Understanding the final stage of the Bitcoin 4-year cycle

Bitcoin has spent the last several months grinding lower while stocks and AI names hit fresh highs. For many investors, that feels like a sign that something is broken. But when you zoom out, Bitcoin still appears to be following its familiar 4-year rhythm – and several powerful signals that historically marked major bottoms have just flashed again.

Why Bitcoin can fall while stocks hit new highs

It’s tempting to assume Bitcoin should always move in sync with tech stocks or the Nasdaq. In reality, Bitcoin follows its own 4-year cycle, driven largely by its halving schedule and investor psychology. Sometimes that cycle lines up with the stock market. Sometimes it doesn’t.

Right now, stocks look like they’re in the late stages of a bull market, while Bitcoin is in the final stage of a bear market. Both can be true at the same time. Bitcoin topped earlier in the cycle than most risk assets and has been in a long, grinding drawdown even as equity indices print new all-time highs.

The three rare signals that just aligned

Over the last week, three major signals have appeared together – a combination that has only shown up at or near the exact bottom of every previous Bitcoin bear market:

• Monthly RSI near historic lows: The Relative Strength Index (RSI) on the monthly chart just hit its second-lowest level in Bitcoin’s 17-year history. This kind of extreme oversold reading has only appeared around the 2015, 2019, and 2022 cycle bottoms.

• Miner capitulation: Bitcoin miners have recently capitulated – a period where weaker miners are forced to shut down or sell coins aggressively. Historically, miner capitulation has coincided with or slightly preceded major cycle lows.

• More than half of all BTC supply is underwater: For the first time this cycle, over 50% of all Bitcoin is held at a loss relative to its holder’s cost basis. That kind of broad unrealized loss tends to mark maximum pain – and has aligned with past bear market floors.

Each of these signals on its own is notable. All three showing up together has, so far, only happened at the deepest points of previous bear markets.

The rising floor of each Bitcoin cycle

To put today’s prices in perspective, it helps to look at prior cycle lows:

• 2015 bottom: around $152

• 2019 bottom: around $3,200

• 2022 bottom: around $15,500

• Current cycle: panic and fear around the $60,000 region

Every bear market bottom in Bitcoin’s history has been significantly higher than the previous one. The price level that feels like a disaster today would have been beyond optimistic in any earlier cycle. That rising floor is one of the strongest long-term arguments for the 4-year cycle still being intact, even if the details change each time.

How AI and macro forces pulled capital away from Bitcoin

This drawdown isn’t being driven by a crypto-specific blowup like FTX or Terra. Instead, it’s largely a macro story with two main engines:

1. The usual late-cycle Bitcoin washout. Late in each 4-year cycle, leveraged longs get flushed out, sentiment turns sour, and “Bitcoin is dead” headlines reappear. This reflexive selling is a recurring feature of every bear market.

2. The AI capital rotation. At the same time, capital has been racing into artificial intelligence and related trades. Money flowing into AI infrastructure, chip stocks, and upcoming IPOs is money that isn’t sitting in Bitcoin.

You can see this in the flows: since April 1, memory chip ETFs have attracted roughly $12.7 billion, while Bitcoin ETFs have seen over $2 billion in outflows. That’s not just bad vibes – it’s a measurable rotation of capital from Bitcoin into AI and high-profile tech names.

That doesn’t mean Bitcoin is broken. It means capital has temporarily found a hotter narrative. And capital that rotates out can rotate back in once the macro backdrop shifts and the AI trade matures.

Interest rates, inflation, and why they matter for Bitcoin

Bitcoin is also dealing with the highest interest rate environment of its life. With 10-year and 30-year U.S. Treasury yields hovering around 4.5–5%, investors can earn a relatively attractive return in government bonds. When “safe” assets pay that much, every risk asset – including Bitcoin – faces pressure.

There’s a catch, though: the U.S. government cannot sustainably finance its growing debt at these elevated rates forever. At some point, the math forces rates lower, not because central banks want to be generous, but because the system can’t handle the interest burden indefinitely.

At the same time, the main driver of recent inflation – war-related energy shocks – appears to be easing. With conflict risk cooling and oil prices dropping sharply, inflation pressures can subside. Once inflation cools, markets tend to shift from expecting rate hikes to pricing in rate cuts.

Historically, that transition from rising to falling rates has been one of the most supportive macro backdrops for Bitcoin. When bonds stop offering a strong real return, capital is pushed back out the risk curve toward assets like BTC.

On-chain data: what long-term holders are doing

Price alone doesn’t tell the full story. On-chain data – what’s happening under the hood on the Bitcoin network – is flashing strong accumulation signals:

• MVRV Z-Score in the accumulation zone: This metric compares market price to the average cost basis of holders. Readings below 1 typically mark attractive accumulation zones. It’s currently around 0.41, deep in that range.

• Long-term holder SOPR below 1: SOPR (Spent Output Profit Ratio) below 1 means coins are moving at a loss. When even long-term holders (those who have held for more than about five months) are realizing losses, it usually signals maximum financial pain – a condition that tends to occur near major bottoms.

• Record accumulation by long-term holders: Long-term holders now control roughly 82.5% of the circulating supply and have just posted their largest 30-day accumulation on record. In other words, the most patient, historically successful cohort is buying more aggressively now than at any other time.

These are not the behaviors you typically see near a cycle top. They’re the behaviors you see when strong hands believe the asset is cheap and are willing to absorb supply from panicked sellers.

The 200-week moving average and why it matters

One of the most important technical levels in Bitcoin’s history is the 200-week moving average (200W MA). This line represents roughly four years of average price – essentially one full Bitcoin cycle.

In prior bear markets (2015, 2018, 2022), Bitcoin has bottomed at or just below this line before beginning a new uptrend. In 2022, the breakdown below it was deeper than usual, but that was largely due to idiosyncratic events like major exchange and lender collapses.

In the current cycle, Bitcoin recently sliced down to around the 200W MA near $61,000, swept slightly below it, then bounced and closed back above. That kind of “sweep and reclaim” – combined with a sharp 12% bounce off the lows – is exactly how bottoms often form in real time.

The power law and the long-term trend

Another way to look at Bitcoin’s long-term trajectory is through the so-called power law model. When you plot Bitcoin’s entire price history on a logarithmic chart against time, the wild volatility compresses into a surprisingly tight upward-sloping band. The correlation of this trend is extremely high, suggesting that adoption over time drives a relatively steady long-term path.

This model has historically been much better at identifying the floor than the ceiling. For example, it projected a potential 2026 bottom around $60,000 – roughly where the current cycle’s low appears to be forming – even though it overshot the last cycle’s top.

The key takeaway isn’t that math guarantees a specific floor, but that Bitcoin is currently trading well below its long-term trend line. In terms of deviation from that 16-year trajectory, today’s prices are as “cheap” relative to trend as they were at the depths of the 2022 bear market.

Could the 4-year cycle break this time?

It’s fair to ask whether the pattern could finally fail. Could Bitcoin keep bleeding and invalidate the 4-year cycle entirely? It’s possible, but the probabilities and the risk/reward profile matter.

Historically, major bear market lows have occurred roughly 900 days after a halving. On that timing, a final low later this year – around October or November – wouldn’t be out of character. If Bitcoin were to lose the $59,000 level on a weekly close, some plausible downside zones include:

• The realized price: the network’s average cost basis, currently in the mid-$50,000s.

• A deeper flush: if this cycle mirrored 2022’s percentage drawdown, a spike low in the mid-$40,000s could be possible.

However, Bitcoin is already down around 50% from its peak. Each cycle’s maximum drawdown has tended to shrink: roughly 94%, 87%, 84%, then 77%. That pattern points to a smaller peak-to-trough decline this time, likely in the low 70% range at most. From current levels, that implies limited additional downside compared to the potential upside if the next bull leg plays out.

In other words, even if the market hasn’t printed its exact bottom yet, the bulk of the damage may already be behind us. For more on how to navigate these phases with a rules-based approach, it’s worth reading this guide to using dynamic DCA across Bitcoin cycles.

The AI mania and the coming rotation back

Today, the consensus trade is to be all-in on AI and underweight or out of Bitcoin. Chip stocks, AI infrastructure, and related IPOs are attracting enormous inflows at very rich valuations. That’s what the late stages of a mania often look like.

Bitcoin, by contrast, was the first major risk asset to top this cycle and has been the first to suffer a deep correction. If history rhymes, it’s also likely to be the first to bottom and the first to recover once macro conditions turn and the AI trade starts to exhaust itself.

As rate cuts come back into view, inflation cools, and high-flying AI names begin to look fully priced, capital will go searching for the next asymmetric opportunity. A structurally scarce asset that has already absorbed a 50% drawdown and is trading near long-term trend support is a natural candidate.

Potential price targets for the next phase

No model or analyst can guarantee future prices, but based on historical cycles, macro expectations, and long-term trend models, a reasonable forward view might look like this:

• 12-month target: Bitcoin in the region of $150,000 by this time next year, assuming macro conditions ease and capital rotation reverses.

• Next cycle peak: a potential move toward the $200,000–$215,000 range by the end of the next full cycle.

These numbers are not certainties, but they fit within the pattern of each cycle’s floor rising far faster than anyone expected in the previous cycle. The key is less about hitting an exact target and more about recognizing where we are in the broader rhythm.

Staying sane in the final stage of the bear

The final stage of a Bitcoin bear market is where emotions run hottest. Prices feel heavy, narratives turn negative, and it’s easy to believe “this time is different” in the worst possible way. Yet historically, these have been the periods that offered the best long-term opportunities.

Whether the absolute bottom is already in or still a few months away, the combination of:

• Deep on-chain accumulation signals

• Extremely oversold long-term technicals

• A rising cycle floor compared to past bear markets

• A likely shift from high to lower interest rates over time

• And an overcrowded AI trade that has drained capital from BTC

all point toward a similar conclusion: the long-term trend remains intact, and the next expansion phase is being quietly set up while most people are distracted elsewhere.

If you want a contrasting viewpoint on the 4-year cycle and why some analysts think it may be weakening, it’s worth checking out this deeper dive on whether the Bitcoin four-year cycle still matters. Understanding both sides of the argument can help you build a conviction that survives the volatility.

In the end, the question isn’t whether Bitcoin will be noisy in the next few months – it almost certainly will be. The more important question is where you believe it will be one or two years from now, and whether your strategy matches that belief.