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In the Bitcoin (BTC) market, the traditional four-year cycle model is increasingly losing its relevance as the impact of political developments on prices grows.
In this newly formed regime, policy statements and liquidity expectations, rather than internal supply chain data, are driving pricing.
While global equity markets are expected to rally strongly in 2025, Bitcoin is not rising to the same extent. This divergence suggests the market is focusing more on liquidity expectations and policy timing than on overall risk appetite. According to the classic model, early 2026 would mark a late-cycle or post-peak period, but current price movements indicate investors are delaying this transition.
Ryan Yoon, a senior analyst at Seoul-based Tiger Research, says Bitcoin tends to react preemptively when markets anticipate “implicit monetary expansion.” According to Yoon, Bitcoin is highly sensitive to liquidity and therefore tends to lead the market. Implicit monetary expansion refers to liquidity support provided by central banks through fiscal or regulatory channels, without formal asset purchases, thereby suppressing borrowing costs.
This transformation is driven by pre-election fiscal stimulus and the blurring of lines between monetary policy. Binance’s 2025 Year-to-Date Review and 2026 Themes report describes this environment as “financial repression.” According to the report, Donald Trump’s tariffs and public pressure on Jerome Powell to cut interest rates further blurred the lines between fiscal, trade, and monetary policy.
Consequently, US policy has shifted from traditional monetary tightening to managing financial conditions and suppressing borrowing costs through fiscal expansion and regulatory measures. The report notes that this combination creates a structurally supportive environment for digital assets: expansionary fiscal policy and suppressed real yields reduce the attractiveness of government bonds and bank loans, while increasing interest in alternative financial avenues.
According to the report, governments, led by the US, are considering trillions of dollars in spending packages ahead of the 2026 midterm elections. Rising public debt, meanwhile, restricts the Federal Reserve’s room for maneuver and increases the risk of implicit liquidity leaks through regulatory channels.
Peter Chung, Research Director at Presto Research, notes that the crypto sector has strong lobbying power and that the upcoming midterm elections have created motivation for US lawmakers to regulate crypto effectively. According to Chung, while the market narrative is constantly evolving, one of the critical issues shaping the sector’s long-term growth is the CLARITY Act.
While spot ETFs continue to offer structural support on the institutional demand side, experts agree that the ultimate direction will be determined by policy developments. Chung notes that policy will directly impact the demand of institutions focused on long-term fundamentals, while Yoon points out that the next 12 months are a critical window. According to Yoon, if regulations do not align with the timing of liquidity expansion, their impact may be limited.
*This is not investment advice.