The Evolution of Bitcoin's Cyclicality: From Supply Scarcity to Mass Adoption

When will the next Bitcoin bull market occur? This question has been on investors’ minds for more than fifteen years. The asset’s history shows a clear pattern: every significant price increase is accompanied by specific catalysts—be it technological breakthroughs, institutional interest, or macroeconomic shocks.

Since 2009, the largest cryptocurrency by market cap has gone through numerous revaluation cycles. From a modest alternative asset to a core component of major financial players’ portfolios, understanding the mechanics of these cycles helps realize why Bitcoin’s history is a series of predictable waves generated by fixed supply and increasing integration into the traditional financial system.

Architecture of Bull Cycles: Supply and Demand as the Driving Forces

The foundation of each Bitcoin bull movement lies in its economic architecture. The fixed supply of 21 million coins is not just a technical limit; it’s a scarcity generator that periodically activates through halving events.

Every four years, Bitcoin’s issuance slows by half. The effect of this event manifests with the certainty of a physical law: throughout history, each halving has been followed by explosive dynamics. After the first event in 2012, the price soared by 5200%; after the second in 2016—by 315%; after the third in 2020—by 230%. The April 2024 halving reaffirmed this pattern, becoming one of the central catalysts of the current rally.

However, halving events themselves are just triggers. The real energy comes from a fundamental shift in perception: from a marginal cryptographic tool to a strategic asset.

2013: The Birth of the Phenomenon

Bitcoin’s debut cycle occurred amid complete uncertainty. The asset rose from $145 in May to $1,200 in December—a 730% increase—despite the complete absence of any regulatory framework.

The energy of this movement was fueled by two sources: firstly, growing media attention that transformed Bitcoin from a cryptographer’s hobby into a curiosity for the mass audience. Secondly, the Cypriot banking crisis demonstrated to concrete investors the tangible value of a decentralized store of value.

At that time, the main vulnerability of the young market also emerged: the Mt. Gox exchange hack, through which 70% of all transactions passed, shattered trust. The price fell below $300 throughout 2014, down 75% from the maximum(. This episode established one of Bitcoin’s main truths: its volatility is inseparable from infrastructure imperfections.

2017: Retail Takes the Stage

The second cycle developed differently. By 2017, Bitcoin was already recognizable, but most importantly, it gained an ecosystem of alternative assets in the form of thousands of ICO projects. The explosive interest in tokens indirectly accumulated capital into the largest asset in the space.

The price accelerated from $1,000 in January to $20,000 in December—a 1900% increase. Daily trading volume grew from )million to $200 billion. This was the first wave of mass retail participation, fueled by FOMO and media hype.

The correction was equally dramatic: an 84% drop to $3,200 in December 2018. Factors provoking this pullback were familiar from the previous cycle—this time, a combination of regulatory pressure $15 China banned ICOs( and natural market overboughtness.

2020-2021: Transition to Institutions

The third cycle was characterized by a qualitative shift in participant composition. If earlier movements were driven by enthusiasts and retail speculators, now corporations stood behind Bitcoin.

MicroStrategy began systematic accumulation, holding over 125,000 BTC. Tesla, Square, and other giants financed their positions. The main narrative shifted: from “internet money” to “digital gold” and a hedge against inflation, fueled by large-scale monetary stimulus during the COVID period.

The price rose from $8,000 in January 2020 to $64,000 in April 2021—a 700% increase. But the most significant change was not in price but in ownership structure: futures on Bitcoin appeared, and in some jurisdictions—exchange-traded funds. This opened the doors for capital previously inaccessible: pension funds, insurance companies, university endowments.

The decline was deep—)-53% in July 2021(—and was accompanied by concerns over mining’s environmental impact, but the market structure changed radically.

2024-2025: Regulation as a Catalyst

The current cycle was initiated by an unprecedented event for Bitcoin: approval of spot Bitcoin ETFs in the USA. In January 2024, the SEC approved regulated funds through which any American investor could access Bitcoin without managing private keys.

The effect was immediate. By November 2024, total inflow into spot Bitcoin ETFs exceeded )billion—surpassing historical flows into gold funds. BlackRock, via IBIT, accumulated 467,000 BTC.

In this context, the price rose from $40,000 in January to $88,990 in December—+122%$28 . As of the latest data, the asset is around $88,990, with a historical maximum of $126,080.

But the main change is the institutionalization of scale, where even drops of 10-15% do not cause panic, as investors view Bitcoin as a long-term asset rather than a speculative instrument.

Recognizing Bullish Signals: Market Techniques and Psychology

Predicting the start of a new rally requires monitoring three categories of indicators.

Technical Indicators: RSI above 70 traditionally signals upward momentum (in 2024, this level was crossed multiple times). Price crossing above 50- and 200-day moving averages confirms trend reversal. In this cycle, these signals formed sequentially.

Network Metrics: Decreasing Bitcoin reserves on exchanges indicate accumulation—investors withdraw coins, expecting growth. Increasing activity of addresses signals heightened interest. Inflows of stablecoins onto trading platforms create liquidity for purchases. All these phenomena were observed before and during the current rally.

Macroeconomic Factors: Lowering interest rates or expectations of rate cuts (as in 2024) shift capital into risk assets. Geopolitical uncertainty pushes investors toward dividend-protected assets. Political shifts favoring favorable regulation of cryptocurrencies open new participants.

Structural Trends Reshaping Future Cycles

Bitcoin as a Reserve Asset: The BITCOIN Act of 2024, proposed by Senator Cynthia Lummis, includes a proposal for the US to acquire up to 1 million BTC over five years. If realized, this would reclassify Bitcoin from a financial asset to a strategic raw material similar to gold. Bhutan has already accumulated 13,000 BTC through a government investment. El Salvador included Bitcoin in its national reserves. Each country following this example adds long-term government demand to the equation.

Technological Expansion of Functionality: The proposal to activate the OP_CAT code in the Bitcoin network could transform the asset. This feature would enable Layer-2 rollups and DeFi applications, allowing the network to process thousands of transactions per second. Bitcoin could potentially evolve from a pure store of value into a platform.

Multiplication of Regulated Financial Products: After the success of spot ETFs, the flow of derivative instruments—volatility futures, synthetic funds, integrated solutions—is inevitable. Each such product expands the potential buyer base.

Obstacles on the Path of the Current Wave

Profit-taking Volatility: Rapid movements of 10-15% in either direction remain common. When the price approaches psychological levels ($100,000), profit-taking can become sharp.

Speculative Overload: The popularity of ETFs attracts short-term traders. With leverage, this creates conditions for stop-loss triggers and cascading sales.

Regulatory Uncertainty: Despite ETF approval, Bitcoin’s legal status remains subject to political negotiations. A change in administration could radically reshape the regulatory landscape.

Macroeconomic Fluctuations: If the Fed unexpectedly raises rates due to uncontrolled inflation, the risk-free rate becomes a competitive alternative to risky assets.

ESG Pressure: Criticism of Bitcoin mining’s energy consumption continues to grow. Climate-focused regulators may impose restrictions.

Navigation for Investors: Practical Guide

1. Education as a Foundation
Don’t jump into the wave. Understanding Bitcoin technology, its role in a portfolio, and historical cycles is not a luxury but a minimum requirement. Study why prices in 2013 rose differently than in 2017, and why 2024 is qualitatively different.

2. Diversify Beyond Bitcoin
While Bitcoin is the central asset, placing all funds in one position carries unacceptable risk. Consider a portfolio including other cryptocurrencies with different use cases, traditional assets, and cash.

3. Choose a Platform with Impartial Security Assessment
The exchange should have: multi-factor authentication, cold storage of most assets, regular security audits. Do not keep large sums on a single platform.

4. Hardware Wallets for Long-term Storage
If your investment horizon exceeds a year, using an offline wallet (Ledger, Trezor) eliminates the risk of exchange hacking.

5. Monitor News and Policies
Regulatory announcements, Fed rate decisions, geopolitical events—all can trigger rapid corrections. Use reputable sources, not social media, for market analysis.

6. Mechanical Discipline in Trading
Set stop-losses. Do not trade out of fear or greed. If a position drops 20%, do not try to catch the falling knife hoping for recovery—move on.

7. Tax Planning
Bitcoin transactions generate taxable events. Keep documentation, consult a tax advisor. Ignoring this aspect can cost more than trading itself.

8. Community as a Knowledge Source
Online forums, conferences, webinars—surrounding yourself with experienced participants accelerates learning and helps avoid common beginner mistakes.

Critical Milestones Defining the Next Cycle

Watch these signals as indicators of upcoming movements:

• 2028 Halving. The next emission reduction event will occur in 2028. History suggests that the 6-12 months before this event are usually accompanied by rising speculative interest.

• ETF Flows. If monthly inflows into spot Bitcoin ETFs fall below (million, it signals waning institutional interest.

• Regulatory Announcements. Any declaration recognizing Bitcoin as a national reserve asset creates a cascade of demand.

• Forward Rate Movements. Inversion of the futures curve )when distant contracts are cheaper than near ones( indicates declining confidence.

Final Reflection: Cyclicality as an Unbreakable Law

Bitcoin’s 15-year history proves one thing: cyclicality is not an anomaly but the fundamental nature of the asset. Fixed supply, growing institutional integration, and periodic macroeconomic shocks create conditions for predictable revaluation waves.

The last Bitcoin bull market did not develop as previous ones did. It was more structured, less speculative on average, and more oriented toward long-term store of value than trading.

The next cycle will likely be even more mature—in terms of investors, technology, and regulation. But its fundamental driver will remain unchanged: scarcity meets demand, and history is rewritten at new price highs.

Be prepared, stay informed, and remember: in Bitcoin, opportunity and risk are two sides of the same wave.