Investment Giant Bitwise Reveals: “Bitcoin Cycles Are No Longer 4 Years, They’re 2 Years” – Here Are the Details

Bitwise analyst Jeff Park argued that Bitcoin’s (BTC) historically adopted 4-year halving cycle is now obsolete and the market is transitioning into a new “2-year price cycle” with the transition to the institutional era.

According to Park, Bitcoin's future price movements will no longer be the product of miner economics and supply shocks, but rather ETF-based fund flows and professional investor psychology.

Park noted that the old cycle was shaped by miners' costs and halving-induced supply contractions. He noted that this, combined with media attention, retail investor FOMO, and leveraged bull markets, created a self-perpetuating psychological cycle. However, the analyst argued that this mechanism “belongs to the old Bitcoin,” saying that supply is becoming less of a factor. Therefore, Bitcoin prices are now determined by decisions from a wider range of factors.

The new cycle, according to Jeff Park, is driven by performance pressures from fund managers and the structural impact of institutional inflows through ETFs. Park noted that in modern asset management, investors primarily evaluate their returns based on year-end performance, noting that hedge funds and ETF managers often act based on P&L results dated December 31, and that during periods of increased volatility, exiting Bitcoin, the riskiest position, becomes more likely. Therefore, for institutional investors, the inability to maintain returns over time, or even a prolonged period where Bitcoin remains flat, leads to selling pressure.

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The analyst emphasizes the importance of capital flow effects on prices and notes that the ETF era has created a new behavioral pattern for Bitcoin. For example, while the majority of capital injected into ETFs in 2024 will be profitable, most funds injected in 2025 will be at a loss, and these fund managers will either have to wait for a larger rally or consider taking a loss to meet their performance targets. He states that this situation has created a critical inflection point that could increase selling pressure in Bitcoin's new cycle.

According to Park, Bitcoin's current level of around $84,000 is a strategic area for ETF investors in terms of average cost. The massive inflows that occurred in October and November 2024, when Bitcoin was in the $70,000-$96,000 range, require Bitcoin to perform significantly stronger by 2026 to achieve the annual compounded returns these investors are targeting. If this performance doesn't occur, ETF investors will have two-year decision points, and these outflows could trigger the start of a bear market.

One of Park's most critical points is that even if Bitcoin doesn't rise, the passage of time has a negative impact. Fund managers present Bitcoin to their committees as an asset promising 25–30% compound annual returns. Even when the price remains stable, the annual return decreases, and Bitcoin begins to offer lower returns for the same risk. This creates a new price pressure mechanism for Bitcoin in the institutional era.

*This is not investment advice.