The decision point for bitcoin is here

If you would put $10,000 in Bitcoin during the 2016 having, it would have turned into $350,000 just 17 months later. That same $10,000 invested during the 2020 having would have grown to $65,000 over the next 17 months. But in both instances, Bitcoin saw over a 75% decline in the following 12 months. 

Fast forward to today and Bitcoin has already delivered over a 100% return from its April 2024 having. But more importantly, we've now reached the 17-month window that coincided with the end of the last two bull markets. 

Past performance isn’t a reliable indicator of future results.

This timeline is based on what's known as the Bitcoin 4-year cycle theory

According to this, Bitcoin tends to move on approximately a 4-year timeline wherein price rallies for the first 17 months after the having followed by a 12-month bare market and then about a 17-month recovery phase heading into the next having.

If Bitcoin were to follow this trajectory again and see another 75% bare market, it could hypothetically take the price down to around $30,000 by late 2026.

But heading into the last two Bitcoin bull market tops, we also saw an overheated sign from key onchain metrics. This chart shows a composite of those metrics. In late 2017 and early 2021, over 90% of these indicators were triggered, suggesting the buildup of irrational euphoria.

Today, this composite is still at zero, meaning not a single onchain indicator is pointing to a bull market top for Bitcoin right now. So, on one hand, the four-year cycle timeline is warning of a potential downturn, but on the other hand, Bitcoin's internal health suggests the bull market may have further room to run.

To evaluate whether we're likely on the verge of another bare market, we need to first understand what drives Bitcoin's 4-year cycle

This pattern mirrors something called the business cycle, a phenomenon where the economy expands as growth and jobs rise, then slows into a downturn or recession, and eventually recovers before starting the process again.

One of the clearest ways to track this is through something called the ISM manufacturing PMI index. This is a monthly survey that tells us whether the US economy is picking up or slowing down.

Every time the PMI has risen sharply from below 50, it's marked the beginning of an economic recovery and expansion phase. And if we put Bitcoin's price on top, those periods have coincided with some of the strongest rallies because economic acceleration boosts investor confidence and increases speculative capital.

The opposite happens when the PMI falls from high levels to under 50, indicating an economic contraction. These are instances when Bitcoin also tends to see its sharpest draw downs.

Now throughout Bitcoin's recent bull run, the PMI has remained around the 50 level

Put simply, Bitcoin has been rising during a period where the economy has basically been neutral. This is quite different from the textbook bull runs of the past, which were fueled by a clear pickup in economic activity.

A key factor driving this difference is likely institutional demand. This chart tracks the total amount of Bitcoin held by ETFs, a good proxy to understand institutional demand.

Back in 2023, these funds held only around $10 billion worth of Bitcoin. Today, it's risen to over $130 billion. That's nearly 7% of Bitcoin's total circulating supply accumulated in just two years.

If we add Bitcoin on top, we see the two lines move quite closely together, meaning ETF demand explains a large share of Bitcoin's recent movement.

Since 2023, we can see that ETF flows have gone from having a minor influence to now explaining nearly 50% of Bitcoin's moves. This cycle has been primarily driven by institutions, unlike earlier cycles dominated by retail investors.

Major institutions have taken notable positions:

• Wells Fargo: $160 million exposure to Bitcoin ETFs
• Harvard’s endowment: nearly half a billion dollars
• Morgan Stanley & Bank of America: recommending clients allocate up to 4%

Some of the world’s most conservative institutions are no longer debating whether Bitcoin belongs in portfolios — only how much. This shift may explain why this cycle behaves differently.

So whether Bitcoin sees a typical 4-year cycle play out or not likely depends on institutional demand from here

Institutional flows hinge on macro conditions — particularly the PMI.

If we put the PMI alongside the performance of industrial metals, we see a tight relationship. Recently, metals are rising, historically signalling a pickup in the business cycle. This environment supports higher institutional demand — a key reason figures like Cathy Wood and Bernstein believe the 4-year cycle may be breaking.

But nothing is guaranteed.

If the PMI rolls into contraction, institutions may pull back, increasing risk of a traditional Bitcoin downturn. To evaluate the risk of a recession in the next 12 months, we can look at this model created by the Federal Reserve. Historically, recession odds spike above 25% before every downturn.

In 2023–2024, recession odds surged to 70% before falling to 25%. The immediate threat has eased — but risks remain elevated compared to periods of strong growth. That’s why recession odds and PMI trends are the two key variables to watch if we want to understand whether institutional capital will keep driving Bitcoin upward — or whether the 4-year cycle resets.

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