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Since its inception in 2009, Bitcoin has shown a stable four-year cycle. This cycle is driven by massive moves centered around the fall of Bitcoin, culminating in a breakout top the following year.
Since the 2024 curve, Bitcoin prices have trended higher, but none of the signs of a peak in 2025 have occurred, at least in the time frame consistent with the four-year cycle.
Below that explosive peak, the rest of the cryptocurrency market slowed down, as rising Bitcoin prices typically kick off altcoin season.
The end of the famous Bitcoin cycle?
with Bitcoin prices drop by 30% From their highs in early October, it became clear that the four-year price cycle has lost its validity.
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This is a logical development, as BTC is rapidly maturing as an asset class. Increased institutional interest also means that Bitcoin cycles will be more centered in economic cycles.
Investors have noticed a strong correlation between Bitcoin and global liquidity:
While he was there Strong correlation since the beginning of 2024This trend has also broken in recent months.
If this trend is confirmed, Bitcoin could jump higher – and even launch Altcoin season.
He said Michael Saylor Recently the four-year cycle is “dead”. Saylor sees a massive repricing coming soon, which may explain his rush this year to buy as much Bitcoin as possible.
However, liquidity is not the only factor.
Economic activity
Some investors today are turning to the relationship between the price of Bitcoin and the United States Purchasing Managers’ Index (PMI).
The PMI measures the health of the industrial sector and serves as a leading economic indicator.
When the PMI is above 50, it indicates expansion; Below 50 indicates contraction.
In theory, a strong PMI indicates economic growth, which could impact Bitcoin through several channels:
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- Strong PMI → Strong economy → Market risk sentiment → Greater appetite for speculative assets like Bitcoin
- Weak PMI → Economic concerns → Possible Fed easing → More liquidity → Possible support for Bitcoin
However, even tools like the PMI cannot act as a single guide to the cycle of Bitcoin and crypto.
Sometimes, Bitcoin is marketed as a “risky” asset (positively correlated with stocks and the strength of the economy).
Other times, they are marketed as a “risk-off” hedge (like digital gold during a period of uncertainty), and even move independently based on crypto-specific factors.
The data also shows that the relationship between Bitcoin and PMI is unstable and varies in different time periods.
Bitcoin often responds more strongly to signals Monetary policy (Federal decisions, liquidity conditions) compared to real economic indicators such as the Purchasing Managers’ Index.
When PMI appears to matter, it is usually through a general risk channel rather than a direct mechanical relationship.
If you are trying to use the PMI as a trading signal for Bitcoin, you will probably find it less reliable than following Fed policy, liquidity conditions, or specific crypto metrics. But economic growth probably won’t hurt – it can sometimes push Bitcoin higher even when monetary conditions are tight.
Morale – a factor that can lead to extremes
Cryptocurrencies, especially Bitcoin, lack traditional valuation pillars such as earnings, dividends, or cash flows.
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Without these basic metrics, pricing depends largely on what… He believes People believe that assets should have their value.
This provides space for the sense of being the main driver.
Studies show Crypto market behavior Consistently, social media activity, research trends, and news analysis have measurable predictive power for short-term price movements in ways that go beyond their impact on traditional assets.
The crypto market also has structural features that amplify sentiment, including a high participation of individuals (resulting in more emotional trading), 24/7 trading (without circular barriers to cooling sentiment), the availability of high leverage, and the rapid spread of information on crypto-specific social channels.
Cycles of fear and greed It can quickly become self-reinforcing.
But this is where it gets complicated: what seems like “pure sentiment” often involves assessments of underlying factors.
When investors are excited by the news of institutional adoption, is that sentiment based on the recognition that supply/demand balances have changed?
When macroeconomic issues push people towards Bitcoin as a hedge, sentiment is a transmission mechanism for macroeconomic factors.
During stable periods, you may see something like: 40% Macroeconomic conditions (Fed policy, inflation, dollar strength), 30% supply/demand fundamentals (adoption metrics, chain activity, halving cycles), and 30% sentiment/pure speculation.
During manic bull runs or panic crashes, 60-70%+ sentiment can dominate, temporarily overriding economic fundamentals and macro logic.
These are periods when asset prices deviate significantly from any rational valuation model. Investors who can recognize a period of sentiment are more willing to take advantage of these conditions.
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Academic studies that attempt to analyze cryptocurrency returns generally find that sentiment indicators explain 20-40% of price variation under normal circumstances, but this can increase significantly during extreme market phases.
It is noted that cryptocurrency markets exhibit much stronger “momentum” and “dependence” effects than traditional markets, which are often signs of sentiment trading.
The cryptocurrency market is probably best understood as sentiment driven in the short to medium term, with macro and supply/demand factors providing long term boundaries and trends.
Bring it all together
Obviously, there is no single signal or trend for investors to look at to determine Bitcoin cycles.
The growing economy should be good for Bitcoin prices. A declining economy should not be like this – unless there is a significant injection of liquidity into the system.
Individual indicators such as global liquidity, credit market conditions, business conditions and market sentiment play a role.
Outside of Bitcoin, individual digital projects working on real-world problems will rise or fall with their prospects.
Meme coins You’ll go up and down much faster – driven by the magic of the memes themselves.
But keep in mind, even as Bitcoin endures its four-year sell-off cycle, the basic concept remains.
As Bitwise Chief Investment Officer Matt Houghton said recently:
“The reason that the price of Bitcoin has risen about 28,000% in the last 10 years is because more and more people want the ability to store digital wealth in a way that is not managed by a corporation or a government.”
When Bitcoin moves again, altcoins will follow.
