The current Bitcoin cycle has challenged almost every assumption traders rely on to identify a complete market cycle. The price has risen steadily over the past two years, but the explosive movement that indicates the late stages of a Bitcoin bull phase has been absent.
According to an analysis shared on The difference is not psychological or technical in the usual sense of a four-year cycle.
Liquidity difference in this cycle
The disconnect between the current Bitcoin price action and previous four-year cycles has led to questions among crypto analysts whether the cycle has already reached its peak or whether something different is influencing its behavior beneath the surface.
For example, during the 2020-2021 bull market, Bitcoin’s peak coincided with a period of extreme liquidity expansion. Bitcoin followed this influx in a classic parabolic explosion once liquidity conditions reached their most expansive point.
The graphic shared by Sykodelic clearly shows this trend. The liquidity index peaked near the price peak in 2021 after a period of growth ranging from quantitative expansion in late 2019. This was followed by a fall that aligned with the 2022 bear market, which ultimately ended with the bear market bottom.
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Interestingly, this pattern of Bitcoin price action based on the liquidity index has repeated itself during every previous bull cycle. This time, the structure is reversed. The liquidity index did not peak around Bitcoin’s most recent all-time high above $126,000. Instead, liquidity has varied and only recently begun to stabilize around levels seen during the 2022 bear market bottom.
One of the more unusual aspects of this cycle is how far Bitcoin has come despite limited liquidity support. Sykodelic points out that Bitcoin rose from the $15,000 region to well above $100,000 while global liquidity was limited, a trend that has never happened before.
Bitcoin/US Dollar. Source: @Sykodelic_ on
Why the dish was delayed and not canceled
The lack of a parabolic surge has led many to assume that the cycle is almost exhausted. However, Sykodelic claims the opposite. According to his interpretation of the global liquidity index, Bitcoin is not moving into an advanced distribution phase, but currently rebounding from a liquidity trough.
Previous crypto cycles relied largely on unpredictable money flows, but this cycle relies on new sources of structural demand. Spot Bitcoin ETFs have introduces persistent institutional flows, while government-level adoption has changed Bitcoin’s role in crypto investment portfolios.
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Additionally, the boom in AI stocks has led traditional stock markets to expand. absorbing a large part of liquidity available, leaving less capital for aggressive rotation into altcoins and broader crypto markets.
The chart shows that liquidity begins to increase at the point when quantitative tightening ends and liquidity conditions begin to increase. The projection is that once liquidity begins to increase and quantitative easing develops, Bitcoin could then begin the missing parabolic behavior that take it to new price heights.
Featured image created with Dall.E, chart from Tradingview.com
