Has the BTC cycle failed? Or is it just being 'smoothed out'—a mid-2026 mid-term assessment

After the market close on May 29, Bitcoin closed around $73,000, with an approximate gain of 8% since the beginning of the year. This performance is quite average among all "risk assets"—the Nasdaq gained 12% in the same period, gold 18%, and the S&P 500 10%. If you go back a year, everyone would think it’s incredible that "BTC’s gains lag behind gold"; but by 2026, this has already happened.
There is an increasingly loud voice in the market—"Bitcoin cycle failure theory." The core of this argument is: in the past three cycles (2013, 2017, 2021), BTC followed a pattern of a "main rally" 12-18 months after halving events; after the fourth halving (April 2024), this pattern has broken down. According to "traditional cycle theory," BTC should have peaked in the second half of 2025 to the first half of 2026 (150k–200k USD), but the actual trend shows it surged to 120k USD in December 2024, then entered consolidation, and by May 2026, it’s still hovering around 70k USD.
Is this cycle failure? Or just a "lengthening" of the cycle? What is the mechanism behind this? This article aims to clarify this question. Because this judgment determines the core strategy for crypto asset allocation in the next 12-24 months—if the cycle is still intact, just delayed, then the answer to "should we reduce or increase holdings now" is completely different.
What was the logic of the previous three cycles?
First, let’s clarify the logic of the past three cycles. Bitcoin halving occurs every four years (block reward halved), and the market generally believes halving reduces supply and drives prices up. This is the surface explanation. The real mechanism is more complex.
First cycle in 2013: BTC rose from $13 to $1,100, with the main rally occurring around the November halving. The true driving force was the rise of centralized exchanges like Mt.Gox + the influx of Chinese miners + the awareness of BTC among early retail investors. "Halving" was just an event trigger; the main driver was the explosive industry growth from zero to one.
Second cycle in 2017: BTC surged from $1,100 to $19,500, with the main rally occurring 12-18 months after the 2016 July halving. The real drivers were the ICO craze + the rise of Ethereum + the first global retail recognition of crypto assets. "Halving" was a trigger; the main driver was expanding use cases (from pure BTC to smart contracts + altcoins).
Third cycle in 2021: BTC rose from $19,500 to $69,000, with the main rally occurring 12-18 months after the 2020 May halving. The real drivers were post-pandemic global liquidity injections + institutional entry (MicroStrategy, Tesla) + narratives like DeFi, NFTs + dollar depreciation expectations. "Halving" was a trigger; the main driver was macro liquidity + institutional expansion.
Looking at these three cycles together, one important insight emerges—the so-called "halving cycle" is only a surface pattern; what truly drives BTC prices is the "new demand sources that appear every four years." The first was CEX, the second ICO, the third institutional + DeFi. Each cycle brought a wave of new incremental buyers.
So, what is the new incremental demand in this cycle (2024–2026)? That’s the key question.
The new buyers in this cycle: ETFs and corporate treasuries
The core new buyers of BTC in 2024–2026 are two: spot ETFs and corporate treasuries.
The ETF story is very clear. On January 11, 2024, the SEC approved 11 spot BTC ETFs. By the end of May 2026, the net inflow into BTC ETFs in the US exceeded $150 billion, with nearly 1.3 million BTC held (about 6.5% of total circulating supply). This is an unprecedented capital influx—nothing in traditional finance has ever absorbed such a large amount of BTC.
ETFs have several characteristics:
First, they are very stable—according to BlackRock’s internal data, over 60% of IBIT clients are pension funds, insurance companies, family offices, and long-term institutions, which have very low turnover.
Second, they are almost emotionless—the majority of ETF capital comes from systematic allocations (automatic monthly contributions), not reacting sharply to price swings.
Third, their size continues to grow—Q1 2026 still saw net inflows exceeding $20 billion, similar to the pace in 2024–2025.
As for corporate treasuries, by May 2026, over 200 publicly disclosed companies hold BTC as part of their treasury, with total holdings exceeding 800k BTC (about 4% of total supply). Among them, MicroStrategy (now called Strategy) holds over 600k BTC at a cost basis below $40k per BTC, making it the largest player. Companies like Metaplanet in Japan, Méliuz in Brazil, and Tezzion listed in Hong Kong are following suit, using "BTC as treasury" as a core strategy to hedge against fiat devaluation.
Together, these two buyer groups already account for over 10% of BTC’s total circulating supply, and they continue to accumulate each month. Interestingly, this steady accumulation has disrupted the "explosive rally" rhythm—because these institutional buyers are entering too steadily, too slowly, and in a highly institutionalized manner, preventing the kind of "retail-driven" blow-off top seen in 2017 and 2021.
The core logic of "cycle smoothing"
This is the biggest difference between this cycle and the previous three—cycles are "smoothed out."
Previous cycles were "retail-driven." Retail investors tend to be emotional, short-term, highly leveraged, and trend-following. A cycle would start with "FOMO buying," end with "panic selling," and be filled with 50%+ retracements and 200%+ rebounds. This structure naturally creates alternating bull and bear markets.
This cycle, however, is a "layering of institutional + retail" forces. Institutional capital accounts for 30-40% (ETF + corporate treasuries + stocks indirectly holding BTC). Their characteristics are the opposite of retail: low leverage, long-term, dollar-cost averaging. Once in, this capital doesn’t exit quickly—unless a true extreme event occurs (like a 2008-style financial crisis).
This "long-term + short-term" market structure essentially transforms BTC from a "commodity" into a "financial asset." Commodity prices fluctuate based on supply and demand, while financial asset prices depend on valuation multiples + liquidity. The volatility of valuation multiples + liquidity is much milder than pure supply-demand swings. That’s why BTC doesn’t seem to "rise wildly" this time—it has matured to the point where it shouldn’t be exploding like 2017.
This is not a bad thing. Lower volatility means BTC’s "Sharpe ratio" (risk-adjusted return) in traditional portfolios is actually improving. For long-term holders, "slow growth but fewer dips" signifies maturity.
The Fed’s role
By the end of May, market expectations for the June FOMC meeting have split. CME FedWatch shows about a 45% chance of a 25bp rate cut in June, and about 50% chance of holding steady. This near-even split is rare over the past six months—usually, the market converges on a clear direction in the one or two weeks before the meeting.
The split is due to conflicting data. On one hand, April’s core PCE inflation rose to 2.9% (above the 2% target), with tariffs further pushing up commodity inflation risks; on the other hand, April non-farm payrolls added only 125k jobs (far below expectations), and the unemployment rate rose from 4.1% to 4.3%. On one side, inflation pressures; on the other, weak employment—Powell’s dilemma is even more severe than in 2024.
This "dual split" macro environment is mildly positive for BTC. If the Fed cuts rates in June, the easing liquidity will generally lift risk assets (including BTC); if they hold steady but adopt a dovish stance, market expectations of a delayed rate cut will continue to support BTC; only a scenario of runaway inflation forcing the Fed to hike again would be unfavorable, but that’s currently very unlikely.
Tariffs are another key variable. The "reciprocal tariffs" policy from the Trump administration has been repeatedly tinkering since mid-2025—raising, lowering, delaying, then raising again. Each policy flip causes significant market sentiment shocks. The critical turning point may be July—if US-China tariff negotiations see major progress or breakdown, market expectations for global growth and inflation will be re-priced, and BTC will fluctuate accordingly.
The "divergence" among altcoins
Another very noticeable feature of this cycle is that the "collective altcoin season" (excluding BTC, ETH, SOL) is unlikely to return.
In previous cycles, a clear pattern was: after BTC’s rise, capital flowed into ETH, then into main altcoins (XRP, ADA, DOT), and finally into long-tail altcoins. This "waterfall effect" occurred in 2017 and 2021, with nearly all coins multiplying dozens of times.
In the 2024–2026 cycle, this waterfall effect is absent. Capital flows into BTC ETFs but rarely out to altcoins. There are two reasons: first, institutional crypto allocations mainly focus on BTC and ETH (a little SOL), with little interest in long-tail altcoins; second, the supply of altcoins has exploded from a few thousand in 2017 to millions in 2026 (including memecoins), making broad market rallies nearly impossible due to dilution.
This cycle has replaced the "whole market altcoin season" with "narrative rotation." AI-related coins (Bittensor, Render), DePIN, L2 concepts, RWA, memecoins—each has its own mini bull run, but none can drive the entire market. This is a sign of market maturation—no longer "all rise and fall together," but differentiated by fundamentals.
This pattern is actually friendly to long-term investors. It forces everyone to research project fundamentals, business models, tokenomics, rather than blindly gambling. But it’s very unfriendly to short-term traders—those "buy and expect to rise" environments are gone for good.
The true position of "peak" and "cycle"
Returning to the initial question: Is the BTC cycle invalid? My judgment is—no, the cycle is not invalid, it’s just lengthened and smoothed out.
The main rally in this cycle has not yet arrived. Past main rallies were characterized by at least two features: retail FOMO reaching extreme levels, a sharp increase in on-chain active addresses, and long-term holders starting to distribute their holdings en masse. None of these features appeared in May 2026—Google search interest in "Bitcoin" is only 30% of the 2021 peak, new addresses are growing modestly year-over-year, and Glassnode data shows long-term holders are still accumulating.
This suggests that the "cycle top" is likely still ahead, just with a longer time window—possibly in late 2026, or the first half of 2027, or even mid to late 2027. No one can predict the exact timing, but the "top" has not yet arrived based on strong on-chain signals.
What could invalidate this judgment? Two black swans: first, macro—an economic hard landing in the US, a stock market crash of 30%+, which would drag BTC down with everything else; second, industry internal—if a major institution (like a large BTC-holding listed company) faces a financial crisis and is forced to sell, triggering a cascade. Neither scenario is the base case now, but both require ongoing monitoring.
Advice for those crossing cycles
At this point, returning to the simplest question—how should long-term investors respond in an environment of "cycle smoothing + macro bifurcation"?
First, recognize that this is not 2017 or 2021. Don’t expect explosive returns of several times in a few months. This cycle is likely to produce a "moderate long bull"—annualized returns of 30-50%, with a maximum drawdown of 25-30%. If you play with expectations from 2017, you’ll either endure sideways grind during the big rally or sell mid-way because you didn’t see the "big surge."
Second, accept that "narrative rotation" is the new normal. Don’t go all-in on a single altcoin; diversify into a few core sectors you understand (public chains, DePIN, AI, RWA, stablecoin infrastructure). Allocate a portion to each, adjusting based on fundamentals. The "full position in SHIB for 100x" kind of play is unlikely to work this cycle.
Third, focus on real on-chain data—don’t be swayed by influencers or media sentiment. Platforms like Glassnode, CryptoQuant, Dune offer abundant free data to gauge market sentiment—long-term holder changes, miner flows, stablecoin market cap, ETF net inflows/outflows. These are far more reliable than "big V influencers’ calls."
Fourth, set your position sizes well and prepare for a long wait. The maximum returns from BTC always come from "not moving at the worst times"—bottom of 2018 bear market, the COVID crash in 2020, the FTX collapse in 2022. Those "most uncomfortable" moments are the biggest opportunities. The current environment isn’t "most uncomfortable," nor is it "most comfortable," but the key is to develop the ability to endure cycles.
By May 2026, BTC is still around $70k, Nasdaq remains near all-time highs, gold hits new records, and the Fed walks a tightrope between inflation and employment. It’s a period full of uncertainty. But for truly long-term thinkers, this is actually the best window to build understanding—markets are not extreme, sentiment is not extreme, allowing you to calmly see every clue clearly.
The most valuable judgment is always contrarian + long-term. This cycle’s "contrarian" view might be: the cycle is not failed, just slower; BTC has not peaked, just grown less frantically; altcoin season is over, but good projects will still emerge. Keep these three judgments in mind, and the rest is patience.