Is Bitcoin’s 4-year cycle dead or are market makers in denial?

Bitcoin’s four-year cycle used to offer a simple script: halving rewards meant scarcity, and scarcity meant higher prices. This cyclical pattern drove Bitcoin’s market dynamics for over a decade, as every four years, the network’s reward to miners was halved. This reduction in rewards led to tighter supply, followed by a speculative mania that culminated in a new all-time high. However, the current market does not perfectly adhere to this once-reliable pattern anymore.

As Bitcoin hovers around $100,000 this week, approximately 20% lower than its October peak of over $126,000, Wintermute, a major player in digital asset market making, declared the halving cycle “no longer relevant.” According to Wintermute, halving’s influence has diminished because “what drives performance now is liquidity.” These assertions, once considered heretical by Bitcoin traditionalists, are increasingly supported by data. Markets today are dominated by ETFs, stablecoins, and institutional liquidity flows, with miner issuance playing only a minimal role.

Bitcoin’s price is now driven by liquidity metrics, especially ETF inflows. For instance, during the week ending October 4, global crypto ETFs raised $5.95 billion — a record-breaking amount, with U.S. funds leading. On October 6, daily net inflows surged to $1.2 billion, the highest ever recorded. This massive influx of capital led Bitcoin to reach its all-time high of $126,000. Conversely, when ETF inflows slowed, Bitcoin retraced back toward $100,000 by early November. The shift from reliance on halving events to ETF inflows reveals the liquidity-centered recalibration of the market.

Stablecoins now play a pivotal role in shaping Bitcoin’s liquidity-driven economy. The total supply of dollar-pegged tokens ranges between $280 billion and $308 billion, essentially functioning as base money within the crypto industry. These stablecoins provide a critical mechanism for facilitating leverage and immediate liquidity, enabling traders to quickly respond to market conditions. While halving events constrain Bitcoin’s new supply, stablecoins effectively open the floodgates for demand.

Liquidity shocks have overtaken supply constraints as the primary drivers of market volatility. For example, Kaiko Research documented an October deleveraging event that wiped out over $500 billion from the total market cap of crypto, driven not by miner activity but by the disappearance of buyers and unwinding of derivatives positions. The rise of spot ETFs in the U.S. and increased global institutional access have redesigned Bitcoin’s price discovery mechanism. Gone are the days of grinding accumulation phases: today’s swings are sharp and liquidity-dependent, with most significant moves occurring during U.S. trading hours due to ETF activity.

The halving is not obsolete, but its significance has diminished in the face of institutional flows and evolving liquidity dynamics. The daily output of miners, about 450 BTC or $45 million, pales in comparison to the $1.2 billion daily inflows from ETFs during peak periods. As stablecoin issuance continues to grow and new regulatory channels open up such as FCA-approved crypto products, Bitcoin's price will increasingly correlate with global liquidity conditions, rather than halving events.

Bitcoin’s transformation into a liquidity-sensitive asset signals its maturation as an institutional-grade investment. The halving, once seen as a preordained driver of price increases, now serves only as a background factor. Instead of the halving clock, investors must watch the flow tape: ETF activity, stablecoin issuance, and global monetary conditions. The new rhythm of Bitcoin is no longer measured in blocks, but in billions of dollars coursing through liquidity channels, marking a definitive shift in its market structure and investor behavior.