Crypto Assets Market Transformation: Four-Year Cycle Theory Faces Challenges

In recent years, the Crypto Assets market has undergone significant changes, and the traditional four-year cycle theory seems no longer applicable. This article will explore the reasons behind this phenomenon and its impact on investment strategies.

Origin of the Four-Year Cycle Theory

The four-year cycle theory originates from the fundamental mechanism of Bitcoin. Every four years, the inflation rate of Bitcoin is halved. The first halving in 2012 reduced the new Bitcoin issuance per block from 50 BTC to 25 BTC. This had a significant impact on the early supply and demand balance, especially during the first two halvings in 2012 and 2016, when Bitcoin prices surged, and other Crypto Assets followed suit.

However, over time, the impact of each halving on the price gradually weakens. The latest halving in 2024 will only reduce the new Bitcoin issuance from 6.25 BTC to 3.12 BTC. Considering that there are currently nearly 20 million BTC in circulation (accounting for 95% of the total supply of 21 million), the impact of future halving events on the price will become negligible.

Market Changes Over the Past Two Years

In the past two years, the Crypto Assets market has seen two significant changes:

1. The launch of Crypto Assets ETF
2. Altcoin Inflation

At the beginning of 2024, the Bitcoin ETF was approved, opening up the global market for Bitcoin. This allows ordinary investors to include Bitcoin in their retirement investment portfolios, bringing in a significant amount of new funds. However, this influx of funds mainly flowed into the Bitcoin ETF, creating buying pressure on the spot price, but did not flow into the altcoin market.

By early 2025, the total amount of Bitcoin ETFs had reached $40 billion, while the demand for Ethereum ETFs was relatively sluggish, totaling only $2.5 billion. This explains why Ethereum and most altcoins have been in a downward trend compared to Bitcoin in recent years.

Challenges Facing the Altcoin Market

The main challenge facing the current altcoin market is the dilution effect. Compared to the past, the number of altcoins has surged (in the millions), leading to a significant dispersion of limited market funds. While some altcoins like SOL, XRP, BNB, and TRX have reached new highs, the gains are relatively limited, and most altcoins (such as Ethereum or ADA) have failed to break through their historical highs.

In addition, the political events at the beginning of 2025 also had a negative impact on the altcoin market, particularly dealing a heavy blow to Meme coins.

The Continuing Advantages of Bitcoin

Although the four-year cycle theory may no longer apply, Bitcoin still maintains its market dominance. Here are several key factors supporting the long-term investment value of Bitcoin:

1. The continuous devaluation of fiat currency
2. Inflation Pressure
3. Global currency supply hits a new high
4. The price of gold continues to rise.
5. Bitcoin ETFs attract a large inflow of funds
6. Dilution Effect in the Altcoin Market
7. National-level buyers entering the market
8. U.S. Crypto Assets Strategic Reserve Program

Investment Strategy Recommendations

Given the current market situation, investors should focus on Bitcoin and view it as a long-term value storage tool. For altcoin investments, a cautious approach is recommended, keeping them within a controllable range.

As time goes by, selecting successful altcoins becomes increasingly difficult, while investing in Bitcoin feels more like playing a "winner's game." In the current economic environment, Bitcoin and gold may be the most reliable currency choices, with Bitcoin having clear advantages in many aspects.

Although the four-year cycle of Bitcoin may still exist, its impact on price has become negligible. However, the reasons for continuing to buy and hold Bitcoin are more compelling than ever.