Bitcoin came close to revisiting levels last seen in June as crypto liquidations swelled past $19 billion last week, a jolt that pushed traders back to the basics of the Bitcoin four-year cycle playbook. Some market participants are trimming risk on the view that the cycle is nearing its final stage, while others argue macro liquidity now outweighs halving dynamics and could reset expectations for the next leg.
Prices test June-area support as liquidations surge
The latest drawdown accelerated as forced unwinds rippled across derivatives venues. With billions in liquidations clearing out leverage, spot prices slipped toward a familiar support zone before stabilizing, prompting a broader rethink of where Bitcoin sits in its cycle.
- Liquidations exceeded $19 billion last week, amplifying downside
- Price briefly approached levels last seen in June before a modest bounce
- Traders are split between cycle-based positioning and macro-driven strategies
In the immediate term, attention has turned to whether the washout has reset positioning enough to allow a steadier base, or if another leg lower is needed to complete the current phase.
How the Bitcoin four-year cycle is supposed to work
The traditional framework for the Bitcoin four-year cycle centers on the halving, when miner rewards drop by 50%. That event reduces the flow of new coins, historically tightening supply just as investor interest rebounds.
A typical sequence, according to adherents:
- Halving curbs new supply
- Demand rises, setting off a bull run and new highs
- A sharp correction follows as euphoria fades
- An extended period of range-bound consolidation lasts roughly 1.5–2 years
- The next halving restarts the cadence
During the last cycle, Bitcoin set an all-time high near $67,000 in November 2021 before entering a prolonged reset. For cycle purists, the current slump fits the “late-cycle” profile that precedes a drawn-out stabilization phase.
Why some traders still trust the Bitcoin four-year cycle
Supporters say the rhythm is not unique to crypto. One veteran chart watcher on X argued that multi-year turning points also appeared in historical U.S. equity data, suggesting the timing impulse could persist in Bitcoin. For these traders, the recent slide and elevated liquidations are the kind of capitulation that often marks the closing chapter of a cycle.
Does the halving still move markets?
The halving remains hard-coded into Bitcoin’s design and is the direct throttle on new supply. When prices trend higher, miners often sell less, which can further constrain available coins and create a perceived “supply shock.”
However, the market structure has evolved:
- Institutional participation has grown
- Trading volumes and derivatives activity are larger than in past cycles
- On-ramps like ETFs and regulated venues have diversified liquidity
That evolution has led some professionals to question whether the halving alone can steer the market to the same degree as before.
Skeptics say the playbook is outdated
Wintermute desk strategist Jasper De Maere has argued that the simple “buy before halving, sell soon after” approach no longer captures the drivers of price because miner rewards now represent a smaller share of daily turnover. In this view, when post-halving price action underwhelms, it can shake conviction and trigger reactive selling—less a function of programmed supply changes and more about positioning and liquidity.
Liquidity narrative: macro may be in the driver’s seat
A growing camp, including BitMEX co-founder Arthur Hayes, frames Bitcoin’s path through the lens of global liquidity rather than a strict Bitcoin four-year cycle. In a recent blog post, Hayes contended that central bank policy—especially the balance between quantitative tightening and easing—has become the dominant force shaping risk appetite across assets, including crypto.
Key elements of the liquidity thesis:
- Looser monetary policy can expand liquidity and lift risk assets
- Tolerance for inflation modestly above target could keep financial conditions easier than expected
- As liquidity rises, investors may favor assets perceived as scarce, which can include Bitcoin
This approach doesn’t dismiss the halving; it reorders the hierarchy. Halving effects may still matter at the margin, but macro liquidity sets the backdrop that determines whether those effects are amplified or muted.
What traders are watching next
With the debate back in focus, market participants are tracking a mix of on-chain, derivatives, and macro indicators to gauge the next directional move.
- Liquidity signals: Central bank balance sheets, Treasury cash balances, and money market flows
- Derivatives positioning: Open interest, funding rates, and basis spreads to assess whether leverage has reset
- Spot flows: ETF creations/redemptions and exchange net flows as proxies for real-money demand
- Miner behavior: Miner-to-exchange transfers and treasury balances for signs of supply pressure
- On-chain thresholds: Realized price bands and long-term holder cost basis as potential support zones
- Macro crosswinds: Dollar strength, real yields, and equity risk sentiment that often correlate with crypto
Price levels in focus include the June-area lows that drew buyers earlier in the year, as well as recent breakdown points that now act as overhead resistance. A decisive reclaim of former support would bolster the case that the worst of the deleveraging is past.
The case for patience—and balance
Where the camps converge is on the value of patience. Cycle adherents view sideways periods as opportunities to accumulate with a multi-year lens. Liquidity-focused traders emphasize staying flexible around policy shifts and broader risk appetite.
Both sides caution against overreacting to single data points. The same halving that once dominated crypto discourse still provides a supply narrative, even if its immediate market impact is smaller. Likewise, liquidity conditions can change quickly, making risk management essential.
Outlook
Whether the coming months validate the Bitcoin four-year cycle or underscore the primacy of global liquidity, last week’s $19 billion in liquidations reset positioning and reignited a core debate about what truly drives Bitcoin. If liquidity continues to loosen and spot demand steadies, the market could find a base above the summer troughs. If macro tightens or risk appetite sours, a deeper test cannot be ruled out.
For now, the market’s next chapter may hinge on both playbooks: the halving’s scarcity story and the macro liquidity tide. Traders will likely keep one eye on central bank signals and the other on Bitcoin’s own on-chain rhythms as they navigate the late stages of this cycle.
This article is for informational purposes only and does not constitute investment advice.
Article Source: Mi Tread
