It's one of the first things you hear when you get into crypto: there's a bull market and a bear market, and they add up to a four-year cycle. The fiercest price increases are always in the year after the Bitcoin halving. Is this still true though? If we copy-paste the traditional price movements onto the current cycle, we should be in the mania phase in the fall of 2021. With fierce price increases for Bitcoin. While we can't complain about the price, those huge, several hundred per cent increases are not happening as of yet.

What is going on? Has the market changed? With a lot of caution, we can state that this cycle is different from that of 2017 and 2013 - although, admittedly, until recently the current cycle was very similar to that of 2013. A fierce rise followed by a somewhat longer-lasting correction. Except the second violent rise thus far hasn’t occurred.

New, bigger market players

A new legion of players has entered the crypto playground. In that respect, the market is different than during Bitcoin's last price explosion, in 2017. The bigger players in the capital market behave differently than the little guys back then. They give in less to FOMO (fear of missing out). Their buying behaviour tends to be continuous accumulation. Some rebalance the crypto share of their portfolio once a quarter. On the other hand, they have buttons they can push to keep the price in a certain area. In the current market environment, the financial tools are available to 'short' the market at the moment when many small investors lose their heads. The big players also have enough capital to pull this off.

Smaller effect of miners and the halving

Until recently, miners were the only truly large market participants. After every quadrennial halving, they suddenly had only half as much Bitcoin available for the market. This caused a price shock and a frenzy that built up, to the point where everyone and their mother-in-law wanted to get into Bitcoin too. Not only is the dominance of those miners in the market smaller than it was in prior cycles - but the effect of the halving itself is also diminishing. True, the block reward still halves every four years, but the shock effect it causes is getting smaller. The block reward will drop from 6.25 to 3.125 in 2024. This has a smaller relative effect than the drop from 50 to 25 after the first halving. When filling up your pool, squeezing a fire hose has a larger effect than squeezing a garden hose.

Declining Bitcoin dominance

Another factor that may contribute to a break in the four-year cycle is the gradually declining dominance of Bitcoin. Ethereum, for example, does not operate with halvings every four years. The rest of the crypto market also has a different issuance schedule than Bitcoin. Currently, Bitcoin still accounts for over 40% of the total market value of the entire crypto market. This number was higher than 90% until spring 2017.

The last cycle or a longer one?

On-chain analyst Willy Woo assumes that because of these effects, the price of Bitcoin will no longer behave according to a four-year cycle. Instead, it will continue to go up in a "random walk”. With less explosive price movements or extended bear markets. But with corrections of a few months here and there, such as the one in the spring of 2021. By the way, those are still hefty corrections if you compare them to the equity markets. Everyone's stomach will undoubtedly still be tested, regardless of the exact course of this cycle and future ones.

Benjamin Cowen is one of a growing group of technical analysts who believes in recurring cycles but notes that they are getting longer. When measuring the time from the halving to the top of the bull market, we see that the 2017 cycle lasted 35% longer than the 2013 cycle. The recent all-time high of November 2021 already makes the current cycle longer than that previous one - and may extend well into 2022, according to Cowen.