Despite growing institutional adoption and regulatory changes, the cyclical nature of Bitcoin may not be dead, according to some market observers. Vineet Budki, CEO of venture firm Sigma Capital, believes that Bitcoin's price will continue to experience booms and busts, leading to a significant drawdown in the next market downturn.
Budki anticipates a retracement of 65% to 70% for Bitcoin in the coming years. This prediction aligns with the traditional four-year Bitcoin cycle, which is influenced by halving events that reduce the reward for mining Bitcoin, causing bull runs followed by sharp corrections and a period of price stability. This cycle resets with each subsequent halving event.
However, some argue that this cycle is evolving. Arthur Hayes, cofounder of BitMEX, suggests that Bitcoin's movements are now more closely tied to global liquidity, particularly from the United States and China, rather than solely relying on halving events. According to Hayes, Bitcoin's rallies have historically aligned with periods of quantitative easing by the Federal Reserve and credit growth in China, while crashes have occurred when both tightened their policies. The Fed has already started cutting rates in September 2025, even with inflation remaining above target. Furthermore, reverse repo balances have been drained, injecting cash back into the markets, and China has been easing rates and reserve requirements to combat deflation.
Institutional adoption has also reshaped Bitcoin's market dynamics. The approval of U.S. spot Bitcoin ETFs in early 2024 attracted substantial inflows, creating a price floor and stabilizing Bitcoin's volatility. By the second quarter of 2025, these ETFs had amassed $33.6 billion, with BlackRock's iShares Bitcoin Trust (IBIT) capturing a significant portion of the market. Institutional investors now account for a substantial percentage of Bitcoin trading volume, a shift from the retail-driven volatility of previous cycles. Regulatory clarity, such as the passage of the GENIUS Act and CLARITY Act, has further integrated Bitcoin into traditional finance.
Still, some analysts believe the four-year cycle remains relevant. They point to on-chain data that indicates profit-taking among long-term holders is at levels similar to previous market peaks. While spot Bitcoin ETFs have experienced outflows, analysts suggest the cycle peak may not yet be reached, with a potential altcoin rally on the horizon.
Despite differing views on the longevity and drivers of Bitcoin's cycles, the cryptocurrency's market behavior remains a subject of intense debate. While some anticipate a significant downturn based on historical patterns, others believe that evolving market dynamics and macroeconomic factors could moderate future price corrections.
