Evolution of the Bitcoin Cycle: From 1000x Growth to 987x, Identifying the Next Rally

Bitcoin is now at a new turning point. As of 2025, BTC is trading around $87,120, having undergone a 30% correction from its all-time high of $126,080. However, this drawdown provides important insights for market participants. Over the past 12 years, the crypto market has dramatically changed its nature by repeating bull and bear cycles. Factors such as halving events, institutional inflows, and regulatory approvals have influenced Bitcoin’s price formation, but this cycle is showing a different pattern from previous ones.

The Essence of the Bitcoin Bull Market: 4-Year Cycles and Supply Shocks

Looking at Bitcoin’s history, halving events occurring approximately every four years have been pivotal market turning points.

After the first halving in 2012, BTC surged by 5,200%. The second in 2016 led to a 315% increase, and the third in 2020 resulted in a 230% rise. The most recent fourth halving in April 2024 also showed similar effects, propelling the price from around $40,000 at the start of the year to over $93,000.

This cyclical rally is straightforward: When mining rewards are halved, supply decreases, and if demand remains steady, prices tend to rise—a fundamental economic principle. However, insights from the past three cycles reveal that supply shocks alone are not enough; the “demand side” at each stage is equally critical.

2013: Small Explosion, Major Setback

Bitcoin’s early bull run began with a rapid surge from $145 in May to $1,200 in December—about 730% increase.

At that time, individual investors and tech enthusiasts dominated. Financial instability, such as the Cyprus banking crisis, made Bitcoin recognized as a “store of value.” But in early 2014, the major exchange Mt.Gox collapsed due to security breaches. Losing this platform, which handled about 70% of Bitcoin trading volume, caused a severe trauma in the market.

Lesson learned: In the early stages, immature infrastructure limited Bitcoin’s growth.

2017: Media Bubble and Mass Retail Investor Influx

After three years of stagnation, 2017 brought a different scene. Bitcoin soared from $1,000 to $20,000—an approximate 1,900% increase. Daily trading volume expanded from $200 million to $15 billion, a 75-fold increase.

This was driven by the ICO boom and a rush of retail investors. User-friendly trading platforms and soaring prices were amplified through media, creating a classic FOMO cycle.

But the outcome was the same. In early 2018, Bitcoin plummeted from $20,000 to $3,200—an 84% drop. Regulatory shocks, such as China banning ICOs and domestic exchanges, triggered the crash.

Lesson learned: Markets driven solely by retail investors are fragile and prone to sharp reversals.

2020-2021: Institutional Investors Change the Landscape

The rally in 2020-2021, fueled by the COVID-19 pandemic, was qualitatively different.

Bitcoin surged 700% from $8,000 to $64,000, but this was not just a price increase; the composition of participants changed fundamentally. Companies like MicroStrategy accumulated over 125,000 BTC. Futures contracts for institutional investors and funds like Grayscale facilitated large capital inflows.

By 2021, inflows from institutional investors exceeded $10 billion. The narrative around Bitcoin evolved into “inflation hedge” and “digital gold.”

Lesson learned: Institutional participation prolonged the market cycle and provided stronger support at lower levels.

2024: ETF Approval and “Integration into the Financial System”

The SEC approval and listing of a spot Bitcoin ETF in January 2024 mark a different kind of milestone.

By November, inflows into ETFs exceeded $4.5 billion. BlackRock’s iBIT ETF holds over 467,000 BTC, and total holdings across all spot ETFs surpassed 1 million BTC. Meanwhile, Bitcoin’s price rose from $40,000 at the start of the year to $87,120 now.

However, the key point is the subsequent correction. The 30% decline from the ATH of $126,080 suggests that FOMO-driven retail buying has waned, and the market is shifting toward a “mature valuation.”

The Shape of the Next Bull Run: “Decelerating Growth” and “Scalability”

Looking at past cycles, Bitcoin’s bull run amplitude has been decreasing.

Numbers indicate that as the market matures, speculative growth diminishes—similar to stock markets.

However, new drivers are emerging:

1. Strategic Reserves by Governments
Bhutan holds over 13,000 BTC through Druk Holding & Investments. El Salvador continues to invest beyond its legal tender adoption. Senator Cynthia Lummis’s “Bitcoin Bill” proposes that the U.S. acquire up to 1 million BTC over five years. If realized, global demand would increase significantly.

2. Expansion of Bitcoin Technology
The reintroduction of the OP_CAT opcode could enable rollups and layer 2 solutions on Bitcoin. This could lead to thousands of transactions per second, transforming Bitcoin from “digital gold” into a utility asset, potentially rivaling Ethereum.

Market Sentiment Is Divided: 50% Bullish, 50% Bearish

Currently, market sentiment is evenly split. The 50/50 outlook suggests a phase where the market is forced to decide.

Bullish arguments:

• Continued institutional inflows via spot ETFs
• Expectations for the next halving in 2028
• Expansion of government reserves

Bearish arguments:

• 25% correction from the ATH of $125,080
• Macroeconomic uncertainties (interest rates, inflation)
• Regulatory pressures on Bitcoin mining and environmental issues

Practical Steps to Prepare for the Next Rally

Stay Informed
Understanding Bitcoin fundamentals and analyzing past cycles is essential. Recognize the differences between the 2017 media bubble and the 2024 ETF-driven market.

Build a Diversified Portfolio
Avoid concentrating solely on Bitcoin; include stablecoins and other asset classes. This provides buffers against volatility.

Security and Storage
For long-term holdings, use hardware wallets; for short-term trading, choose reputable exchanges. Multi-layer security like 2FA is mandatory.

Monitor Market Trends
Regulatory developments, ETF inflows, institutional buying, and halving schedules are key catalysts.

Risk Management
Use stop-loss orders, avoid emotional trading, and plan taxes in advance. Timing profit-taking requires discipline.

Conclusion: “Not the End of the Cycle, but a Transformation”

Bitcoin is transitioning from a stage of over 1,000x gains to a correction of 987x. This is not decline but a process of integration into the financial system.

From the speculative boom of 2013, retail bubble of 2017, institutional entry in 2021, to regulatory approval in 2024—each phase has increased Bitcoin’s reliability and liquidity.

When the next bull run arrives, its form will undoubtedly differ. Physical ETFs, government reserves, technological innovations—these combined factors could elevate Bitcoin from a mere speculative asset to a core financial infrastructure.

Staying informed and prepared is the only strategy to succeed in the next cycle.