Why is this Bitcoin cycle completely different from the previous ones?

Introduction

In previous Bitcoin cycles, the structure was almost predictable: halving reduced supply, the market gained momentum, retail entered en masse, and the new all-time high appeared within a relatively stable pattern. But this cycle broke those models. Not only did price behavior change; the market mechanics changed. The flow changed, the dominant agent changed, the macro changed. Therefore, analyzing 2025 through the lenses of 2017 or 2021 can lead to dangerous conclusions. In this article, I explain why this cycle is structurally different, which variables have changed, and why, in my view, the true all-time high has not yet been reached.

What made previous cycles “similar”

The cycles of 2012, 2016, and 2020 shared a similar macro and micro foundation:

• Near-zero or declining interest rates
• Abundant liquidity
• Low institutional participation
• Price action mainly driven by retail
• Accelerated euphoria post-halving
• Relatively more liquid supply
• Derivatives still not dominant

In this environment, halving had a direct and quick impact on price. Historically, the ATH occurred, on average, about 500 days after the event, with increasing delays as the market matured.

The most striking difference: high interest rates at halving

For the first time in Bitcoin history, a halving occurred under positive real interest rates. In previous cycles, real interest rates at the time of halving were approximately:

• 2012: ≈ -1.9%
• 2016: ≈ -0.5%
• 2020: ≈ -1.0%

This scenario favored risk assets: cheap money, high liquidity, and a widespread search for returns. In 2024–2025, the context is the opposite:

• Positive real interest rates
• More restricted liquidity
• Controlled but persistent inflation
• Lower risk appetite
• Institutional purchases more gradual and rational

If historically ATHs occurred with negative real interest rates, this single factor already suggests a slower cycle and possibly a delayed timing.

The entry of institutions changed the entire mechanics (data)

Previously, Bitcoin was dominated by retail: volatile, emotional, and subject to parabolic movements. Today, the structure is different:

• Bitcoin spot ETFs accumulate hundreds of billions of dollars in assets under management and have absorbed, since launch, between 4% and 5% of the circulating supply.
• The average daily purchase of ETFs, in various periods of 2024–2025, has exceeded the net issuance post-halving (≈450 BTC/day), creating a structural supply deficit.
• Institutional market makers dominate intraday liquidity.
• Hedge funds treat BTC as a macro asset, correlating it with real interest rates, the dollar, and global liquidity.
• The options market has started to directly influence price zones and implied volatility.

This new balance reduces:

• Extreme volatility spikes
• Retail speculative manias
• Classic parabolic movements

And creates a heavier, more continuous, and institutionally driven upward trend, not driven by immediate euphoria.

ETFs as the main driver of the rally (quantification)

Much of Bitcoin’s appreciation in 2024 occurred before the halving. In this cycle, the main initial catalyst was not the supply reduction caused by halving, but the structural flow of Bitcoin spot ETFs, amplified by a political shift with the victory of Donald Trump.

Quantitatively:

• At various times, ETFs bought 2x to 4x the amount of BTC issued daily by miners.
• In monthly windows, the ETF net flow was enough to fully absorb miner selling pressure and even withdraw liquidity from exchanges.

This explains why BTC managed to rise even in an environment of high interest rates: demand came from structural portfolio allocation, not cheap liquidity. This dynamic did not exist in any previous cycle.

Extremely illiquid supply (on-chain)

The current cycle presents the most restrictive supply conditions in Bitcoin history:

• BTC balance on exchanges at the lowest levels since 2018, below 12% of total supply.
• Over 70% of the supply has not moved in at least 1 year, a historical record.
• Long-term holders (LTHs) maintain a net positive position even after new highs.
• Miners, after strong capitulation in previous cycles, now operate with greater efficiency and less forced selling.

In past cycles, the rally quickly attracted BTC to exchanges. In this cycle, the opposite is happening: ETFs and institutional custody are continuously draining liquidity.

The current macro environment is unlike any other cycle

Previous cycles occurred in environments of:

• Low interest rates
• Contained inflation
• Controlled fiscal deficits
• Less geopolitical influence

Today, the scenario includes:

• Elevated interest rates
• Historically high fiscal deficits
• Moderate but persistent inflation
• Reindustrialization, reshoring, and geopolitical fragmentation
• Central banks dealing with higher levels of structural debt

It is an unprecedented macro regime for Bitcoin.

The true ATH of this cycle has not yet arrived

Based on:

• The historical occurrence of ATHs in environments of low or negative real interest rates
• The structural delay caused by a halving under positive real interest rates
• The measurable impact of spot ETFs
• The historically illiquid supply level
• The expectation of an interest rate cut cycle conditioned on inflation and growth
• The normalization of volatility driven by institutional activity via derivatives

The central thesis:

👉 Historically, Bitcoin cycle tops occurred in environments of higher risk appetite, often associated with negative real interest rates (an approximate zone near -0.8%). This reference should not be seen as an exact trigger, but as a historical region observed in previous cycles, despite broad dispersion. Currently, real interest rates remain positive, around 1.9%, which helps explain the absence of typical top euphoria. If previous cycles needed this environment… and this one has not yet experienced it… then it makes sense to consider that the current cycle has not ended — it is structurally delayed.

Quantitative box — Historical top conditions vs. current cycle

• Real interest rates: negative ❌ | currently positive ✅
• Realized volatility: high ❌ | compressed ✅
• BTC on exchanges: high ❌ | historic low ✅
• Institutional demand: marginal ❌ | structural via ETFs ✅

Limitations and statistical caution

Bitcoin still has only three complete cycles, which limits robust statistical inferences. However, the recurrence of macro conditions at previous cycle tops suggests that the relationship between real interest rates, liquidity, and all-time highs is not random but structural.

Conclusion

This Bitcoin cycle is not an extended version of previous ones. It has a different structure, macro environment, demand profile, and price profile. It is the most institutional, most illiquid, and most interest rate-sensitive cycle in history. And, precisely because of that, it may be the first time that the true all-time high appears after most of the market has already declared that the top is behind us.

👉 If the macro conditions that historically marked tops have not yet appeared, does it make sense to treat this movement as the end of the cycle — or just its halfway point?