From the halving cycle to institutional entry: understanding the bullish wave of cryptocurrencies

The current Bitcoin market is at a critical juncture. Latest data shows BTC price hovering around $88.57K, still below the all-time high of $126.08K, but market sentiment is evenly split between bullish and bearish. To understand the current market dynamics, we need to delve into a key concept: What is a bull market in cryptocurrency, and what drives these dramatic upward cycles?

The Essence of a Bull Market: Cyclical Prosperity of Crypto Assets

In traditional finance, a bull market refers to a period of sustained rising prices. However, in cryptocurrencies, bull run has its unique characteristics: prices not only rise but often experience exponential growth, community enthusiasm erupts, and institutional investments pour in.

Unlike stock markets, the bull cycle of crypto assets is closely linked to specific on-chain events. Bitcoin’s halving events occur every four years, reducing new coin supply and creating scarcity. Historical data shows that within 12-18 months after a halving, Bitcoin often experiences significant price increases. This predictability makes halving one of the most important events on crypto investors’ calendars.

2013: The Prelude to the Digital Asset Era

The first major rally in 2013 laid the groundwork for everything that followed. That year, Bitcoin surged from about $145 in May to $1,200 in December, a 730% increase. The driving forces behind this rally included:

Media Attention Surge — As prices rose, mainstream media began reporting on this mysterious digital asset, attracting tech enthusiasts and early adopters.

Impact of the Cyprus Banking Crisis — The European financial turmoil in 2013 increased demand for alternative assets, with Bitcoin seen as a hedge against inflation and political risks.

However, the crash in early 2014 was equally intense. Security breaches at Mt. Gox exchange led to massive Bitcoin losses, confidence shattered, and prices fell below $300 in 2014. This event underscored the importance of market infrastructure and foreshadowed future demand for safer, regulated trading platforms.

2017: Retail Investors Enter the Fray

If 2013 was the prelude, 2017 was the moment crypto “went mainstream.” Bitcoin rose from $1,000 at the start of the year to nearly $20,000 by year-end, a 1,900% increase. Several key changes occurred during this period:

Initial Coin Offering (ICO) Boom — Projects raised funds by issuing their own tokens, attracting millions of retail investors into crypto. Bitcoin, as the gateway into the ecosystem, benefited greatly.

Democratization of Trading Platforms — More user-friendly exchanges emerged, making it easier for ordinary people to buy Bitcoin, breaking down previous technical barriers.

FOMO Amplification — Every new high fueled fears of missing out, driving more investors in and creating a self-reinforcing cycle.

As expected, the correction in 2018 was brutal. From nearly $20,000, Bitcoin dropped to $3,200 by December 2018, over an 84% decline. China’s ban on ICOs, increased global regulatory scrutiny, and rampant speculation accelerated this correction. This cycle taught the market a lesson: Rapid growth is inevitably followed by sharp corrections.

2020-2021: Institutional Recognition as a Turning Point

The third bull market marked the maturity of the crypto asset space. Bitcoin rose from about $8,000 in early 2020 to $64,000 in April 2021, a 700% increase. But the nature of this rise was entirely different:

Entry of Institutional Investors — Companies like MicroStrategy, Tesla, and Square began holding Bitcoin on their balance sheets. This was not only a validation of Bitcoin’s value but also changed market structure. Institutional participation added stability and liquidity.

Establishment of the “Digital Gold” Narrative — Amid economic uncertainty caused by the COVID-19 pandemic, Bitcoin was repositioned as an inflation hedge, contrasting sharply with its 2013 “get-rich-quick” image.

Development of Derivatives Markets — The launch of Bitcoin futures and other instruments provided institutions with ways to participate without directly holding the coins.

Mid-2021, Bitcoin retraced from $64,000 to $30,000, a 53% correction, yet the market never entered a bear phase. This indicated that institutional holders provided a price floor.

2024-2025: New Opportunities with the ETF Era

Looking at the current cycle, January 2024 saw the U.S. SEC approve a spot Bitcoin ETF, marking a new era. ETFs offer traditional investors familiar investment tools—no need to handle private keys, worry about exchange security—just buy ETF shares like stocks.

The impact of this policy shift is profound:

Surge in Institutional Inflows — By November 2024, over $28 billion had flowed into spot Bitcoin ETFs, surpassing the annual net inflow of gold ETFs.

Supply-Side Tightening — Meanwhile, the April 2024 halving reduced the annual new Bitcoin issuance from 900 BTC to 450 BTC. Companies like MicroStrategy continue to increase holdings, further reducing market liquidity.

Favorable Political Environment — The U.S. policy landscape appears more crypto-friendly, removing psychological barriers for institutional investors.

These factors have propelled Bitcoin from $40,000 at the start of the year to a new high of $93,000. Although the current price has retreated to $88.57K, the market fundamentals remain strong.

Key Indicators for Recognizing a Bull Market

For investors, early warning signs of a bull market are crucial. Here are indicators to monitor:

Technical Indicators — Relative Strength Index (RSI) above 70 often signals strong buying momentum. When Bitcoin price breaks above the 50-day and 200-day moving averages, it often signals the start of an upward trend.

On-Chain Data — Increased wallet activity, inflows of stablecoins into exchanges (indicating buying power), and declining Bitcoin balances on exchanges (signaling accumulation) are positive signs.

Macro Environment — Federal Reserve monetary policy stance, global economic uncertainty, geopolitical events all influence Bitcoin’s attractiveness. In a loose monetary environment, Bitcoin tends to perform better.

Market Sentiment — Current sentiment indicators show a roughly 50/50 split between bullish and bearish forces, indicating the market is still searching for direction.

Potential Catalysts for the Next Bull Run

Looking ahead, several factors could trigger the next upward cycle:

Government Adoption of Bitcoin — Countries like Bhutan and El Salvador already hold Bitcoin in reserves. If the U.S. or other major economies follow suit, demand could shift fundamentally.

Technological Upgrades — Bitcoin networks may gain enhanced features, such as improved Layer-2 solutions and smart contract capabilities. These upgrades could attract investors seeking DeFi opportunities within Bitcoin.

Development of Derivatives Markets — Maturation of options and futures markets will provide more hedging and speculative tools, attracting broader participation.

Preparing for the Next Cycle

For investors aiming to profit from the next bull run, here are practical tips:

Deepen Your Knowledge — Understand Bitcoin’s technical fundamentals, its limited supply (21 million BTC), and its role as a store of value. Read the Bitcoin whitepaper and other authoritative resources.

Diversify Investments — While Bitcoin is the flagship crypto asset, don’t put all your eggs in one basket. Consider holding Ethereum, Solana, and other major cryptocurrencies.

Choose Secure Platforms — Use exchanges with strong security records. Enable all available security features, including two-factor authentication.

Adopt a Long-Term Holding Strategy — History shows that investors who sell at market tops or panic at bottoms often lose the most. Building a long-term mindset can yield the best returns.

Tax Planning — Don’t overlook the tax implications of crypto holdings. Keep detailed records and consult local tax professionals.

The Deeper Meaning of Bitcoin Cycles

Bitcoin’s bull cycles are more than just price increases. They represent an ongoing transformation—from a digital experiment mocked by mainstream finance to an increasingly recognized legitimate asset class.

The 2013 bull run introduced Bitcoin to the world. The 2017 cycle proved retail interest in alternative finance. The 2020-2021 rally validated institutional recognition. The 2024 cycle indicates Bitcoin’s integration into traditional finance.

Each cycle has brought better infrastructure, more participants, and more mature market behavior. The earliest bull markets were characterized by speculation and volatility. Recent cycles show more sustainable fundamentals.

Conclusion: Bull Markets Are Not the End, But a Sign of Evolution

Currently, although Bitcoin’s price has retreated from the all-time high of $126.08K, the fundamentals remain strong. The periodicity of halving cycles, continuous ETF inflows, institutional participation, and improved market infrastructure all suggest Bitcoin is undergoing long-term appreciation.

For investors, the key is not to perfectly time every bull cycle but to understand the underlying drivers. By focusing on supply reductions, institutional adoption, regulatory progress, and technological upgrades, investors can make more informed decisions.

The next bull run may be triggered by various conditions, but history shows it will come. The important thing is to be prepared—understand the opportunities and recognize the risks. In this rapidly evolving asset class, knowledge and patience are often the best investments.