Why is the cyclical upward trend of Bitcoin crucial for investors

Since its inception in 2009, Bitcoin has experienced a series of intense price fluctuations. From the first major jump in 2013 to the mechanistic rally in 2024-25, each cycle reveals the underlying logic of the market. Understanding these patterns not only helps investors seize opportunities but more importantly, it helps to understand what drives Bitcoin’s bull runs.

The Current Bitcoin: A New Stage from $40K to $87K

By the end of 2024, Bitcoin has risen from about $40,000 at the start of the year to $87,190, an increase of 132%. Behind this rally are clear drivers: approval of spot Bitcoin ETFs, the arrival of the fourth halving, and unprecedented enthusiasm from institutional investors.

It’s worth noting that BTC still has about 30% room to grow relative to its all-time high of $126,080. This relative position influences market psychology—full of anticipation yet with risks of correction. 24-hour trading volume is approximately $1.03B, with a market cap surpassing $1.74 trillion.

The True Definition of a Bull Run

A bull run is not just a price increase; it’s a comprehensive explosion of price, sentiment, liquidity, and policy. It typically has three characteristics:

1. Technical Validation: RSI surpassing 70, the 50-day moving average crossing above the 200-day moving average—these are classic signals in traditional markets, also applicable to crypto assets.

2. On-Chain Data Support: Increased inflow of stablecoins into exchanges, decreasing BTC balances on exchanges, rising large wallet holdings—these on-chain footprints point in one direction: retail and institutional accumulation.

3. Macro Environment Alignment: Whether it’s central bank policies, geopolitical tensions, or regulatory stances, moments of resonance can collectively push prices higher or suppress them.

Three Major Cycles in History

2013: The $145 to $1,200 130x story

The 2013 bull run can be seen as Bitcoin’s “enlightenment period.” From $145 in May to $1,200 in December, a 730% increase.

The driving forces were simple: media attention, the Cyprus banking crisis triggering safe-haven demand. People began to realize there might be an asset storage method outside government control.

But this cycle ended abruptly. In early 2014, Mt. Gox—then handling 70% of Bitcoin transactions—was hacked, causing BTC to fall below $300, a drop of over 75%. This event taught the market a bloody lesson: infrastructure security is critical.

2017: The ICO boom driving from $1,000 to $20,000

2017 was the “celebrity moment” for crypto assets. BTC soared from $1,000 at the start of the year to $20,000 by year-end, a 1,900% increase. Daily trading volume surged from $200 million to $15 billion.

The stars of this show weren’t just Bitcoin but thousands of ICO projects. Newbie investors flooded in, exchange user numbers exploded, and social media was full of dreams of wealth.

But excessive speculation came at a cost. Throughout 2018, BTC declined 84%, halving from $20,000 to $3,200. This downturn lasted over two years until new catalysts emerged.

2020-2021: Institutional entry and the “Digital Gold” narrative

Starting from $8,000, BTC surged to over $64,000 in 16 months, a 700% increase. The key difference was that buyers were no longer mainly retail but listed companies like MicroStrategy, Square, Grayscale, which began to include BTC in their corporate asset allocations.

The pivotal moment was the approval of Bitcoin futures contracts at the end of 2020, followed by the launch of multiple overseas spot ETFs. This opened a compliant channel for institutional investors—they could hold BTC indirectly through familiar financial instruments without managing private keys and wallets themselves.

The pandemic-era unlimited quantitative easing also reinforced the “Digital Gold” narrative—if fiat is depreciating, a fixed-supply asset will naturally appreciate.

The Uniqueness of 2024-25: ETF Wind and Halving Collision

The current rally features an unprecedented combination of conditions.

First is the approval of spot ETFs. In January 2024, the US SEC approved the first batch of Bitcoin spot ETFs, seen as a milestone for crypto asset regulation. By November, these ETFs had absorbed over $4.5 billion in inflows, with BlackRock’s IBIT ETF alone holding over 467,000 BTC. In other words, traditional financial institutions now have a “formal channel” to buy BTC.

Second is the fourth halving. Bitcoin undergoes a halving every four years—block rewards drop from 6.25 BTC to 3.125 BTC. Historically, within 12 months after each halving, BTC has appreciated significantly: 5,200% after 2012, 315% after 2016, and 230% after 2020. The logic is simple but effective: supply decreases while demand (especially from institutions) increases, tilting the supply-demand balance upward.

Third is political and environmental shifts. The new government’s stance on crypto is relatively friendly, with some legislators even proposing to include BTC in the US strategic reserves. This kind of imagination alone can attract new categories of investors.

How to Identify Genuine Bull Run Signals

Rising prices alone are not enough. A true bull run requires validation through:

On-chain activity increase: New addresses created, large transactions frequent, exchange outflows exceeding inflows.

Institutional buying signals: Continuous accumulation by Grayscale, MicroStrategy, or new ETF products launching and quickly attracting funds.

Volatility structure changes: Long-term put options’ prices decline, indicating market expectations are upward.

Media and social sentiment shifts: From headlines like “Bitcoin is dead” to discussions about “where’s the next ten-bagger.”

The sequence of these indicators is important. Usually, on-chain data signals first, followed by institutional activity, and finally retail sentiment explodes.

Future Catalysts: Four Areas to Watch

1. Government Reserves—From small countries’ pilots to major nations’ recognition

El Salvador led by making BTC legal tender; Bhutan’s national investment fund secretly accumulated 13,000 BTC. If the US truly follows a legislator’s proposal to buy 1 million BTC, it would be a game-changing policy signal, exponentially expanding market imagination.

2. Technological Upgrades—OP_CAT could bring a DeFi revolution

Bitcoin may soon restore a removed code snippet, OP_CAT. Once activated, it will allow Bitcoin to handle more complex smart contracts and even support DeFi applications. This means Bitcoin evolving from a simple “store of value” to an “application platform,” exponentially expanding its use cases.

3. Corporate Adoption—From MicroStrategy to mainstream listed companies

Whenever a new listed company announces holding BTC, it triggers a market ripple. This trend could accelerate as CEOs face shareholder pressure to hedge inflation, making BTC an easily accepted choice.

4. Halving Cycles—The geometric effect of supply curves

The next halving is expected around 2028, followed by 2032. Each halving sparks discussions, with new investors verifying historical data and discovering “each halving has always led to a rally,” prompting early positioning.

How Investors Should Respond

Understanding the规律 of bull runs is not about chasing highs but making rational decisions. Several basic principles:

1. Dollar-cost averaging: Don’t try to bottom fish. Enter at different stages of the bull run with varying positions to smooth out risk.

2. Safety first: Choose secure and reliable trading platforms (like Gate.io), enable two-factor authentication, and transfer large assets to hardware wallets.

3. Know your risk tolerance: BTC’s maximum drawdown can reach 50-80%. If this would cause insomnia, don’t put all your funds in.

4. Watch macro variables: Interest rates, inflation data, geopolitical events—all can change the risk-reward assessment for BTC.

5. Don’t listen to stories: Phrases like “the next 10x coin” have been around since 2013. Real investment decisions should be based on data and logic, not emotions.

Conclusion: Cycles Will Continue, Preparation Is Key

Bitcoin’s bull runs are not mysterious but follow patterns. Halving events, policy shifts, institutional adoption—these forces repeatedly push prices to new highs.

The current cycle (2024-25) has shown remarkable resilience. Even with a 30% correction from $87,190, many investors see long-term support from institutional participation. The key is not to be fooled by every fluctuation but to always remember: understanding historical cycles, being well-prepared, and staying vigilant are the true secrets to profiting in the next bull run.

Buyers will continue to emerge. The question is not “Will there be another bull run,” but “Are you ready?”