Has the "four-year cycle" in the crypto market really become invalid? The truth about 2024 from a bottom-up theoretical perspective

The key issues are in front of us: After Bitcoin halving from $60,000 to $126,000, the increase is far below previous cycles. Even more painfully, altcoins collectively went silent, and the once-timely “altcoin season” seems to have disappeared. Does all this mean the classic four-year cycle is a thing of the past?

The three-layer truth behind a phenomenon

An easily overlooked observation in the market: When a theory is repeatedly validated, it shifts from “law” to “consensus,” and finally evolves into a “self-fulfilling prophecy.” The four-year cycle is undergoing such a transformation.

The foundation of cycle theory is weakening

The traditional four-year cycle driven by Bitcoin’s mining reward halving—supply reduction → price increase → wealth effect → altcoin season activation. This logic was ironclad when Bitcoin’s market cap was small. But now?

Analyzing from the bottom up, the fundamental reasons for cycle failure are:

After the 2024 halving, Bitcoin will only add 600,000 coins, while the total circulating supply is nearly 19 million. This means the new supply pressure on the market is minimal, less than $6 billion in sell-side pressure can be easily absorbed by Wall Street. More critically, spot ETFs have already absorbed over $50 billion, and this capital was in place before and after the halving, completely changing the price formation rhythm—no longer a steep parabola post-halving, but a gentle rise spread across the entire cycle.

Mining cost data confirms the weakening of cycle strength: in the previous cycle, miners’ costs were around $20,000 when prices rose to $69,000, with a profit margin of 70%; in this cycle, mining costs have risen to $70,000, so even at $126,000, profit margins are only above 40%. This is not a signal failure but a diminishing marginal effect— as market cap grows, each incremental liquidity injection has less impact.

Macroeconomic liquidity is the new driver

Most institutional investors in interviews point to the same answer: The Federal Reserve’s money-printing cycle, not Bitcoin’s technical cycle.

Changes in global M2 growth, central bank balance sheet expansion, US Treasury yields—these indicators now explain market movements better than halving events. In other words, the four-year cycle has evolved from “supply-side constraints” to “liquidity narratives.” What does this shift imply?

Thinking from the bottom up: If the essence of the cycle has shifted from being driven by technology to macro factors, then its shape, amplitude, and even length could change. No longer a complete “bull-bear transition” every four years, but perhaps a prolonged, oscillating “shaking upward channel” dictated by central bank policies.

Where are we now? Most institutional views are polarized

The pessimists believe we are in the early stages of a bear market. Their logic is simple: mining profitability at a historic low + market enthusiasm fading = bottom not yet reached. They estimate the real bottom should be below $70,000, and it may take 1-2 years.

The optimists see this as just a technical adjustment in the mid-cycle. Reasons include: interest rates peaking, Fed starting rate cuts, crypto policies becoming more friendly, liquidity easing expectations unchanged. As long as global M2 continues to grow, crypto assets as hedges won’t face a deep bear market.

Neutral observers give the most pragmatic judgment: Currently in a “wait-and-see” phase. Technical signals have shown warning signs (weekly chart breaking below the 50-day moving average), but macro confirmation signals are not there yet. A true bear market would require two conditions to occur simultaneously: ① Central banks start tightening liquidity; ② Macroeconomic recession leading to liquidity crises. Neither is seen now.

Changes in stablecoin total supply are another key indicator—as long as stablecoins continue to grow, it indicates inflows of new capital. Only when stablecoin growth stalls for over two months can a true bear market be confirmed.

Can altcoin season really not come back?

The answer is surprisingly consistent: It’s not that it can’t come back, but when it does, it will be very different.

The traditional logic of altcoin season was: market enthusiasm surges → scattered retail chase low-priced coins → small tokens collectively surge. But now, the structure has changed:

1. Total token count hits record highs. Even with massive incremental liquidity, spreading across thousands of projects makes it hard to form a “sector-wide” rally. As a result, only top-tier projects with real applications can stand out.

2. Institutional investment thinking dominates. The previous retail-driven sentiment has shifted to institutional allocation logic. Institutions only allocate to projects with clear business models, compliance prospects, and stable cash flows. This automatically filters out 90% of altcoins.

3. No new super narratives. Past DeFi booms and NFT crazes were “common topics” for the entire cycle. Now? The stories are fragmented, with no unified narrative center.

Looking from the bottom up at future altcoin seasons: There may be localized, sectoral, short-term rebounds (e.g., certain blockchain ecosystems), but the “buy anything and everything rises” foolish rally is unlikely to return.

The future driver: shifting from emotional bull to structural bull

If the four-year cycle is truly fading, where will the next phase of crypto market growth come from?

Clear main logic: fiat devaluation + asset allocation

Bitcoin is increasingly seen as “digital gold,” not just speculation. This identity shift is crucial. Past surges came from retail chasing highs; future rises may come from:

• Sovereign wealth fund allocations. As more countries include Bitcoin in foreign exchange reserves, it’s no longer a “speculative wave” but a “systemic asset class transfer.”
• Long-term holdings by pension funds and hedge funds. Institutions care less about short-term volatility and more about inflation hedging over a 10-year horizon.
• Expansion of stablecoin commercial applications. Payments, clearing, cross-border capital flows—stablecoins are upgrading from “trading pairs” to “financial infrastructure.”

What does this drive imply? Prices will rise, but volatility will decrease, and the rise will be more sustained. No longer a “cyclical boom-bust,” but a “structural, compressed, long-cycle slow spiral upward”—similar to gold’s performance over the past 50 years.

Benchmarking the US stock market: from small-cap frenzy to blue-chip dominance

Understanding the evolution of the US stock market’s altcoin seasons helps. Retail once drove small-cap stocks higher; now, the “Seven Sisters” (seven tech giants) dominate gains. The crypto market is replicating this process.

The future structure should look like this: Bitcoin and Ethereum steadily rise (as the mainline), a few top altcoins have pulse-like rebounds (forming sector trends), and many small tokens remain long-term neglected (value zeroed out).

Current position distribution: institutional practical deployment

A key finding from interviews: Almost all leading institutions have already half or fully exited their positions. What does this indicate?

• No one dares to be fully invested. The market still has significant uncertainty.
• They are deploying gradually, not all-in or all-out.
• Core holdings are concentrated in BTC and ETH. Allocation to altcoins has been sharply reduced to 5-10%.

This reflects a deep cognitive shift: From “pursuing maximum returns” to “prioritizing capital preservation.”

Should you start bottom-fishing now? Practical advice

The most conservative answer: Wait until below $60,000 to start dollar-cost averaging, maximizing the chance of profit. But this timing may take 1-2 years.

A more pragmatic approach: Don’t aim for perfect bottoms; instead, start small, regularly, and without leverage. Historical data shows this is the most stable way to profit during bull markets.

Consensus among all institutions:

• ❌ No leverage
• ❌ No frequent trading
• ✅ Strict discipline > precise judgment

Final bottom-up advice: Instead of betting on “where the market is now,” bet on “where the market is heading.” If you believe Bitcoin will be widely held by central banks and sovereign funds in 10 years, current prices are attractive. If not, there’s no real need to participate now.

An ultimate observation: The four-year cycle has not failed; it has shifted from “physical constraints” to “psychological expectations.” It still influences the market but is no longer the sole factor. Macro liquidity, institutional allocations, regulatory outlooks, narrative cycles—these new variables are gaining importance.

Understanding this allows you to stay clear-headed amid the evolving market.