The traditional four-year crypto market cycle, once closely tied to Bitcoin Harving events, is not as predictable as it once was. According to Sandeep Nailwal, co-founder of Polygon, the cryptocurrency market is growing maturity and the cycle is shifting due to increased institutional involvement. Nailwal said that Bitcoin’s harving events are still affecting the market, but the effects have become so pronounced. He explained that high interest rates and low liquidity conditions slowed speculative activity, but changing factors could lead to market rebounds. However, he expected the market to behave in a more stable way, with the correction not being more severe than the previous cycle, typical of a drop of up to 90%. Instead, he predicts the drawdown will be around 30-40%.
Half of Bitcoin remains a significant event, but the market impact is no longer mechanical. Nailwal emphasizes that past market corrections often follow predictable patterns, but the current cycle has evolved due to factors such as institutional adoption and macroeconomic pressures. Increased institutional investment has helped reduce the volatility in the crypto market, further supported by new financial products such as Bitcoin ETFs.
These ETFs are also involved in disrupting traditional market cycles by allowing investors to get into Bitcoin without actually holding cryptocurrency. By limiting the flow of capital to the underlying assets, these products prevent funds from rotating freely within the broader crypto ecosystem. This changes the usual dynamics, with large assets like Bitcoin and Ethereum absorbing most of their capital, while fewer cap assets pay less attention.
Geopolitical events and macroeconomic factors also contribute to the changing landscape of the crypto market. US government policies, including President Trump’s executive order to create President Trump’s Bitcoin strategic reserve, justified the crypto space in the eyes of institutional investors. As a result, capital flowed into established assets, contributing to the concentration of wealth in Bitcoin and Ethereum. Analysts have seen an upward advantage in Bitcoin, and is now approaching 54%, at a level not seen since 2021.
Despite these changes, some analysts, including Miles Deutscher, have argued that the classic four-year cycle is still relevant, but they may not follow the same pattern. Deutscher noted that while the market is less volatile, the typical sequences of accumulation, rise, distribution, and falls are likely to become predictable. He suggested that market behavior is more asynchronous as Bitcoin and Ethereum lead the fees before Altcoins made a significant profit. This change, coupled with the broader economic environment, suggests that crypto markets are entering a new phase where older cycles may no longer be a reliable guide to investors.