Cryptocurrencies, particularly bitcoin, have long been defined by their dramatic four-year price cycles. These cycles, driven by bitcoin’s halving events and amplified by market speculation, have seen meteoric rises followed by gut-wrenching crashes. But as the crypto market matures the narrative may be shifting.
With institutional interest soaring, regulatory clarity improving and new investment products such as spot bitcoin and ether exchange traded funds (ETFs) reshaping access, this bull market may chart its own course, untethered from historical norms.
Bitcoin’s early price cycles were legendary. In its first two prices skyrocketed more than 500 times from their lows in just a couple of years. By the third and fourth cycles gains moderated to 100 times and 20 times, signalling a gradual maturation. Today, after bottoming out at $16,000 in November 2022, bitcoin has climbed by roughly six times — significant, yet far more restrained. The question is whether this is a sign of diminishing returns or a reflection of a more stable, institution-driven market.
Historically, bitcoin’s halving events — the quadrennial supply cuts that reduce the issuance of new coins — have served as the ignition for bull markets. These supply shocks, combined with speculative frenzy, created the dramatic peaks and troughs we’ve come to expect. But as bitcoin integrates into traditional financial markets and liquidity deepens, the influence of these halvings may wane, potentially smoothing out the wild rides of the past.
Bull run
Today’s market shows hallmarks of being in the middle stages of a bull run. One key indicator, the market value to realised value ratio, suggests bitcoin still has room to grow. Now at 2.6, this metric remains well below the peaks of past cycles, where it exceeded 4. Another measure, on-chain activity known as HODL Waves, shows that 54% of bitcoin’s supply has moved in the past year, still shy of the 60% typically seen at market tops.
Even bitcoin miners, who often sell when prices peak, seem to be holding steady. The miner cap to thermocap ratio, which measures miners’ profitability, currently sits at 6, well below the historical sell-off trigger of 10.
These indicators paint a picture of a market with more gas left in the tank.
Beyond bitcoin, the broader crypto market offers clues about where we stand. In past cycles bitcoin’s dominance — the share of total crypto market value — declined at about the two-year mark of a bull market as investors rotated into alt-coins. That pattern seems to be repeating, with bitcoin’s dominance slipping recently as funds flow into smaller, more speculative assets.
Futures markets tell a similar story. Open interest in alt-coin perpetual futures — contracts that allow traders to bet on price movements — reached $54bn before a wave of liquidations trimmed speculative positions. While this suggests some froth in the market, demand for leverage remains high, signalling that investors are still hungry for upside.
Institutional tailwinds
The approval of spot bitcoin and ether ETFs in the US has been a game-changer. These funds have already attracted billions in inflows, providing mainstream investors with an easy, regulated way to gain crypto exposure. More importantly, they signify a shift in perception: crypto is no longer a fringe asset but a legitimate component of diversified portfolios.
Regulatory clarity is also improving. With a new US Congress potentially prioritising crypto oversight, the industry could gain the legal framework it needs to thrive. For years regulatory uncertainty cast a shadow over crypto’s future. Now, clearer rules could unlock a flood of institutional capital, further anchoring digital assets in the global financial system.
Crypto doesn’t operate in a vacuum. Global macroeconomic conditions, such as central bank policies, inflation trends and geopolitical stability, are key drivers. Bitcoin’s correlation with equities and its growing reputation as “digital gold” make it sensitive to shifts in risk appetite and monetary policy.
The current macro environment offers a mixed bag. While easing inflation and potential interest rate cuts are bullish, lingering geopolitical tensions and economic uncertainty could test investors’ resolve. Yet bitcoin’s fixed supply and decentralisation make it a unique hedge in a world of fiat currency instability, potentially boosting its long-term appeal.
If history is any guide, this bull market could extend into 2025. However, the maturing market may not follow the predictable boom-and-bust patterns of the past. Institutional participation, coupled with increased liquidity and more subdued retail speculation, suggests a smoother trajectory.
That said, risks remain. Regulatory overreach, a sudden shift in macroeconomic conditions or speculative excess in alt-coins could derail the market. But, for now, bitcoin’s fundamentals — rising adoption, network security and growing integration into traditional finance — provide a strong foundation.
Cryptocurrencies have come a long way since bitcoin’s inception in 2009. No longer the Wild West of finance, the market is maturing into a more stable and institutionalised asset class. While echoes of the past remain, the future may look very different. For investors this is not only about riding cycles, but also about navigating an evolving market with the tools and insights needed to stay ahead.
As we enter this new phase one thing is clear: the crypto story is far from over. The four-year cycle may fade, but the promise of blockchain technology and digital assets continues to capture the imagination — and portfolios — of the world.
• Muchena is founder of Proudly Associated and author of “Artificial Intelligence Applied” and “Tokenized Trillions”.
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