Bitcoin's Four-Year Cycle May Be Ending, Signaling a Year of Downside

Bitcoin may have ended its historical four-year cycle, signaling an incoming year of downside, despite widespread analyst expectations for an extended cycle driven by regulatory tailwinds.

Bitcoin's Four-Year Cycle Explained

Bitcoin's $125,000 all-time high on Oct. 6 may have signaled the top of the current four-year Bitcoin halving cycle, both in terms of “price and time,” according to Jurrien Timmer, the director of global macroeconomic research at asset management firm Fidelity. The four-year cycle is a historical pattern in Bitcoin's price, with each cycle consisting of a bull run followed by a bear market. This cycle is closely tied to the halving of Bitcoin's block reward, which occurs every four years and reduces the supply of new Bitcoins entering the market.

Contrasting Analyst Expectations

Timmer's analysis contradicts other crypto analysts, who expect the growing number of regulated crypto investment products to lead to an extended bull market cycle in 2026. Tom Shaughnessy, the co-founder of crypto research firm Delphi Digital, expects new all-time highs for Bitcoin in 2026, after investor sentiment recovers from the record $19 billion crypto market crash that occurred at the beginning of October. Shaughnessy believes that the crypto market will be driven by the industry's “fundamental progress,” including growing Wall Street implementations and regulatory developments.

Regulatory Developments and Their Impact

Policy experts are also predicting a significant year of progress on US cryptocurrency legislation, a development that may bring more institutional investment to the crypto space. Cathy Yoon, general counsel at crypto research firm Temporal and Solana block-building system Harmonic, expects 2026 to be another meaningful year for crypto regulation, but it will look different from the last one. The real impact will come from implementation - examinations, disclosures, and how these assets integrate into payments and financial infrastructure.

Market Sentiment and Trader Positions

However, investors' social sentiment took a significant hit earlier this week as Bitcoin dipped below $85,000. Bearish commentary has since dominated social media platforms, including X, Reddit, and Telegram. Meanwhile, the crypto industry's best-performing traders by returns, who are tracked as “smart money” traders on Nansen's blockchain intelligence platform, are also betting on a short-term decline for most leading cryptocurrencies. Smart money traders were net short on Bitcoin for $123 million, but were betting on Ether's price increase, with $475 million worth of cumulative net long positions.

Conclusion and Future Outlook

The contrasting views of analysts and the current market sentiment suggest that the future of Bitcoin's price is uncertain. While some analysts expect a year of downside, others believe that the growing regulatory support and fundamental progress in the industry will drive the price up. As the crypto market continues to evolve, it is essential to keep a close eye on regulatory developments, market sentiment, and trader positions to make informed investment decisions.