Grayscale Research has gone against the grain, rejecting Bitcoin’s popular 4-year cycle thesis and saying new highs could be possible next year.
Grayscale Research Doesn’t Believe A Prolonged Bitcoin Decline Is Coming Yet
In a new report, Grayscale Research has discussed what the latest pullback in the market could mean for Bitcoin. This drawdown, which began in early October and lasted until two-thirds of the way into November, resulted in a price decrease of about 32% from peak to trough.
While the scale of the drop hasn’t been small, Grayscale has noted that it has still been close to the historical average for bull market drawdowns. “Since Bitcoin’s price bottomed in November 2022, it has declined at least 10% nine times,” said the crypto asset manager’s research arm. “It has been a bumpy ride, but not atypical for a Bitcoin bull market.”
2026 will mark four years since the 2022 bear market. Among BTC traders, there is a popular idea that the cryptocurrency’s price cycles run over a length of roughly four years. According to this thesis, the next year could see the asset go down, as it has now enjoyed three years of appreciation.
The 4-year cycle thesis originates from the fact that Bitcoin Halving events are spaced apart by approximately four years. During such an event, BTC’s block subsidy, a fixed reward that miners receive for adding the next block to the chain, is slashed in half.
As the block subsidy is the only way to mint more of the cryptocurrency, Halvings have a direct effect on its supply growth. This scarcity effect of the Halving is what has made many in the community believe that the event sits in the center of bullish phases.
Historically, Bitcoin has seen large drawdowns about every four years, which has strengthened the belief in the idea of a cycle being four years in length. Grayscale doesn’t think that the current cycle will go the same way, however. “Although the outlook is uncertain, we believe the four-year cycle thesis will prove to be incorrect, and that Bitcoin’s price will potentially make new highs next year,” explained the report. Grayscale Research has given three reasons for this expectation.
The first is the fact that the latest BTC cycle hasn’t seen any phase of parabolic price increase, as the below chart highlights.
The trajectory that BTC has followed in each of the bull runs | Source: Grayscale
The second is that Bitcoin has seen a shift this cycle, with instruments like exchange-traded funds (ETFs) and digital asset treasuries (DATs) bringing in fresh capital. Before, BTC relied on inflows through retail exchanges.
Lastly, Grayscale has pointed out that the macro market backdrop is still looking favorable for cryptocurrencies; the potential for lower interest rates and continued progress on bipartisan digital asset legislation could drive institutional investment.
BTC Price
At the time of writing, Bitcoin is floating around $87,000, unchanged from one week ago.
Looks like the price of the coin has plummeted over the last couple of days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Grayscale.com, chart from TradingView.com
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