BitMEX co-founder Arthur Hayes has come to terms with the end of the four-year cycle for cryptocurrencies, countering common beliefs about why this change has occurred.

“As the four-year anniversary of this fourth cycle is upon us, traders wish to apply the historical pattern and forecast an end to this bull run,” stated Hayes in a recent blog post.

He noted that while the previous four-year cycle was reliable, its relevance has diminished, indicating it “will fail this time.”

Hayes suggested that Bitcoin price cycles are now influenced more by monetary supply and dollars, especially from the USD and the Chinese yuan, rather than just following the historical four-year cycle aligned with halving events or driven by institutional interests in cryptocurrency.

Historically, cycles concluded with tightening monetary conditions rather than solely determining factors like time.

The Shifting Cycle

He identified several factors contributing to the alteration of the current cycle:

• The US Treasury pulling $2.5 trillion from the Fed’s Reverse Repo program as it issues new Treasury bills.
• An intention from US President Donald Trump to maintain ‘hot’ policies for economic growth through a more relaxed monetary approach to alleviate debts.
• Proposed deregulation of banks to facilitate increased lending activities.

Moreover, the US Federal Reserve is cutting rates again even with inflation exceeding targets. Expectations suggest two more rate reductions could occur this year.

Monetary Policies At Play

Looking back, Bitcoin’s first significant price increase was tied to the Federal Reserve’s quantitative easing and growth of Chinese credit availability, whereas the second bull market was significantly influenced by credit expansion in China in 2015.

The cycle during the COVID-19 pandemic was primarily sustained by USD liquidity, tapering when the Fed began tightening in 2021.

The Chinese Factor

Despite predictions that China will not spur this cycle as vigorously as before, Hayes emphasized that their policymakers are shifting focus towards ending deflation rather than continuing their liquidity withdrawals. This alteration paves the path for US monetary strategies to enhance Bitcoin values without the counterbalancing force of Chinese deflation.

“Listen to our monetary masters in Washington and Beijing. They clearly state that money shall be cheaper and more plentiful. Therefore, Bitcoin continues to rise in anticipation of this highly probable future. The king is dead, long live the king!”

Opinions on the Cycle

Some experts remain committed to the four-year cycle. Onchain analytics firm Glassnode indicated a historical echo in Bitcoin’s price movements, suggesting a continuation of cyclical patterns. Saad Ahmed, head of Gemini’s APAC sector, expressed that a form of the four-year cycle may still persist.

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