TLDR
- Arthur Hayes declares Bitcoin’s four-year cycle dead due to monetary policy changes replacing halving-driven patterns.
- Bitcoin cycles historically ended during monetary tightening, not predetermined timing, Hayes argues.
- Current cycle features $2.5 trillion Treasury liquidity injection and Fed rate cuts despite elevated inflation.
- China’s shift from deflation to neutral policy removes major headwind that killed previous cycles.
BitMEX co-founder Arthur Hayes has declared the traditional Bitcoin four-year cycle obsolete, arguing that monetary policy rather than halving events now drives cryptocurrency price movements.
Hayes maintains that while historical patterns suggested Bitcoin cycles occurred every four years, the underlying mechanism was always monetary conditions, not arbitrary timing.
Monetary Policy Drives Bitcoin Cycles, Not Halvings
Hayes explained that Bitcoin price cycles are fundamentally driven by the supply and quantity of money, primarily USD and Chinese yuan, rather than halving events or institutional adoption. Past cycles ended when monetary conditions tightened, not because of predetermined four-year patterns.
The BitMEX founder analyzed three previous Bitcoin cycles to support his thesis. Bitcoin’s first bull run coincided with Federal Reserve quantitative easing and Chinese credit expansion, ending when both central banks slowed money printing in late 2013.
The second “ICO cycle” was driven primarily by yuan credit explosion and currency devaluation in 2015, collapsing as Chinese credit growth decelerated and dollar conditions tightened. The third “COVID-19 cycle” surged on USD liquidity alone while China remained restrained, ending when the Fed began tightening in late 2021.
Current Cycle Differs from Historical Patterns
Hayes argues this cycle presents different dynamics that break the traditional pattern. The US Treasury is draining $2.5 trillion from the Fed’s Reverse Repo program into markets by issuing more Treasury bills, while President Trump aims to “run it hot” with easier monetary policy to reduce debt.
Additionally, the Federal Reserve has resumed rate cuts despite inflation above target, with 94% odds on an October cut and 80% odds on a December reduction.
China’s monetary policy shift represents another crucial difference. While China won’t fuel this rally as much as previous cycles, policymakers are moving to “end deflation” rather than continuing liquidity drainage.
This removes a major obstacle that previously killed cycles, allowing US monetary expansion to drive Bitcoin higher without Chinese deflationary forces counteracting the effect.
