Changing dynamics of the cryptocurrency market: why Bitcoin halving no longer defines bear and bull cycles

Discussion about whether the cryptocurrency market is headed for a bear or bull phase is taking on a new dimension in light of recent industry observations. Gate.io leader Lin Han criticized the popular narrative about four-year cycles driven by Bitcoin halving, offering fresh perspectives on the evolution of the digital asset market and its increasing dependence on global macroeconomics.

Bitcoin Halving Loses Significance in the New Market Reality

Bitcoin halving, long considered the most important cyclical element of the crypto market, has, according to Han, lost the vast majority of its influence. This transformation results from simple mathematics: the more years pass, the smaller the relative impact of new BTC supply on the market, which has already grown significantly. Han noted that in the early stages of the industry, theories about four-year supercycles had real predictive power, but in modern conditions, their importance is “marginal."

This observation has profound implications for investors who relied on traditional cyclical models. Bitcoin no longer operates in isolation as an independent ecosystem driven by internal dynamics. Instead, it has become part of a broad class of risky assets, moving in tandem with modern stock markets and global economic turbulence.

The Impact of Macroeconomics Overshadows Traditional Cycles

The history of recent years confirms this paradigm shift. 2020 marked a significant turning point, fitting into the industry narrative – an expansion of cheap money combined with the “DeFi Summer” phenomenon. However, this euphoric phase quickly faded in 2022, when the global economy faced post-pandemic turbulence.

The period from 2022 to 2023 Han describes as relatively “cold” for the industry. Only the approval of ETF products and rising expectations for economic recovery reignited market sentiment towards the end of 2023. These events illustrate how, more than halving, macroeconomic factors – fiscal policy, central bank decisions, global capital flows – now shape the trends of bear and bull markets in the digital asset sector.

Correction Scenarios: Are We Heading for a Dramatic Bear Market?

Contrary to some market participants’ pessimistic forecasts, Han argues that deep and sudden bearish moves are becoming less likely. Even if a significant correction occurs – say a drop from the $100,000–$120,000 range to $80,000–$90,000 – such levels will still serve as “relatively high” support points in the context of Bitcoin’s long-term trajectory.

This remark sheds light on a new dimension of volatility: large corrections may be more controlled and occur within much higher price levels than in previous cycles.

Volume Signals: No Panic Despite Rumors

In November, reports emerged suggesting significant drops in trading volumes on major platforms. However, data from Gate.io, one of the largest cryptocurrency exchanges, shows a different picture – volume declines were limited. This observation suggests that while some sectors may experience effects of capital exiting, the overall market has not fallen into the panic characteristic of previous bear markets.

New Risks: AI Bubble as a Variable Threat

Looking ahead, Han identifies a new threat to market stability – a potential speculative bubble around investments in artificial intelligence infrastructure. 2024 saw a massive influx of capital into data centers and computing power, driven by enthusiasm around AI’s transformative potential.

The paradox is that despite impressive financial results from giants like Nvidia – the main beneficiaries of this trend – the actual profitability of many massive infrastructure projects remains uncertain. Uncertainty regarding returns on investments in data processing and storage could become a catalyst for future movements in risky asset markets, including the crypto sector.

Han’s analysis suggests that the future of the cryptocurrency market will be less dependent on internal halving cycles and more sensitive to macroeconomic winds and changing global capital allocation. In this new reality, bear and bull phases will be defined more by economic dynamics than by deterministic technical calendars.