Four-year cycle peak vs extending to 2026: key divergence in the crypto market

Written by: Aylo

Compiled by: Saoirse, Foresight News

It's worth considering a question: do you think you can accurately sell at the market's peak? The answer is quite clear — almost no one can, including myself, and there's no need to force it. A characteristic of the formation of a cycle top is that it appears quickly within a short time frame, but it is difficult to accurately identify before it manifests in higher time frames (HTFs).

Those day traders who focus on short-term trading may capture some signals, but they have long shouted "the top is here" so many times that these judgments have naturally lost their meaning - after all, they do not pay attention to the macro market background.

Therefore, regarding market cycles, you still need to observe and judge for yourself to make suitable financial decisions. After all, the market is ever-changing, and my views will adjust according to new data, for reference only.

Arguments supporting the "four-year cycle peak"

Evidence of pattern recognition:

Looking back at the historical charts, a clear pattern cannot be ignored: December 2013, December 2017, and November 2021 (all occurred at market peaks). The consistency of the four-year cycle is significant, and market patterns often persist until they are broken by changes in the fundamentals.

Reasons why this model may continue:

Psychological Deep-rootedness: The four-year cycle has been deeply ingrained in the cognition of cryptocurrency market participants.

Self-fulfilling prophecy: A widespread awareness of cycles may trigger coordinated selling pressure, compounded by hidden leverage in the system (such as DATs);

Halving correlation: Bitcoin halving triggers supply shocks, and historically, peaks usually occur 12-18 months after halving (though in this cycle, it seems more like a market narrative);

Occam's Razor Principle: The simplest explanation is often the closest to the truth - Why complicate things with a pattern that has been verified three times?

We are clearly no longer in the early stage of this cycle - Bitcoin has risen significantly since its bottom. According to this pattern, we should be close to the peak range.

Arguments against the "Four-Year Cycle Top" (2026 Cycle Continuation Theory)

Fundamental shift argument:

I pose a simple question: will the institution-led cycle really be completely consistent with the previous two cycles led by retail investors?

I generally agree that the market has cyclical characteristics, so I won't talk about a "super cycle" lightly, but I believe that cycles can be lengthened or shortened due to other factors.

Possible reasons for this round of cycles may differ:

1. Differences in behavioral patterns between institutions and retail investors

The capital flow of spot ETFs has formed a new liquidity model compared to traditional exchange flows.

Institutional systematic profit-taking is smoother and does not easily trigger panic selling like retail investors.

2. Traditional indicators may become ineffective.

We have many cycle analysis tools (such as NVT, MVRV, etc.), but their historical data range is based on a market dominated by retail investors;

The participation of institutions fundamentally changes the definition of "overextension";

When priced in gold, the current price of Bitcoin has not even surpassed the peak of the previous cycle - far from the bubble range;

3. A complete transformation of the regulatory environment

The regulatory environment of this cycle is drastically different, with the US and SEC being more accepting of cryptocurrencies, forming a clear framework for institutional participation.

The final part of the previous cycles was influenced by regulatory shocks (such as the crackdown on ICOs in 2018);

The risk of this systematic and sudden ending cycle has now been significantly reduced;

4. Macroeconomic and Federal Reserve Dynamics

The term of Federal Reserve Chairman Powell will end in May 2026, and Trump may announce a successor at the end of 2025;

The dynamics of the "shadow Federal Reserve chair" have weakened the effectiveness of current policies, while if the market expects Trump to nominate a dovish chair, it may trigger early buying pressure.

The first FOMC meeting of the newly appointed Federal Reserve Chair is scheduled for June 17-18, 2026 - potentially becoming a market catalyst.

During the transition period, a "Goldilocks environment" (an ideal state where the economy is neither too hot nor too cold) may be maintained.

(Note: "Goldilocks environment" is a commonly used expression in financial markets, originating from the concept of "not too cold, not too hot, just right" in the fairy tale "Goldilocks and the Three Bears." It means that during a transition period, economic and policy conditions are maintained in a stable state, providing support for the continuation of market increases.)

The historical pattern of the Federal Reserve Chair reappointment: A review of past reappointments reveals a clear trend:

Both rounds of the re-election show the same pattern - the nomination news triggers a market rally, which continues until the completion of the re-election, but the S&P 500 index will accurately pull back when the new chairman takes office.

When Yellen took office, the S&P 500 fell about 6% in January-February 2014; when Powell took office, the index corrected about 12% in February 2018. This suggests that after Trump announces his nomination at the end of 2025, the bull market may continue until the transition ends, while there is a high probability of volatility around the transition in May-June 2026 — potentially coinciding with the peak of the cycle.

5. Market Structure Changes

Concerns about currency devaluation have generated a new demand driver, no longer limited to shifts in risk appetite;

The market value of stablecoins can serve as a leading indicator - currently still on the rise (this is our "dry powder" indicator);

The demand for Bitcoin is more diversified than in previous cycles: ETFs, DATs, pension funds, etc.

What factors could lead to an early end of the cycle and a four-year cycle repeating?

DAT Leverage Risk: I believe the main bearish factor is that DAT may close positions faster than expected. Large-scale forced sell-offs could overwhelm buyers and alter the market structure. However, there is a difference between losing buying demand (mNAVs dropping to 1) and becoming a forced seller that triggers a "market crash."

Nevertheless, the loss of purchasing power of the main DAT is clearly significant. Many speculate that this situation has already occurred - the mNAVs of Strategy and major ETH DAT companies have dropped significantly. I am not ignoring this, and you should pay close attention as well.

Macro Risk: Rising inflation is a real macro risk, but there are currently no signs of it. Cryptocurrencies are now highly correlated with the macro economy, and we are still in a "Goldilocks environment."

Missing elements at the cycle top

Market frenzy has not yet emerged:

The market has yet to break free from the "Wall of Worry" — every 5% pullback triggers speculation about a market top (which has lasted for 18 months);

There has not yet been a sustained frenzy, nor is there a consensus in the market for further increases;

There is no characteristic of a top that involves a "surge followed by a crash" (although it is not a necessary characteristic).

If there is a significant surge in cryptocurrencies later this year, and the gains significantly outperform the stock market, this "boom-bust" signal may indicate that the peak of cryptocurrencies occurred well before the business cycle that could extend to 2026.

Leading Indicators of Stablecoins

A highly valuable indicator: the growth of stablecoin market capitalization.

In traditional finance, the growth of M2 money supply often precedes asset bubbles. In the cryptocurrency market, the role of stablecoin market capitalization is similar – it represents the total amount of "dollars" available within the crypto ecosystem.

The main cycle tops often coincide with a stagnation in stablecoin supply that occurred 3-6 months earlier. As long as stablecoin supply continues to grow significantly, the market may still have upward momentum.

My current viewpoint

Honestly, based on current observations, I don't believe there will be a major cycle top before 2026 (this view may change at any time due to new developments).

The historical data points over a four-year cycle are limited (only three times), and institutional participation represents a fundamental change in market structure. The mere change in the chair of the Federal Reserve could extend the "Goldilocks environment" to 2025 — this is particularly important, especially given the unprecedented correlation between cryptocurrencies and the macroeconomy at this moment.

During this cycle, participants in the cryptocurrency market have a deeper understanding of the four-year cycle, which makes me feel that the outcome may be slightly different. When has the public's judgment ever been completely correct?

Will everyone sell off and exit the market according to a four-year cycle?

However, I also acknowledge that the consistency of the four-year cycle pattern is significant, and market patterns often persist until they are broken. The public's perception of the cycle may also become a self-fulfilling prophecy that brings it to an end.

As the market capitalization ratio of Bitcoin declines, I will continue to gradually take profits from those overvalued altcoins; however, I will hold onto Bitcoin because I believe it will reach new highs in 2026. It is important to note that regardless of the overall market cycle, the altcoins you hold could peak at any time.

Final Thoughts

The four-year cycle pattern is the strongest argument supporting a peak in 2025 — it has been validated three times, and simplicity often prevails. However, changes in market structure dominated by institutions, dynamics of the Federal Reserve's leadership transition, and the absence of euphoric signals all suggest that this cycle may extend into 2026.

The situation may change dramatically in the coming months, so there's no need to be too stubborn.

In any case, you have to accept that you cannot precisely sell at the highest point and develop a systematic exit strategy.

A suitable position is one that allows you to sleep peacefully. If you have made a substantial profit, it is perfectly fine to "sell too early."