The cycle law of Bitcoin: the complete evolution from bull market to bear market

In recent years, the Bitcoin market has exhibited clear cyclical characteristics. In 2024 alone, BTC has risen from the beginning of the year’s $40K to $93.11K, a 132% increase, reaching a new all-time high of $126.08K. Behind this rally are both institutional support (US SEC approval of spot ETFs) and technical drivers (halving expectations). But to truly understand the current bull run, we need to look back at Bitcoin’s four major historical cycles.

The Current Crypto Bull Market: New Drivers for 2024-2025

Quick Overview

• Current BTC price: $93.11K
• 24h change: +1.91%
• 7-day increase: +6.07%
• Year-to-date: +132%
• 24h trading volume: $858.55M

The Bitcoin market in 2024 is markedly different from previous cycles. The core drivers of this bull run come from three aspects: first, the US SEC approved a spot Bitcoin ETF in January; second, the April halving event reduced supply; third, expectations of friendly crypto policies from Trump’s political influence.

Institutional Funds Keep Flowing In. As of November 2024, cumulative net inflows into Bitcoin ETFs exceeded $2.8 billion, far surpassing gold ETFs in the same period. Listed companies like MicroStrategy continue to increase Bitcoin holdings, further locking in supply. These changes mark a shift from retail-driven to institutional-driven crypto markets.

Supply-side Pressure Is Easing. After the fourth halving, new Bitcoin issuance was cut in half, while institutional holdings continued to rise, shrinking circulating supply. Historical data shows that supply constraints post-halving typically push prices higher within 6-12 months—this pattern is repeating in 2024.

Historical Benchmarks: Lessons from Three Classic Bull Runs

2013: Bitcoin’s Leap from Extreme Poverty to $1200

That was the wild frontier of the crypto market. Early 2013, Bitcoin hovered around $145, but by December, it surged to $1,200, a 730% increase. It sounds unbelievable, but it happened.

What triggered it? First, the Cyprus banking crisis, where European deposits were frozen, prompting people to seek assets outside traditional banks—Bitcoin became a choice. Second, media coverage intensified, turning Bitcoin from a tech geek toy into a mainstream topic.

But at a cost. In 2014, Mt. Gox was hacked, at that time handling 70% of global Bitcoin transactions, with hundreds of thousands of BTC lost overnight. Price plummeted from $1,200 to below $300, a 75% drop. This event exposed the fragility of market infrastructure and foreshadowed a multi-year bear market.

2017: Retail Frenzy and the ICO Bubble

2017 marked the “social media era” of crypto. Bitcoin soared from $1,000 at the start of the year to $20,000 by year-end, a 1,900% jump. Daily trading volume skyrocketed from $200 million in February to $15 billion in December.

The explosive driver. The ICO craze attracted millions of new participants, who invested in various tokens and also bought Bitcoin as a base asset. User-friendly exchanges lowered entry barriers. Daily news pushes and social media discussions created positive feedback: rising prices → more attention → more buyers → further rise.

Then the bubble burst. Early 2018, global regulators (including China banning ICOs and exchanges) moved aggressively, causing Bitcoin to fall from $20,000 to below $3,200, an 84% decline. It took a full year to bottom out.

Deeper lesson: This bull run proved retail investors’ power but also revealed the speculative nature of the market—valuations lacked sufficient real utility support.

2020-2021: Institutional Entry Rewrites the Rules

This cycle’s tone was entirely different. Bitcoin rose from $8,000 in early 2020 to $64,000 in April 2021, a 700% increase. Behind the numbers was a shift in policy.

What changed? The COVID-19 pandemic prompted global central banks to flood markets with liquidity, interest rates dropped to zero, and the Fed’s QE expanded endlessly. Under this backdrop, investors began viewing Bitcoin as “digital gold” rather than just a gamble.

Institutional capital was decisive. MicroStrategy started buying in August 2020, accumulating over 125,000 BTC. Tesla, Square, and other listed companies followed. Their financial disclosures brought Bitcoin into fund managers’ radar, fueling institutional demand. Meanwhile, US futures markets and some spot ETF approvals provided compliant investment channels.

But risks accumulated. Environmental concerns about Bitcoin mining’s carbon footprint emerged, ESG funds faced restrictions, and regulatory scrutiny intensified. By mid-2021, Bitcoin dropped from $64,000 to $30,000, a 53% decline.

Turning point: This cycle demonstrated that institutional demand could be sustainable and underscored the importance of policy support.

Technical Analysis of the Bull Run: How to Spot Bottoms and Rebounds

Identifying signals of Bitcoin’s bull market isn’t impossible.

Technical indicators’ signals. RSI (Relative Strength Index) above 70 suggests overbought conditions. But in 2024, RSI staying high actually confirmed strength—indicating high levels can still sustain high momentum. The golden cross (short-term moving average crossing above long-term) of the 50-day and 200-day moving averages often signals trend reversals, and this pattern has reliably marked each bull run start.

On-chain data truths. A surge in stablecoin inflows to exchanges indicates buyers are preparing to buy. Conversely, Bitcoin withdrawals from exchanges to wallets suggest accumulation. In 2024, we see both: institutions holding via ETFs and retail hoarding on-chain, both bullish signals.

Macro factors as catalysts. Interest rate policies, dollar trends, geopolitical risks, political cycles—these are often underestimated. In 2024, Trump’s political influence regained momentum, pricing in expectations of more crypto-friendly policies. Historically, policy shifts tend to trigger Bitcoin’s leading reactions.

The New Logic for Future Bull Runs

Long-term supply constraints. Bitcoin’s cap at 21 million is fixed. Each halving cuts new supply in half. Over 180,000 BTC are held in Grayscale, BlackRock ETFs, representing about 9% of circulating supply. Government reserves (El Salvador’s ~5,900 BTC, Bhutan’s over 13,000 BTC) are small but symbolic. If the US passes the “Bitcoin Act,” the Treasury might hold 1 million BTC (~5% of total), drastically altering the supply curve.

Imagination for technological upgrades. Re-enabling OP_CAT could support Layer 2 scaling solutions, theoretically processing thousands of transactions per second. Native DeFi support would transform Bitcoin from “digital gold” into a “digital economic infrastructure,” rewriting valuation models.

Mainstream institutional acceptance. Since January 2024, spot ETF inflows have exceeded $2.8 billion, far surpassing Bitcoin futures ETF flows historically. More countries approving spot ETFs and pension funds including Bitcoin in their portfolios could dramatically increase demand.

Mature regulatory frameworks. From no regulation to establishing reporting standards and risk controls, the crypto market is becoming institutionalized. Entry barriers are rising, deterring speculators and attracting institutional investors. Volatility may decrease, but the price center will shift upward.

How to Prepare for the Next Bull Run

Not everyone wants to trade short-term. Long-term holders should follow different logic:

Step 1: Build a knowledge framework. Understand Bitcoin’s fixed supply, halving cycles, UTXO model, and fundamentals. You don’t need to be a developer, but knowing why its scarcity can’t be replicated is crucial. Analyzing past cycles—2013’s infrastructure fragility, 2017’s bubble burst, 2021’s institutional entry—helps grasp current developments.

Step 2: Develop personal strategies. Know your risk tolerance. If you can handle 50% drawdowns, dollar-cost averaging (DCA) is more stable. For swing trading, learn to set stop-loss orders—use automatic liquidation to lock in risks. Most failures stem from not knowing when to exit.

Step 3: Secure storage. Hardware wallets (cold wallets) are essential for long-term holdings. Enable two-factor authentication on exchange accounts. Regularly back up private keys. These steps may seem tedious, but security risks are often greater than market risks.

Step 4: Tax planning. Crypto gains are taxable in most countries. Understand local tax laws ahead of bull markets; it’s smarter than being chased by tax authorities. Record every transaction’s date, price, and amount.

Step 5: Continuous learning. Follow official updates (like Bitcoin Improvement Proposals), macroeconomic data, but avoid being swayed by intraday volatility. Subscribe to in-depth analysis, participate in community discussions, but don’t get caught up in herd mentality.

Summary: The Logic of Cycles

Bitcoin’s bull markets don’t happen without reason. They are often driven by supply constraints (halving), policy shifts (ETF approvals or political support), or macroeconomic changes (liquidity flooding).

The uniqueness of the 2024-2025 bull run lies in the fact that it’s no longer retail gambling but institutional buying. ETF inflows, government reserves, corporate hoarding—these are irreversible capital flows. Even if short-term corrections occur, the medium-term upward trend remains open.

The key is understanding that bull runs aren’t eternal. 2025 may see new highs or 20-30% corrections. Don’t go all-in at the top or sell everything at the bottom. Grasp the cycle, respect data, and manage risks—this is the wisdom for survival in this market.