The research team at BitMEX has recently commented on why the Bitcoin (BTC) price is crashing. The digital assets firm pointed out that the prevailing narrative is now everywhere: “This time is different.” With spot exchange-traded-funds or ETFs and considerable institutional flows, many now seemingly believe that the so-called Bitcoin 4-year cycle is finally dead.
BitMEX’s latest quantitative analysis suggests otherwise. According to the crypto exchange, the 4-year cycle is not actually dead (rather it is more structural).
As stated in the analysis, the persistence of the cycle is not really about retail speculation. Moreover, it said to be rooted in the mechanics of the crypto market:
- The Halving Effect: The supply shock remains the primary catalyst, suggesting a peak 12–18 months post-halving.
- Structural Flaw: High leverage and the dominance of perpetual futures mean market stability is governed by liquidation mechanics, guaranteeing excess in the bull phase and catastrophic drawdowns.
- Current Indicators: Bitcoin’s lagging underperformance YTD and recent $20B liquidation cascade signal cyclical fatigue, not maturity.
History doesn’t always repeat but it often rhymes.
Every 4 years, Bitcoin’s (BTC) market follows a seemingly consistent rhythm that is said to be shaped by one mechanical event: the Bitcoin halving. Roughly every 210,000 blocks, the network cuts the BTC mining reward in half, slowing down new supply.
BitMEX further stated that each halving has historically led “to the same sequence: accumulation → parabolic rally → speculative peak → collapse and recovery.”
- 2012–2014: The first halving ushered in Bitcoin’s earliest true bull market, pushing prices from double digits to over $1,000 before the Mt. Gox collapse marked the first great crash.
- 2016–2018: The second halving led to the 2017 mania and Initial Coin Offering (ICO) boom, before the 2018 bear was triggered by China’s crackdown and the overwhelming number of token issuances.
- 2020–2022: The third halving kicked off crypto’s institutional era—Strategy, Tesla, and ETFs—culminating in the 2021 high. This was shortly followed by the 2022 collapse, fuelled by the downfall of LUNA, Three Arrows Capital (3AC), and FTX.
- 2024 onward: The most recent halving occurred on 19 April 2024, cutting issuance to 3.125 BTC. We are now midway through this fourth cycle.
The pattern has repeated so precisely that some analysts “estimate the peak usually comes 12–18 months after each halving.”
The mechanism is described as being “self-reinforcing: lower supply, rising demand, euphoric speculation, and eventual exhaustion.”
BitMEX concluded:
“If the cycle had truly ended, Bitcoin should be leading this risk-on environment — not lagging it. Its relative weakness implies we are approaching the final phase of the cycle — wind down and recovery. Further evidence is the crypto ecosystem is again showing internal “cracks” for a deep correction that is internally only for the crypto market.”
