The four-year cycle of Bitcoin may come to an end as institutions lead the market toward maturity.

The four-year bull and bear cycle of Bitcoin has become a hot topic in the industry. This pattern of big pump to crash and then to new highs has run through most of Bitcoin's history. However, there is ample reason to suggest that this four-year cycle may have come to an end.

To understand this phenomenon, we need to first explore the reasons behind the four-year cycle. It can mainly be attributed to three factors:

1. Halving effect

Approximately every four years, Bitcoin mining rewards are halved. This mechanism often drives prices up in the following years by creating a supply shortage.

Asset scarcity is usually measured by the stock-to-flow ratio (S2F), which is the ratio of the total existing supply to the annual new supply. Taking gold as an example, its S2F ratio is about 60. Currently, Bitcoin's S2F ratio is about 120, meaning its annual new supply is only about half of that of gold. This number will continue to increase after each halving.

2. Global Liquidity Cycle

Bitcoin is closely related to global M2 liquidity. Many opinions suggest that liquidity also follows a cycle of about four years. Although its accuracy is not as high as Bitcoin halving, this correlation does exist. If this theory holds, it is reasonable for Bitcoin to stay in sync with it.

3. Psychological Factors

Each bull market triggers a new wave of popularization. People's behavior patterns confirm a viewpoint: first they ignore, then they ridicule, next they resist, and finally they accept. This cyclical process pushes people to further embrace the value of Bitcoin approximately every four years. People often fall into excessive excitement, and the subsequent crash restarts the entire cycle.

So, are these factors still dominating the price movement of Bitcoin?

In terms of the halving effect, the trend of the proportion of newly added Bitcoin to the total supply decreasing after each halving is becoming weaker. When the newly added supply accounted for 25% of the total supply that year, reducing it to 12.5% had a significant impact; whereas now, with a decrease from around 0.8% to 0.4%, its actual influence is far less than before.

The impact of global liquidity on Bitcoin prices still exists, but it is changing. As Bitcoin shifts from being retail-driven to being institution-driven, trading behavior has changed. Institutions tend to accumulate for the long term, and short-term price fluctuations will not easily shake them out of the market. Therefore, while global liquidity will still affect Bitcoin prices, its sensitivity to M2 liquidity will continue to decrease. Moreover, the behavior of over-the-counter institutions purchasing Bitcoin has also reduced price volatility, which is where the true confidence in Bitcoin lies.

From a psychological perspective, the wider the adoption of Bitcoin, the stronger its stability at the psychological level of people. The influence of retail investors' selling behavior will weaken, and the market dominance shifting to institutional buyers will also reduce the volatility caused by retail investors on the price.

In summary, Bitcoin remains one of the most promising assets in the world, but its growth model is undergoing a transformation, shifting from cyclical growth to (on a logarithmic scale) linear growth. Global liquidity has become the dominant force in the current market. Unlike the top-down flow of most assets (from institutions to retail), Bitcoin has achieved penetration from the grassroots to mainstream institutions in a bottom-up manner. It is precisely for this reason that we are witnessing the market becoming more stable as it matures, with its development model becoming increasingly standardized and orderly.