Author: Matt Hougan, Chief Investment Officer of Bitwise
Compiled by: Luffy, Foresight News
Over the past few weeks, the question I've been asked most frequently in meetings with institutional investors is: Is the four-year cycle of Bitcoin still relevant?
The so-called four-year cycle refers to the historical pattern in Bitcoin's price movement: 'three years of gains, followed by a crash in the fourth year.'
This question is crucial because, according to the logic of the four-year cycle, next year would be a difficult one for Bitcoin and the entire cryptocurrency market.
Although I cannot accurately predict cryptocurrency prices next year, I believe that blindly adhering to the idea that the four-year cycle will mechanically repeat is unwise. After all, the four-year cycle is not an immutable law carved in stone by the god of cryptocurrency; its formation actually stems from three specific driving factors:
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Bitcoin Halving Events: The mining reward on the Bitcoin blockchain halves approximately every four years.
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Interest Rate Fluctuations: The two interest rate surges in 2018 and 2022 both contributed to cryptocurrency market corrections.
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Boom-and-Bust Market Cycles: The crash years for cryptocurrency (2014, 2018, 2022) invariably followed years of strong gains. For example, Bitcoin rose 5530% in 2013, 1349% in 2017, and 57% in 2021. During periods of market euphoria, fraud and speculative bubbles proliferate. The bursting of these bubbles, such as the regulatory crackdown on ICOs in 2018 and the collapse of FTX in 2022, directly triggered the market crashes in those years.
Today, these three driving factors have either significantly diminished in influence or are trending in the opposite direction compared to previous cycles. The impact of the Bitcoin halving is not as strong as it was four years ago; interest rates in 2026 are more likely to fall than rise; and the cryptocurrency market in 2025 has not experienced the kind of狂热暴涨 (frenzied surge) seen in previous cycles.
Meanwhile, more decisive forces, particularly the large-scale entry of institutional investors and the gradual improvement of regulatory policies, are gathering momentum for 2026. In our latest "2026 Market Outlook" report, we predicted that Bitcoin will reach a new all-time high next year. Currently, I still believe this is the most likely outcome.
What Will Replace the Four-Year Cycle?
If the four-year cycle is indeed over, a logical question follows: What new framework should we establish for thinking about the cryptocurrency market in 2026 and beyond?
The four-year cycle once provided clear guidance for investors. Knowing whether the market was in a recovery phase, a bull market, or a crypto winter helped investors hold on during bear markets and remain rational during bull markets.
So, what framework can replace it now?
The answer is: A Decade-Long Protracted War.
I know this phrase sounds far less catchy than 'four-year cycle.' But hear me out, because I firmly believe this is the essence of the current market.
By 'protracted war,' I mean the long-term struggle between two forces: one is a strong, persistent, and gradual positive driving force; the other is an intermittent, fierce but short-lived negative shock force.
The positive driving forces currently gaining momentum include: accelerated adoption by institutional investors, continuous improvement of regulatory frameworks, concerns about fiat currency devaluation, and the implementation of practical use cases like stablecoins and asset tokenization.
The goal of these trends is to disrupt deeply entrenched traditional systems such as capital markets, global payment systems, and international monetary regimes. Their full realization will inevitably take over a decade. Early signs of this process are already visible: billions of dollars flowing into crypto ETFs, cryptocurrency-related bills steadily advancing in Congress, rapid expansion of the stablecoin and tokenization markets, and so on.
But progress will inevitably meet resistance. Potential negative shock forces include: macroeconomic shocks, waves of leveraged position liquidations, and恶性事件 (malicious events) such as hacks, scams, and rug pulls. The impact cycle of such negative shocks typically lasts weeks, months, or quarters.
Overall, the long-term influence of the positive driving forces far exceeds that of the negative shock forces, but the negative shocks erupt rapidly and can suppress the positive forces in the short term. The market crash on October 10, 2025, is a classic case: a macro shock triggered large-scale liquidations of cryptocurrency leveraged positions, leading directly to a cliff-like drop in the market.
It is precisely this protracted war dynamic that has caused the severe divergence in the current cryptocurrency market: retail investors are in deep despair, while many institutional investors are full of bullish confidence. The root cause lies in the completely different time horizons they focus on. Retail investors are focused on the aftermath of the October liquidation event; institutions are looking ahead to the prospect of stablecoin assets surpassing $3 trillion by 2030.
Both views have their validity, just based on different time scales.
Implications of the Protracted War for Investors
For the past few months, I have been using the 'protracted war' framework to analyze the market, and it has proven extremely valuable. The protracted war格局 (situation) suggests the market will exhibit the following characteristics:
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Substantial but not outrageously夸张离谱 (outlandish) returns over the long term
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Overall decreased volatility
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Periodic corrections of 20%—40%
This means that investors must take every market correction seriously, as they could last for a considerable time. But as long as the fundamentals remain strong, one can be confident that prices will eventually rebound.
Looking back, I believe the cryptocurrency market officially entered the protracted war phase in January 2024 with the approval of the Bitcoin spot ETFs. This milestone event unleashed a wave of institutional investment, a trend I believe will last a full decade. The facts bear this out: since the ETFs launched, the price of Bitcoin has risen 93% cumulatively, while also experiencing three deep corrections of over 20%.
I believe the market will maintain these return characteristics for a long time to come. The protracted war might not be as thrilling as the previous boom-and-bust cycles, but it signifies a deeper transformation正在迎来 (is ushering in) for the cryptocurrency industry. When an asset class matures, the era of the protracted war arrives.
