Bitcoin (BTC) is currently at a crucial juncture in its cycle, displaying indications that it may be deviating from the expected patterns following halving events. Unlike previous cycles, where robust uptrends ensued after halvings, the current one has been marked by increased uncertainty. The market dynamics of Bitcoin are now being significantly influenced by broader macroeconomic shifts and the emerging presence of institutional players.
Unexpected elements such as Trump’s favorable stance towards crypto and the adoption of Bitcoin at the state level have introduced new variables into the mix. With these evolving dynamics, the pivotal question arises: has Bitcoin already reached its peak for this cycle? Or is there still potential for another surge beyond the $100,000 mark?
Has BTC Broken Away From Previous Cycles?
The ongoing Bitcoin cycle seems to be diverging from its predecessors, showcasing a distinct price trajectory compared to past halving cycles.
In previous instances, Bitcoin witnessed substantial uptrends at this stage of the cycle, notably during the 2012-2016 and 2016-2020 periods.
Yet, the current cycle saw a significant surge starting in October 2024 and December 2024, followed by a consolidation phase in January 2025 and a subsequent correction by late February.
This departure from the norm seen in earlier cycles, where Bitcoin continued to rally aggressively post-halving, implies that macroeconomic factors, shifts in market structure, and the increasing involvement of institutional investors may be reshaping Bitcoin's traditional cyclical patterns.
Unlike the speculative frenzies driven by retail investors in past halving events, Bitcoin is now viewed as a more mature asset class, which is influencing its price dynamics.
Another key observation is the diminishing intensity of Bitcoin’s price surges as cycles progress. The exponential spikes witnessed in the 2012-2016 and 2016-2020 cycles far surpassed those of the 2020-2024 cycle and the ongoing one.
While this scaling back is anticipated due to Bitcoin's expanding market capitalization, it also underscores the growing impact of institutional investors, financial institutions, and even governmental entities. In the long run, this trend is likely to bring about more stability and structured behavior in the market.
Despite these transformations, earlier cycles have also experienced periods of consolidation and correction before resuming their upward trajectory. If history repeats itself, this phase could represent a temporary reset before another upswing.
However, considering the evolving market landscape, this cycle may unfold differently, potentially characterized by less volatile fluctuations but sustained and gradual price appreciation, steering away from the explosive spikes of the past.
Signaling a Shift in Cycle Dynamics: Long-Term Holder MVRV
Bitcoin's Long-Term Holder (LTH) MVRV ratio vividly illustrates a trend of diminishing returns across successive cycles. In the 2016-2020 cycle, the LTH MVRV peaked at 35.8, indicating an extreme level of unrealized profits among long-term holders before distribution commenced.
By the 2020-2024 cycle, this peak had notably dropped to 12.2, illustrating a reduced overall multiple of unrealized gains despite Bitcoin achieving new all-time highs.
In the current cycle, the LTH MVRV has only reached a peak of 4.35 so far, suggesting that long-term holders have not experienced the same level of liquid profits as in prior cycles.
This consistent decline across cycles implies that Bitcoin's upward potential is contracting over time, aligning with the overarching trend of diminishing returns as the asset matures and market dynamics evolve. This data indicates that Bitcoin's cyclical growth phases are becoming less explosive, likely attributable to the growing influence of institutional investors and a more efficient market.
As the market cap expands, significantly greater capital inflows are needed to drive comparable percentage gains to those observed in earlier cycles.
While this trend might suggest that Bitcoin's long-term growth is stabilizing, it doesn't definitively signal that the cycle has peaked already.
Historical patterns indicate that previous cycles have encountered phases of consolidation before reaching peak levels. Moreover, institutional participation could usher in prolonged accumulation phases rather than sudden climactic peaks.
Nevertheless, if the trend of diminishing MVRV peaks persists, it could imply that Bitcoin's capacity to deliver extraordinary returns based on cycles is fading, hinting that this cycle might have passed its most aggressive growth phase.
Bitcoin's Prospects in the Long Term
Despite the variations in this cycle, experts maintain an optimistic outlook regarding Bitcoin's long-term future, particularly with the increasing acceptance at the state level.
Harrison Seletsky, director of business development at SPACE ID, conveyed to BeInCrypto:
"Anticipation was running high ahead of Friday's White House Crypto Summit, yet the aftermath was somewhat subdued. The market response lacked the anticipated enthusiasm as the US currently holds confiscated BTC without actively acquiring more. Nonetheless, there are ample reasons to remain upbeat beyond what the market reflects. The fact that President Trump signed an executive order for a crypto reserve - whatever its implementation may entail -- and the progress at the state level indicate promising signs. The passage of Texas Senate Bill 21 on the eve of the Summit enabling a state-controlled crypto reserve comprising Bitcoin and other digital assets is a significant development. A year ago, such advancements would have been unimaginable. Texas's actions could pave the way for other states and local jurisdictions globally to follow suit."
Nic Puckrin, founder of The Coin Bureau, shared with BeInCrypto that Bitcoin's short-term trajectory correlates with macroeconomic conditions. He highlighted that investors in the current cycle harbored unrealistic expectations concerning the Bitcoin crypto reserve.
The notion that the US government would procure billions of dollars' worth of new BTC, causing a supply shock, was gaining prominence. However, from an economic and political standpoint, such a move would have been infeasible.
It was unrealistic to envision Congress endorsing such a hefty purchase using taxpayers' money to invest in speculative assets. This misplaced anticipation catalyzed the recent corrections in prices.
Puckrin added:
"The recent crypto sell-off underscores the disparity between expectations and reality. The proposed reserve will only consist of crypto already within the US government's possession and won't involve purchasing additional BTC from the market. Furthermore, it's pertinent to note that neither crypto nor stock prices are the focal point of Trump's initiatives. He has even brushed off stock price declines as maneuvers by global actors. Concurrently, the evolving regulatory environment and the prospect of deeper integration with traditional financial infrastructures will cement crypto's significant role in the US financial arena. It's more constructive to acknowledge this progress rather than lament the transient downbeat backdrop."
Taking these factors into account, the ongoing cycle proves to be distinct from its predecessors. Hence, despite recent downturns, Bitcoin might not have reached its peak yet.
With new elements like institutional acceptance, Trump's stance on crypto, and geopolitical tensions influencing the scene, historical analogies may no longer provide a reliable guide. Unlike preceding cycles, Bitcoin's price movements are not conforming to a straightforward post-halving rally pattern.
Simultaneously, the uncertainty surrounding Bitcoin's trajectory is at an all-time high, with macroeconomic conditions, trade conflicts, and evolving US policies introducing greater intricacy. As Bitcoin integrates further into the global financial realm, its pricing reflects a blend of influences beyond the conventional halving cycles. While the future path remains ambiguous, indications suggest that the cycle is still in flux and not definitively concluded.