Bitcoin Paradigm Shift: Institutional Inflows End the Four-Year Cycle—A New Duel Between Hedging and Speculation Reshapes Prices
As a unique financial asset, Bitcoin’s market structure is undergoing a profound paradigm shift. For a long time, participants have been divided into two sharply distinct groups: one group views Bitcoin as the ultimate hedge asset, favoring long-term holding and permanently locking up coins to guard against inflation risk in the fiat system; the other group consists of sharp-eyed speculators who exploit its high volatility for tactical swing trading to capture excess returns. The contest between these two forces forms the core动力 behind Bitcoin price fluctuations. However, as the market’s scale expands exponentially and institutional capital moves deeper into the space, the traditional “four-year cycle” narrative faces the risk of becoming ineffective. In the past, the supply contraction caused by the halving mechanism was the main engine driving bull-bear transitions; but today, the influence of this physical mechanism on prices has been greatly weakened. The market is transitioning from a “youth stage” dominated by supply to a “mature stage” dominated by liquidity and sentiment. For investors, understanding this structural change is crucial, because it not only affects the timing of entry, but also determines the multiple differences in long-term returns. Against the backdrop of persistent capital market institutions, Bitcoin’s speculative characteristics ensure that its price will still undergo periodic repricing—yet the amplitude and regularity of the cycle are changing in irreversible ways.
Looking back at Bitcoin’s historical data, the halving mechanism used to be the cornerstone of cycle formation. From the first halving in 2012 to the most recent one in 2024, the block reward declined from 50 BTC to 3.125 BTC. In the early period, the ratio of newly issued coins to the existing supply was extremely high—for example, before 2012, the number of new coins added each year was about 2.6 million, which was one quarter of the then-existing 10 million coin supply. This dramatic supply shock directly led to dramatic price volatility. By 2024, however, annual newly added supply is only about 320,000 coins, representing less than 1% of the near-20 million existing supply. This means the halving’s power as a “cycle engine” has almost run out of steam. Even though speculative sentiment and collective belief can still temporarily sustain the appearance of a cycle, without real supply contraction to support it, sentiment-driven volatility will become increasingly irregular and increasingly muted. Historical drawdown data clearly reveals this trend: the drawdowns during the 2014–2015 bear market were about 85%, the 2017–2018 drawdowns about 84%, and the 2021–2022 drawdowns about 77%. In this current cycle, the drawdown from the October 2025 peak to the June 2026 low has shrunk to over 50%. The step-by-step decline in drawdown magnitude reflects the strengthening of the market’s underlying base. The introduction of ETFs allows traditional capital to participate directly, locking up large amounts of “deep” coins for the long term. As a result, the market has a stronger capacity to absorb selling during downturns, which weakens the destructive power of panic liquidation.
Based on the above evolution in market structure, investment strategies should shift from simply “buying the dips and escaping the tops” to more refined position management. An ideal allocation plan should include two parts: first, a core position—core assets held on the basis of long-term belief. This portion of the position should not be adjusted due to short-term price fluctuations, aiming to ensure investors have an unshakable seat on the train of long-term asset appreciation; second, a cycle position—tactical positions that use market sentiment-driven volatility for high-sell/low-buy operations, aiming to accumulate more shares for the core position through swing trading. In terms of tool selection, spot ETFs provide a convenient channel for investors who do not want to manage private keys. Public companies like MSTR, which treat Bitcoin as a core asset, offer leveraged exposure, making them suitable for speculators with higher risk appetite who can withstand larger drawdowns. Particularly noteworthy is that between July and August 2026, Bitcoin completed more than 1 million coins of turnover within the $62,000–$65,000 range. This phenomenon indicates that the June low was not merely a technical “needle in the haystack” but an actual, substantive process of coin exchange. Large amounts of coins transferred from old holders to new holders, forming solid bottom support. Even if further drawdowns occur in October to November, it would be extremely difficult to break through the cost zone formed by those one million-plus coins. Therefore, the traditional “carving on wood to follow the sword” style prediction—that the cycle bottom must be around October 2026—may no longer apply. The bottom structure of this cycle may have been established early. The market is shifting from intense cyclical volatility toward a slow bull-market pattern similar to the U.S. stock market’s century-long bull run. During this period, news may trigger sharp fluctuations, but the overall trend is upward.
For investors today, the focus should move away from predicting specific time points and toward understanding the market’s microstructure and the distribution of coins. The market condition at the end of September 2026 shows that Bitcoin has not displayed typical late-stage bear market characteristics. Instead, after a round of deep coin turnover, it shows stronger resilience. Strategies that previously relied on the halving time window for trading are becoming less effective. Going forward, the drivers of price will be more diversified, including macro liquidity, institutional allocation ratios, and changes in global monetary policy. Investors should recognize that Bitcoin’s “four-year cycle” is a product of its early development stage, when circulating supply was smaller and the participant structure was simpler. As market capitalization expands and holders become more institutionalized, this regularity is being diluted. Therefore, completing one’s position-building and holding it before the end of 2026 may be a more rational choice than waiting for a so-called “perfect bottom.” The core logic of this strategy is to acknowledge the ambiguity and complexity of market bottoms, use the relatively reasonable valuation range and solid coin support to lock in long-term returns, and at the same time stay sensitive to the macro environment—taking partial profits from cycle positions in periods of extreme exuberance to enhance the safety margin of the core holding. Ultimately, Bitcoin investing is no longer a simple gambler’s game; it becomes a long race built on patience, discipline, and a deep understanding of market fundamentals. At this stage, understanding the cycle is not about predicting the future, but about staying clear-headed amid uncertainty—so that no matter how the market moves, the core assets remain in hand.
Follow me—my next post will be a fast market read, so you won’t miss what matters.
As a unique financial asset, Bitcoin’s market structure is undergoing a profound paradigm shift. For a long time, participants have been divided into two sharply distinct groups: one group views Bitcoin as the ultimate hedge asset, favoring long-term holding and permanently locking up coins to guard against inflation risk in the fiat system; the other group consists of sharp-eyed speculators who exploit its high volatility for tactical swing trading to capture excess returns. The contest between these two forces forms the core动力 behind Bitcoin price fluctuations. However, as the market’s scale expands exponentially and institutional capital moves deeper into the space, the traditional “four-year cycle” narrative faces the risk of becoming ineffective. In the past, the supply contraction caused by the halving mechanism was the main engine driving bull-bear transitions; but today, the influence of this physical mechanism on prices has been greatly weakened. The market is transitioning from a “youth stage” dominated by supply to a “mature stage” dominated by liquidity and sentiment. For investors, understanding this structural change is crucial, because it not only affects the timing of entry, but also determines the multiple differences in long-term returns. Against the backdrop of persistent capital market institutions, Bitcoin’s speculative characteristics ensure that its price will still undergo periodic repricing—yet the amplitude and regularity of the cycle are changing in irreversible ways.
Looking back at Bitcoin’s historical data, the halving mechanism used to be the cornerstone of cycle formation. From the first halving in 2012 to the most recent one in 2024, the block reward declined from 50 BTC to 3.125 BTC. In the early period, the ratio of newly issued coins to the existing supply was extremely high—for example, before 2012, the number of new coins added each year was about 2.6 million, which was one quarter of the then-existing 10 million coin supply. This dramatic supply shock directly led to dramatic price volatility. By 2024, however, annual newly added supply is only about 320,000 coins, representing less than 1% of the near-20 million existing supply. This means the halving’s power as a “cycle engine” has almost run out of steam. Even though speculative sentiment and collective belief can still temporarily sustain the appearance of a cycle, without real supply contraction to support it, sentiment-driven volatility will become increasingly irregular and increasingly muted. Historical drawdown data clearly reveals this trend: the drawdowns during the 2014–2015 bear market were about 85%, the 2017–2018 drawdowns about 84%, and the 2021–2022 drawdowns about 77%. In this current cycle, the drawdown from the October 2025 peak to the June 2026 low has shrunk to over 50%. The step-by-step decline in drawdown magnitude reflects the strengthening of the market’s underlying base. The introduction of ETFs allows traditional capital to participate directly, locking up large amounts of “deep” coins for the long term. As a result, the market has a stronger capacity to absorb selling during downturns, which weakens the destructive power of panic liquidation.
Based on the above evolution in market structure, investment strategies should shift from simply “buying the dips and escaping the tops” to more refined position management. An ideal allocation plan should include two parts: first, a core position—core assets held on the basis of long-term belief. This portion of the position should not be adjusted due to short-term price fluctuations, aiming to ensure investors have an unshakable seat on the train of long-term asset appreciation; second, a cycle position—tactical positions that use market sentiment-driven volatility for high-sell/low-buy operations, aiming to accumulate more shares for the core position through swing trading. In terms of tool selection, spot ETFs provide a convenient channel for investors who do not want to manage private keys. Public companies like MSTR, which treat Bitcoin as a core asset, offer leveraged exposure, making them suitable for speculators with higher risk appetite who can withstand larger drawdowns. Particularly noteworthy is that between July and August 2026, Bitcoin completed more than 1 million coins of turnover within the $62,000–$65,000 range. This phenomenon indicates that the June low was not merely a technical “needle in the haystack” but an actual, substantive process of coin exchange. Large amounts of coins transferred from old holders to new holders, forming solid bottom support. Even if further drawdowns occur in October to November, it would be extremely difficult to break through the cost zone formed by those one million-plus coins. Therefore, the traditional “carving on wood to follow the sword” style prediction—that the cycle bottom must be around October 2026—may no longer apply. The bottom structure of this cycle may have been established early. The market is shifting from intense cyclical volatility toward a slow bull-market pattern similar to the U.S. stock market’s century-long bull run. During this period, news may trigger sharp fluctuations, but the overall trend is upward.
For investors today, the focus should move away from predicting specific time points and toward understanding the market’s microstructure and the distribution of coins. The market condition at the end of September 2026 shows that Bitcoin has not displayed typical late-stage bear market characteristics. Instead, after a round of deep coin turnover, it shows stronger resilience. Strategies that previously relied on the halving time window for trading are becoming less effective. Going forward, the drivers of price will be more diversified, including macro liquidity, institutional allocation ratios, and changes in global monetary policy. Investors should recognize that Bitcoin’s “four-year cycle” is a product of its early development stage, when circulating supply was smaller and the participant structure was simpler. As market capitalization expands and holders become more institutionalized, this regularity is being diluted. Therefore, completing one’s position-building and holding it before the end of 2026 may be a more rational choice than waiting for a so-called “perfect bottom.” The core logic of this strategy is to acknowledge the ambiguity and complexity of market bottoms, use the relatively reasonable valuation range and solid coin support to lock in long-term returns, and at the same time stay sensitive to the macro environment—taking partial profits from cycle positions in periods of extreme exuberance to enhance the safety margin of the core holding. Ultimately, Bitcoin investing is no longer a simple gambler’s game; it becomes a long race built on patience, discipline, and a deep understanding of market fundamentals. At this stage, understanding the cycle is not about predicting the future, but about staying clear-headed amid uncertainty—so that no matter how the market moves, the core assets remain in hand.
Follow me—my next post will be a fast market read, so you won’t miss what matters.
