The halving-driven pricing model that propelled Bitcoin's early history is losing its influence. As more Bitcoin enters circulation, the relative impact of each halving is diminishing.

According to Grayscale, today's Bitcoin market is more influenced by institutional capital rather than the retail speculation that defined earlier cycles.

Unlike the explosive price increases of 2013 and 2017, Bitcoin's recent price rise has been more controlled. Grayscale notes that the subsequent 30% drop resembles a typical bull market correction.

Interest rate expectations, bipartisan cryptocurrency regulatory momentum in the U.S., and Bitcoin's integration into institutional portfolios are increasingly influencing market behavior.

Since its inception, Bitcoin's price has followed a predictable pattern. A programmed event halves the supply of Bitcoin, creating scarcity. This is often accompanied by a period of sharp price increases, followed by a correction. This widely recognized four-year cycle has strongly influenced investor expectations since Bitcoin's early days.

According to Grayscale's latest analysis, supported by on-chain data from Glassnode and market structure insights from Coinbase Institutional, Bitcoin's price trajectory is being interpreted differently. The analysis shows that by the mid-2020s, Bitcoin's price behavior may be transcending traditional models. Bitcoin's price volatility appears to be increasingly influenced by factors such as institutional demand and broader economic conditions.

This article explores why Grayscale believes the four-year cycle framework is gradually losing its complete explanatory power over prices, outlining Grayscale's analysis of Bitcoin cycles, supporting evidence from Glassnode, and why some analysts still believe Bitcoin will follow the four-year cycle.

Bitcoin halving occurs approximately every four years, reducing the issuance of new Bitcoin by 50%. In the past, these supply reductions have always heralded the arrival of major bull markets:

2012 halving — peak in 2013

2016 halving — peak in 2017

2020 halving — peak in 2021.

This pattern stems from an inherent scarcity mechanism and investor psychology. Retail traders are the primary drivers of demand, and reduced supply leads to strong buying.

However, as a larger portion of Bitcoin's fixed supply of 21 million has already entered circulation, the relative impact of each halving is gradually diminishing. This raises questions about whether supply shocks can continue to dominate the cycles.

Did you know? Since 2009, halvings have occurred in 2012, 2016, 2020, and are expected in 2024. Each halving has permanently reduced Bitcoin's inflation rate and pushed annual issuance toward zero, while reinforcing the narrative of Bitcoin's digital scarcity among long-term holders and analysts.

Grayscale concludes that the current market is significantly different from past cycles in three ways:

Previous cycles relied on strong buying from individual investors on retail platforms. Today, capital flows are increasingly driven by exchange-traded funds (ETFs), corporate balance sheets, and professional investment funds.

Grayscale observes that institutional tools attract patient long-term capital. This contrasts with the rapid, emotion-driven retail trading of 2013 and 2017.

The peaks of Bitcoin in 2013 and 2017 were marked by extreme, unsustainable price surges followed by crashes. Grayscale points out that by 2025, price increases are more controlled, and the subsequent 30% drop appears to be a standard bull market correction rather than the beginning of a multi-year bear market.

In Bitcoin's early days, price volatility was largely independent of global economic trends. By 2025, Bitcoin has become sensitive to liquidity conditions, fiscal policy, and institutional risk sentiment.

Key influencing factors mentioned by Grayscale include:

Expected changes in interest rates

Growing bipartisan support for U.S. cryptocurrency legislation

Bitcoin's inclusion in diversified institutional portfolios.

These macro factors exert influence independent of the halving timeline.

Did you know? When block rewards are halved, miners receive fewer Bitcoins for the same work. This may prompt higher-cost miners to temporarily suspend operations, which typically leads to a short-term drop in hash rate, followed by a network rebalancing.

Glassnode's on-chain research shows that Bitcoin's price has deviated from historical norms in several ways:

Long-term holder supply is at a historical high: The proportion of circulating supply controlled by long-term holders is greater than ever. Ongoing accumulation limits the number of Bitcoins available for trading, reducing the typical supply shock effect associated with halvings.

Despite corrections, volatility is decreasing: Although a significant price correction occurred by the end of 2025, realized volatility remains far below the levels seen at previous cycle turning points. This indicates that the market is handling large fluctuations more effectively, often due to greater institutional participation.

ETFs and custody demand are reshaping supply distribution: On-chain data shows an increase in transfers to custody wallets, which are associated with ETFs and institutional products. Coins held in these wallets tend to remain inactive, reducing the number of Bitcoins actively circulating in the market.

According to Grayscale, Bitcoin's price behavior is gradually diverging from the four-year model, becoming more responsive to:

Stable long-term institutional capital

Improved regulatory environment

Global macroeconomic liquidity

Ongoing ETF-related demand

An expanding group of long-term holders.

Grayscale emphasizes that corrections remain inevitable and may still be severe. However, they do not automatically signify the beginning of a long-term bear market.

Did you know? After each halving, Bitcoin's inflation rate drops sharply. Following the 2024 halving, the annual supply inflation rate will be lower than that of many major fiat currencies, reinforcing its comparison to scarce commodities like gold.

Certain analysts, often citing Glassnode's historical cycle overlays, continue to believe that halvings remain a major driving force. They argue that:

Halvings are still a fundamental and irreversible supply reduction.

Long-term holder activity continues to cluster around halving periods.

Even with increased institutional participation, retail-driven activity may re-emerge.

These differing viewpoints indicate that the discussion is far from over. The debate and counterarguments regarding whether Bitcoin is ignoring the four-year cycle reflect an evolving market.

Grayscale's arguments against the traditional dominance of the four-year cycle are based on clear structural changes. These changes include increased institutional participation, deeper integration with global macro conditions, and persistent changes in supply dynamics. Supporting data from Glassnode and Coinbase Institutional confirms that today's Bitcoin market operates under more complex forces, rather than the retail-dominated cycles of the past.

As a result, analysts are placing less emphasis on fixed halving-based timing models. Instead, they focus on on-chain metrics, liquidity trends, and institutional flow indicators. This more nuanced approach better captures Bitcoin's ongoing transition from a fringe digital asset to a recognized part of the global financial landscape.

Related: U.S. Treasury Leads Tokenization Wave, CoinShares Predicts Growth Momentum in 2026

Original article: “Why Grayscale Thinks Bitcoin (BTC) Will Ignore the 4-Year Cycle This Time”

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