The traditional four-year cycle that once defined the cryptocurrency market, closely linked to Bitcoin’s halving events, is becoming less predictable, according to Sandeep Nailwal, co-founder of Polygon. While Bitcoin’s halving continues to play a role, its impact has diminished as the market matures and institutional investors gain a larger foothold.
Nailwal highlighted that speculative trading has slowed, largely due to high interest rates and low liquidity conditions. However, he believes a market rebound could occur once these factors ease. Despite this, Nailwal expects the market to become more stable, with corrections becoming less severe than in previous cycles, where declines of up to 90% were common. He predicts that future drawdowns will be more modest, around 30-40%.
Although the Bitcoin halving remains a key event, Nailwal noted its influence is no longer as direct. Market corrections once followed a predictable pattern, but new factors—such as institutional adoption and macroeconomic pressures—are altering this. The rise in institutional investment has contributed to reducing volatility, with new financial products, like Bitcoin ETFs, playing a significant role. These ETFs, which allow investors exposure to Bitcoin without holding the cryptocurrency itself, have restricted the free flow of capital within the broader crypto ecosystem. As a result, larger-cap assets such as Bitcoin and Ethereum have absorbed most of the capital, leaving smaller-cap assets with less attention.
Geopolitical events and macroeconomic factors are also reshaping the crypto landscape. For instance, U.S. government policies, including an executive order by former President Trump to create a Bitcoin strategic reserve, have added legitimacy to the crypto market. This has spurred institutional capital into established assets, consolidating wealth in Bitcoin and Ethereum. Bitcoin’s dominance, now nearing 54%, has risen to levels not seen since 2021.
Despite these shifts, some analysts, like Miles Deutscher, argue that the classic four-year cycle still holds relevance, though it is evolving. Deutscher noted that while the market is becoming less volatile, the traditional cycle of accumulation, rise, distribution, and fall is becoming harder to predict. He pointed out that Bitcoin and Ethereum are taking the lead, with altcoins following behind. This shift, combined with the changing economic landscape, suggests that the cryptocurrency market is entering a new phase, one where older market cycles may no longer serve as a reliable guide for investors.
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