Module 10: Stablecoins and Macro
Bitcoin's Four-Year Cycle and the Halving Debate
Chapter 9 of 12 · about 6 minutes
9.1 The calendar
Mint had seen a chart shared widely online: Bitcoin's price over its whole history, with vertical lines at each halving. After each line, the price rose dramatically over the following year or so, peaked, and then crashed.
"So all I have to do is buy after the halving and sell about a year and a half later?" Mint asked.
"That's what a lot of people believe," said Hash. "It's worked roughly that way in the past. But there are only a few cycles to learn from, and the market today is very different from the one in 2012. This chapter is about what the cycle is, why it might exist, and why it might not continue."
9.2 The halving schedule
As Module 1, Chapter 2 explained, the bitcoin block reward halves every 210,000 blocks, roughly every four years.
| Halving | Approximate date | Block reward after |
|---|---|---|
| 1st | November 2012 | 25 BTC |
| 2nd | July 2016 | 12.5 BTC |
| 3rd | May 2020 | 6.25 BTC |
| 4th | April 2024 | 3.125 BTC |
| 5th | Expected around 2028 | 1.5625 BTC |
9.3 The historical pattern
| Halving | Approximate price at halving | Approximate cycle peak | Time from halving to peak | Approximate multiple |
|---|---|---|---|---|
| 2012 | ~$12 | ~$1,150 (late 2013) | ~1 year | ~95x |
| 2016 | ~$650 | ~$19,700 (late 2017) | ~1.5 years | ~30x |
| 2020 | ~$8,700 | ~$69,000 (late 2021) | ~1.5 years | ~8x |
| 2024 | ~$64,000 | ~$126,000 (October 2025) | ~1.5 years | ~2x |
After each of the first three peaks came a deep bear market, with drawdowns of about 75% to 85% (Module 1, Chapter 13), followed by a recovery leading into the next halving. The fall after the October 2025 peak has been shallower so far.
Two patterns stand out: peaks have arrived roughly 12 to 18 months after halvings, and each cycle's multiple has been smaller than the last. The October 2025 high landed about 18 months after the 2024 halving, in line with the earlier timing but with the smallest multiple yet, in a market now shaped by ETFs and institutions.
9.4 Argument 1: the supply shock
The original explanation is simple supply and demand. Each halving cuts the flow of new bitcoin in half. If demand stays steady, less new supply should push prices higher.
| Halving | Daily new supply before | Daily new supply after |
|---|---|---|
| 2020 | ~1,800 BTC | ~900 BTC |
| 2024 | ~900 BTC | ~450 BTC |
The challenge: this effect shrinks every cycle. In 2012, the halving removed a large share of the bitcoin being added to the market. Today, most bitcoin that will ever exist has already been mined, and daily new supply is tiny compared with trading volume and ETF flows (Chapter 8).
At $100,000 per bitcoin, the 2024 halving reduced daily new supply by about 450 BTC, around $45 million a day. A single strong day of ETF flows can be more than ten times that (Chapter 8).
"So the supply shock gets smaller in importance every time," said Mint.
"In relative terms, yes," said Hash. "That's the core of the argument that the halving matters less now."
9.5 Argument 2: liquidity coincidence
Some analysts argue that the four-year pattern lines up with global liquidity cycles (Chapter 4), and that the halving timing is partly coincidence.
| Bull market | Macro backdrop |
|---|---|
| 2013 | Large central bank asset purchases following the financial crisis |
| 2017 | Strong, synchronised global growth and easy financial conditions |
| 2020 to 2021 | Massive pandemic-era liquidity, near-zero rates |
| Bear market | Macro backdrop |
|---|---|
| 2018 | Rising US interest rates and balance sheet reduction |
| 2022 | Rapid rate hikes and quantitative tightening |
In this view, Bitcoin's cycles reflect when money was abundant or scarce, and the halving's main role may be as a story that coordinates market attention.
9.6 Argument 3: a self-fulfilling cycle
A third view: the cycle exists partly because people believe in it. If enough traders expect a rally after the halving, they buy, creating the rally. If they expect a peak about a year and a half later, they sell, creating the peak. Belief becomes behaviour.
The weakness of self-fulfilling patterns is that they can break once everyone tries to front-run them. If traders sell earlier to beat the expected peak, the peak comes earlier, and the pattern shifts.
9.7 Argument 4: the market has changed
| Change | Possible effect on the cycle |
|---|---|
| ETFs and institutional ownership (Chapter 8) | Steadier demand; flows tied to macro rather than the halving |
| Lower volatility over time | Smaller booms and busts |
| Diminishing supply impact | Halvings matter less to supply and demand |
| Larger market size | More capital needed to move prices by the same percentage |
| Derivatives and hedging (Modules 7 and 8) | More ways to express views without buying spot |
Some argue the four-year cycle will fade into a longer, smoother pattern. Others argue cycles will persist because human psychology, leverage, and liquidity still move in waves.
9.8 What to do with all this
Node summarised. "So the four-year cycle has worked roughly three or four times, there are several competing explanations, and the market has changed."
"That's an honest summary," said Hash. "Use the cycle as one lens, not as a timetable. Don't bet everything on a peak arriving on a particular date."
Practical ideas:
- Combine cycle thinking with other evidence: on-chain metrics (Module 6, Chapter 12), macro liquidity (Chapter 4), and positioning (Module 7, Chapter 9).
- Avoid all-or-nothing timing. Gradual buying and gradual profit-taking reduce the cost of being wrong about timing (the personal finance module).
- Watch for whether the pattern is holding, rather than assuming it will.
- Remember sample size. Three or four cycles is very little data.
9.9 Try it yourself
Find Bitcoin's price on the dates of each halving and its peak price in each following cycle. Calculate the multiple and the time from halving to peak, and check whether the figures match the table in section 9.3. Then compare each cycle's timing with the US Federal Reserve's interest rate decisions in the same periods. Which explanation do you find more convincing, and why?
Key takeaways from this chapter
- Bitcoin's block reward halves roughly every four years; the most recent halving was in April 2024.
- Historically, cycle peaks arrived about 12 to 18 months after halvings, followed by deep bear markets, with shrinking multiples each cycle.
- The supply shock explanation weakens each cycle, as new supply becomes small relative to trading and ETF flows.
- Some analysts argue the cycle mainly reflects global liquidity, with the halving partly coincidental.
- The cycle may be partly self-fulfilling, which also means it can shift as traders try to front-run it.
- ETFs, institutions, and a larger market may change or weaken the pattern.
- Use the cycle as one lens among many, not as a timetable.