Bitcoin Shifts to 2-Year Cycle Driven by ETF Flows

Shift in Bitcoin Market Dynamics

Bitcoin's traditional four-year halving cycle is being replaced by a two-year cycle influenced by ETFs and institutional investment strategies.
The diminishing impact of halvings, due to most Bitcoin supply already in circulation, reduces their effect on price cycles.
ETF flows are now a primary influence, with professional investors focusing on one- to two-year performance horizons.
Key factors include common-holder risk and calendar-year performance, which can lead to amplified market movements.
Institutional investors require substantial returns over two years to justify ETF investments, targeting around 50% gains.
Current ETF flows suggest significant embedded gains for early 2024 investors, but challenges for those entering in 2025.
Bitcoin trades near $84,000, an essential level reflecting the average cost basis of ETF investments.
A 10% price drop could severely impact ETF AUM, showing minimal profit for 2025 despite risks taken.
Investors must monitor ETF cost bases and P&L profiles as these will drive future liquidity pressures.
In the institutional era, stagnant Bitcoin prices equate to underperformance, potentially triggering sell-offs.
The new cycle is dominated by ETF manager incentives rather than halving events.

At press time, Bitcoin was trading at $87,559.

Bitcoin price