving,” Choueifaty said. “The impact was halved every four years. After a series of divisions by two, the remainder is negligible compared with what it used to be in the past.”
Bradley Duke, managing director and head of Europe at Bitwise, said the numbers show why the old model is breaking down. The latest halving created a deficit of about 165,000 Bitcoins entering circulation compared with the previous year.
Digital asset treasury companies bought more than 702,000 Bitcoin in 2025, more than four times the deficit.
“It is no surprise that this four-year cycle is breaking down,” Duke said. “The halving cycle is becoming less important in a scenario where Bitcoin is so much more heavily traded and has an investor base that is much more diverse and sophisticated.”
Options reshape crypto
Derivatives are also changing the shape of the market. Bitcoin’s capital markets have become more sophisticated, with options open interest at about US$60 billion, above the roughly US$52 billion in futures open interest.
“This really is about maturation of the market for Bitcoin,” Duke said. “This is about Bitcoin growing up. It is bootstrapping itself to become a macro asset for the long term.”
Crachilov said the balance between futures and options matters because it points to different investor behavior. Futures often reflect short-term directional trades, particularly in highly leveraged perpetual swaps.
“Nobody goes into a 100-times leveraged perpetual swap to express a view for the next five years,” he said. “Generally, this is for the next hour or the next couple of days.”
Options suggest a more institutional market. They are commonly used for hedging, downside protection and portfolio construction, rather than only for quick directional bets.
“If options open interest suddenly rises sustainably above futures, that means there are different players behind that,” he said. “Generally, that will be an indication of proper institutional capital, which is not just betting on direction but hedging away risk.”
Gold’s old advantage
Bitcoin’s maturation has not yet made it a full substitute for gold in periods of stress. Duke said that recent risk-off markets showed investors still turned to gold rather than Bitcoin when seeking a defensive asset.
“Gold has been around for literally thousands of years,” he said. “It has been a safe-haven asset. It has been a protection against debasement.”
The difference reflects investor behavior as much as technology. Large allocators are still at different stages of education and conviction, so Bitcoin’s safe-haven role will take time to develop.
Duke compared Bitcoin with an asset that can lift returns in rising markets, while gold remains more useful as a defensive cushion when markets fall.
“When markets are going down, gold is a better cushion,” Duke said. “When markets are going up, Bitcoin can boost the performance of that portfolio.”
Choueifaty challenged the assumption that gold is unquestionably more reliable. Gold is difficult to verify properly, especially when used as collateral in financial transactions.
“Gold is not auditable,” Choueifaty said. “People used to criticize Bitcoin by saying it is virtual. In fact, with the gold that is traded in the market, it is much more virtual because nothing has ever been audited.”
Matthew Le Merle, managing partner and chief executive of Fifth Era, said the more important question is whether digital assets can keep moving toward mainstream adoption despite volatility. Fifth Era is an early-stage investor in digital asset companies, including Bitwise, Coinbase, Kraken, Tether and Circle.
“We are about to go through an inflection point in adoption,” Le Merle said. “We have about 500 million digital wallets. We are expecting another 3 billion or so in the next two or three years, as the mass market begins to use digital asset products in their everyday lives.”
Uncertainty could delay adoption if consumers and institutions wait longer to open wallets or use digital asset products. For digital asset platforms, this could affect future cash flows and company valuations.
Developer attention is another constraint. The blockchain sector still relies on a limited pool of elite engineers, many of whom could also work in artificial intelligence (AI).
Le Merle said the industry must also keep top technical talent focused on blockchain rather than losing it to AI. There are only a few thousand top-tier blockchain developers worldwide, and many of them could also work on AI systems.
Francesco Filia, founder and chief executive of Fasanara, said the market should not reduce the entire asset class to Bitcoin’s latest price move. Volatility, liquidations and technical trading conditions can distort short-term signals.
“There is a world beyond the price of Bitcoin,” Filia said. “It acts as the representative for the asset class and the frontrunner. But you can do a lot of real-world applications.”
Those applications include market-making, arbitrage, cross-exchange basis trades and the tokenization of real-world assets. The next phase of digital assets may depend less on proving that a four-year cycle still works and more on building infrastructure that can support everyday financial use.