Bitcoin: Is the four-year cycle dead?

The End of Bitcoin’s Four-Year Cycle: Analysis of Strategic Implications for Mining Operations Introduction: Reassessing an Iconic Narrative Over the course of Bitcoin’s development, the “four-year cycle” theory has played a central role and is widely used as a key tool in predicting market highs and lows. The theory is that the "halving" event that occurs every four years - when the number of newly mined Bitcoins is cut in half every day - triggers an imbalance between supply and demand, which drives cyclical price fluctuations. However, there is now a growing consensus within the industry that this once reliable narrative is coming to an end. This summary aims to provide an in-depth analysis of the core drivers behind this shift and explore the profound strategic implications for Bitcoin miners and other industry stakeholders. -------------------------------------------------------------------------- 1.0 The Decline of the Four-Year Cycle Narrative Understanding why the four-year cycle theory is losing its persuasiveness is critical for investors and operators. This helps them adjust market expectations, avoid erroneous decisions based on outdated models, and make strategic layouts more accurately in the current market environment. Several key factors combine to undermine the validity of this traditional theory. * Insufficient data samples: From an empirical perspective, it is not methodologically rigorous to assert the existence of a solid four-year cycle based on just a few data points for an asset that has been around for less than two decades. Declaring a statistically certain cycle requires a longer time span and more data to support it. * The “hyperstition” effect wanes: Part of the effectiveness of the four-year cycle stems from a phenomenon called “hyperstition” — when a belief becomes a self-fulfilling prophecy when enough people believe it. However, this collective consensus is crumbling as an influx of new investors with little understanding of the field’s historical narrative emerges. New entrants lack a deep “belief” in historical cycles, which weakens their ability to realize themselves. * The supply shock of the halving is weakening: The impact of the halving event on market supply and demand dynamics is significantly declining. At this stage, the daily new supply of Bitcoin (approximately 450 coins) has become “irrelevant” compared with the huge demand from exchange-traded funds (ETFs), institutions and corporate treasury. The demand for the latter is often 5 to 10 times the new supply, which means that even if the supply is halved, its impact on the overall market will be far less than before. All in all, old cyclical drivers are being replaced by stronger macroeconomic forces, leading us to look away from Bitcoin’s endogenous mechanisms and toward the broader global financial environment. 2.0 New Drivers: The focus of strategic analysis of global liquidity cycles is shifting from endogenous halving events to exogenous global liquidity cycles. This is a key shift in understanding current and future market behavior. Global monetary policy, rather than Bitcoin’s own issuance schedule, has become the dominant force in market movements. * Historical case comparison: The market peak in November 2021 is in sharp contrast with the current market environment. The peak at that time coincided with the Federal Reserve's announcement that it would launch "the fastest interest rate hike cycle in history" and tighten global liquidity. Currently, the Federal Reserve has made it clear that it will cut interest rates to release liquidity. These two completely different macro backgrounds illustrate the decisive impact of monetary policy on asset prices. * General rise in asset prices: The current market presents a rare phenomenon: the prices of traditional safe-haven assets (such as gold and silver) and high-risk cutting-edge technology assets (such as quantum computing, "flying car" concept stocks) simultaneously hit record highs. This "U-shaped" asset performance suggests that price increases may not stem from the inherent cycle of a specific asset, but are a direct reflection of the decline in the purchasing power of the dollar (i.e., the "collapse of the base"). * New measurement: Rather than denominating it in dollars, Bitcoin can be benchmarked against gold, which provides a new perspective on value assessment. A few months ago, when Bitcoin's market cap was around $2 trillion, gold's market cap was $21 trillion. Today, the market value of gold has grown to approximately US$27 trillion. This development illustrates that Bitcoin is chasing an ever-moving “Big Brother” as a benchmark. This continued evolution of relative value demonstrates that Bitcoin’s growth potential is dynamic and ever-expanding, with value drivers extending beyond a simple four-year time period. In the context of macroeconomics becoming the dominant force, Bitcoin miners face unique challenges and opportunities, which requires them to conduct a profound review and adjustment of their operational strategies. 3.0 Strategic Imperatives for Bitcoin Miners While the halving’s impact on overall market prices may be waning, it poses a direct and fundamental challenge to miners’ revenue models. The halving of block rewards directly cuts half of miners’ core revenue sources, forcing them to make forward-looking strategic adjustments to ensure long-term survival and profitability. * Forward-looking CapEx An old adage aptly describes the miners’ situation: “You can’t control the wind, but you can adjust the sails.” Miners’ capex decisions today, such as investing in new mines, must take into account the impact of future halving events years in advance. This is an ongoing balancing process that requires careful trade-offs between current investments and future revenue expectations. * Asset allocation trade-offs Miners face an ongoing strategic choice: "Buy mining machines for mining" or "Buy spot Bitcoin directly"? The two strategies represent different judgments of future value. The former is an investment in network utility and future transaction fee revenue growth, while the latter is a direct bet on the appreciation of the asset price itself. Miners must dynamically balance their capital allocation between the two. * Evolution of revenue model Transaction fees are becoming an increasingly important component of miners’ revenue model. A very convincing example is that on the day of the last halving, due to a surge in on-chain transaction activity, the value of on-chain transaction fees reached five to seven times the block subsidy, making that day the “highest revenue day ever.” This is not just a one-time record, but a critical "foreshock" that previews the future of miners' income models. As network utility and transaction volume continue to grow, miners’ business models are expected to shift from relying on ever-dwindling block rewards to capturing value by operating the future “SWIFT network on Bitcoin.” The future of miners will depend on their ability to adapt to the new environment and the development and effectiveness of the Bitcoin network itself. 4.0 Conclusion: Navigating a New Paradigm Comprehensive analysis suggests that the days of Bitcoin’s four-year cycle as a reliable forecasting tool may be over. The market is entering a new paradigm dominated by macroeconomic forces and driven by the utility of network fundamentals. The following are the core conclusions of this analysis: 1. The dominance of macroeconomics The global liquidity cycle has replaced the endogenous halving event as the most critical factor affecting the price trend of Bitcoin. Future market analysis must place Fed policy and global capital flows at the core. 2. Miners’ strategic transformation For miners, the strategic focus must shift from passively responding to the halving of block rewards to proactively creating long-term value by improving network utility and capturing transaction fees. Its role is changing from a simple "issuer" of assets to an "infrastructure service provider" that ensures network security, operating and maintaining this core financial "toll road." 3. A sign of industry maturity. The transcendence of the four-year cycle narrative indicates that the Bitcoin industry is maturing. Its value drivers are increasingly derived from its true utility as a financial network and macroeconomic realities, rather than historical self-fulfilling prophecies. This shows that Bitcoin is integrating into the global financial system as a more mature asset class.