– What is Grayscale’s prediction about Bitcoin’s 4-year cycle?

Why Grayscale Predicts Bitcoin Will Break the 4-Year Cycle: Insights and Implications

Bitcoin’s historic “4-year cycle” – driven by halvings and reflexive market psychology – has been a reliable mental model since 2012. But Grayscale and a growing cohort of institutional researchers argue that 2024-2028 will look different. Structural demand from spot Bitcoin ETFs, changing miner economics, and evolving macro/liquidity regimes are likely to weaken the halving’s dominance and stretch or reshape the cycle. Here’s what crypto-native investors, builders, and institutions need to know in 2025.

Grayscale’s Core Thesis: The 4-Year Cycle Is Losing Its Grip

From issuance-driven markets to demand-driven markets

Historically, the halving cut in new issuance catalyzed multi-year supply squeezes. Today, issuance is a smaller share of free float, and price is increasingly set at the margin by professional flows, not miner sell pressure. Grayscale Research has highlighted three shifting pillars:

• Spot ETF demand creates persistent, mechanical buy flows decoupled from the halving calendar.
• Illiquid supply is high: a large share of BTC is held by long-term holders, treasuries, and custodial vehicles, reducing available float.
• Fees are a growing part of miner revenue, muting the binary impact of block subsidy cuts.

Spot Bitcoin ETFs: The Structural Flow Shock

Why ETFs can bend the cycle

U.S. spot Bitcoin ETFs, approved in January 2024, and additional listings in markets like Hong Kong in 2024, introduced daily, rules-based demand at institutional scale. By 2025, U.S. spot ETFs collectively hold a material share of the circulating supply (hundreds of thousands of BTC), with many trading days registering net inflows. This matters because:

• Creation/redemption mechanics tightly couple secondary market demand to underlying BTC purchases.
• Advisors and retirement platforms now allocate via familiar wrappers, broadening participation beyond crypto-native venues.
• Flows respond to macro and portfolio rebalancing cycles, not just halving narratives.

Flow-through effects

1. Price discovery shifts toward traditional market hours and ETF liquidity conditions.
2. Volatility clusters around macro prints (rates, inflation) as allocators adjust risk budgets.
3. The amplitude/timing of post-halving rallies becomes less uniform across cycles.

On-Chain Supply, Miner Economics, and Fee Markets

Illiquid supply and holder behavior

On-chain analytics into 2025 show a large fraction of BTC supply sitting with long-term holders and in custody accounts, reducing active float. Exchange balances remain structurally lower than in prior cycles. This constrains supply during demand shocks (e.g., ETF allocations), amplifying moves independently of the halving schedule.

Miners and the post-2024 fee regime

• April 2024’s halving cut block rewards to 3.125 BTC. During periods of on-chain activity (e.g., inscriptions and new token protocols), fees periodically comprised a significant share of miner revenue.
• Rising hashrate and industrial-scale operations push miners toward dynamic treasury management (hedging with futures/options, flexible sell programs), smoothing the once-lumpy post-halving supply overhang.
• Result: Subsidy shocks carry less market-wide impact; miners are no longer the marginal price setter they once were.

Macro Liquidity Now Matters as Much as Halving

Rates, real yields, and cross-asset correlations

Since 2020, Bitcoin has responded more sensitively to global liquidity, real yields, and dollar dynamics. In 2025, expectations for policy shifts and balance-sheet paths of major central banks remain key inputs. For allocators, the implication is clear: macro cycles can pull-forward or delay bull/bear phases relative to the halving cadence.

Implications for Traders, Allocators, and Builders

Strategy shifts if the 4-year model breaks

• Don’t anchor to halving dates: blend on-chain metrics (holder cost basis, dormancy, illiquid supply) with flow and macro data (ETF net flows, futures basis, funding, real yields).
• Risk management: expect mid-cycle drawdowns even during structurally bullish flow regimes; use options and staggered rebalancing.
• Time diversification: systematic DCA/volatility harvesting may outperform calendar-based “post-halving” timing.
• For builders: design around fee volatility and L2/L3 demand; miner incentives depend more on fee markets and throughput than subsidy alone.

Signals to watch in 2025

1. ETF net creations/redemptions across U.S. and international listings.
2. On-chain illiquid supply and long-term holder distribution behavior.
3. CME futures open interest, basis, and options skew for institutional positioning.
4. Miner revenue mix (fees vs subsidy) and hashrate trends.
5. Global liquidity indicators and real yield movements.

Conclusion: A Post-Halving Market With New Gravity

The 4-year Bitcoin cycle was a useful map for an early-stage, issuance-driven asset. Grayscale’s view – echoed by much of the institutional research community – is that Bitcoin’s next phase is shaped less by block subsidies and more by structural demand via spot ETFs, constrained float, and macro liquidity conditions. That doesn’t eliminate halving-related effects; it dilutes and distorts them. For crypto-native readers, the edge in 2025 comes from integrating ETF flow analytics, on-chain supply dynamics, and macro into a single thesis – and retiring the idea that the calendar alone dictates the trend.