BitMEX co-founder Arthur Hayes agrees that the four-year cryptocurrency cycle is dead, but the reasons are not what most people think.
Hayes stated in a blog post on Thursday, "As we approach the four-year anniversary of the fourth cycle, traders hope to apply historical patterns and predict the end of this bull market."
He added that while the four-year pattern has been effective in the past, it is no longer applicable, saying, "This time it will fail."
Hayes believes that Bitcoin's price cycles are driven by the money supply and quantity, primarily the US dollar and the Chinese yuan, rather than an arbitrary four-year pattern related to halving events or a direct result of institutional interest in cryptocurrencies.
Hayes noted that past cycles ended when monetary conditions tightened, not due to time factors.
He believes this cycle is different for several reasons, including the US Treasury injecting $2.5 trillion into the market by issuing more government bonds from the Federal Reserve's reverse repurchase program, and President Trump wanting to "run full throttle" with looser monetary policy to grow out of debt.
There are also plans to relax bank regulations to increase lending.
Additionally, despite inflation being above target, the US central bank has resumed interest rate cuts. According to the CME futures market, two more rate cuts are expected this year, with a 94% probability of a cut in October and an 80% probability of another cut in December.
The first bull market for Bitcoin coincided with the Federal Reserve's quantitative easing and China's credit expansion, ending when both the Fed and the Chinese central bank slowed down money printing at the end of 2013.
The second "ICO cycle" was mainly driven by the explosion of Chinese credit and currency devaluation in 2015, rather than the US dollar. He stated that the bull market collapsed as Chinese credit growth slowed and dollar conditions tightened.
During the third "COVID cycle," Bitcoin soared solely on US dollar liquidity, while China remained relatively restrained. Hayes explained that the cycle ended when the Federal Reserve began tightening policy at the end of 2021.
Hayes believes that while China will not drive this round of gains as strongly as in previous cycles, policymakers are taking action to "end deflation" rather than continue to withdraw liquidity.
He stated that this shift from deflationary resistance to at least neutral or mildly supportive monetary policy removes the main obstacle that would have stifled the cycle, allowing US monetary expansion to drive Bitcoin higher without being offset by Chinese deflation.
On-chain analytics firm Glassnode stated in August, "From a cyclical perspective, Bitcoin's price movements also echo previous patterns."
Saad Ahmed, head of the Asia-Pacific region for cryptocurrency exchange Gemini, told Cointelegraph earlier this month, "I think in terms of the four-year cycle, the reality is that we are likely to continue seeing some form of cycle."
Related: "Predatory" traders squeeze Bitcoin long positions, BTC faces risk of dropping to $114,000
Original article: “Arthur Hayes: Bitcoin (BTC) Four-Year Cycle is Dead, Monetary Policy is the Key Price Driver”
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