Bitcoin’s Four-Year Cycle Persists but Now Influenced by Politics and Liquidity

Bitcoin’s price historically follows a roughly four-year cycle linked to halving events that reduce supply. Recent analysis by 10X Research shows this cycle remains intact but is increasingly shaped by broader macroeconomic liquidity conditions and political developments, complicating its predictability and integration into traditional markets.

What happened

Bitcoin’s four-year price cycle has been widely associated with its halving events, which cut the block reward miners receive by 50%, thereby tightening supply. This pattern has been observed consistently since Bitcoin’s inception. However, according to recent analysis by 10X Research, while the cycle itself remains, its underlying drivers have evolved.

The 2020 halving event was followed by a significant influx of liquidity from central banks, notably the Federal Reserve’s asset purchase programs, which provided unprecedented monetary stimulus. This macroeconomic liquidity coincided with Bitcoin’s strong bull run into 2021, indicating that supply dynamics alone no longer fully explain price movements. Political developments, including regulatory announcements and geopolitical tensions, have also played a measurable role in influencing Bitcoin’s price volatility and investor sentiment during recent cycles.

Additionally, the introduction of new institutional liquidity channels, such as the ProShares Bitcoin Strategy ETF launched in October 2021, has integrated Bitcoin more deeply into traditional financial markets. This institutional participation has added complexity to Bitcoin’s market behavior, making it more sensitive to shifts in policy and liquidity conditions.

Interpretations from 10X Research suggest that these additional factors—liquidity and politics—reduce the predictability of Bitcoin’s price cycles when viewed solely through the lens of on-chain events like halvings. Cointelegraph and Bloomberg analyses reinforce this view, highlighting the growing influence of institutional investors and regulatory scrutiny on Bitcoin’s market dynamics.

However, some analysts maintain that while liquidity and political factors influence short-term volatility, the halving events remain the fundamental long-term supply shock underpinning the four-year cycle. Thus, the traditional cycle persists but is now modulated by external macroeconomic and political variables rather than being replaced.

Why this matters

The shifting drivers of Bitcoin’s cycle have structural implications for how the cryptocurrency is understood and approached within broader markets. Historically, the halving events provided a relatively clear, on-chain signal that influenced market expectations and investment strategies. The emergence of political and liquidity factors introduces a layer of complexity that aligns Bitcoin more closely with traditional financial assets, which are sensitive to macroeconomic policies and geopolitical developments.

This evolution affects market participants by expanding the range of variables that must be considered when analyzing Bitcoin’s price trajectory. Central bank policies, such as quantitative easing or tightening, now have demonstrable impacts on Bitcoin’s liquidity environment, while regulatory developments can affect investor sentiment and market access. Institutional products like ETFs further link Bitcoin to traditional capital flows, increasing its responsiveness to policy shifts.

From a policy perspective, this integration may influence regulatory approaches and the framing of Bitcoin within financial systems, as governments and regulators observe its growing sensitivity to political and liquidity conditions. It also raises questions about the role of Bitcoin as a store of value or hedge, given its evolving correlation with macroeconomic factors.

What remains unclear

Despite these insights, several important questions remain unresolved. The precise extent to which political and liquidity factors can override or amplify the effects of halving events in future cycles is not clearly defined. There is limited quantitative data measuring the relative contribution of institutional liquidity—such as that introduced by ETFs—compared to traditional retail and miner-driven supply dynamics in shaping the amplitude and duration of Bitcoin’s cycles.

Moreover, the causal relationship between specific political events and Bitcoin price movements is difficult to establish definitively, as much of the observed correlation may not imply direct causation. The transmission mechanisms by which macro liquidity changes, such as central bank balance sheet expansions, impact Bitcoin markets lack precise quantification.

The 10X Research report referenced in Cointelegraph is not fully public, restricting access to detailed methodologies and comprehensive datasets that could clarify these relationships. Furthermore, regulatory announcements vary widely across jurisdictions and timelines, complicating efforts to generalize their impact on Bitcoin’s global price cycles.

What to watch next

Monitor upcoming regulatory decisions and announcements globally, particularly in major markets, to assess their immediate and longer-term effects on Bitcoin volatility and investor sentiment.
Track disclosures and data regarding institutional Bitcoin holdings post-ETF approvals to better understand the scale and impact of institutional liquidity on market dynamics.
Observe central bank monetary policy developments, including asset purchase programs and interest rate changes, for their potential influence on Bitcoin’s liquidity environment.
Look for emerging research or data that attempt to identify leading indicators within political or liquidity metrics that could forecast phases of Bitcoin’s cycle.
Follow geopolitical developments that may introduce new volatility or shifts in market perception of Bitcoin as a risk asset or alternative store of value.

The persistence of Bitcoin’s four-year cycle alongside its growing sensitivity to political and liquidity factors reflects a complex and evolving market environment. While halving events remain a foundational component, the increasing interplay with macroeconomic and geopolitical variables challenges simple predictive models. This underscores the need for continued research and nuanced analysis as Bitcoin’s role within the broader financial ecosystem develops.

Source: https://cointelegraph.com/news/bitcoin-four-year-cycle-politics-liquidity-10x-research?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.