The evolution of Bitcoin bull market cycles: from early bubbles to institutional acceptance

In the cryptocurrency market, Bitcoin, as the largest digital asset by market capitalization, has experienced multiple distinct cycles of prosperity and decline since its inception in 2009. These cycles not only shape the development trajectory of the entire crypto ecosystem but also provide valuable references for understanding the operational logic of crypto bull markets. Currently, Bitcoin’s trading price is approximately $88.68K, still with room to rise from its all-time high of $126.08K. Understanding the driving forces behind these cycles is crucial for investment decisions.

The Genetic Code of Bull Markets: Scarcity of Supply and Halving Cycles

The formation of Bitcoin bull cycles is no coincidence. Its fixed total supply of 21 million coins makes the halving event every four years a market “timer.” Halving reduces the rate of new coin issuance, and this artificially induced supply compression often leads to expectations of price increases.

Historical data shows: after the 2012 halving, Bitcoin surged by 5200%; after the 2016 halving, it increased by 315%; and following the 2020 halving, it rose by 230%. The fourth halving in April 2024 once again validates this pattern.

On a technical level, indicators supporting bull market judgments include the Relative Strength Index (RSI) breaking above 70, golden cross signals between the 50-day and 200-day moving averages, as well as on-chain data such as rising wallet activity and increased stablecoin inflows into exchanges.

2013: Early Wild Growth

Bitcoin’s first major rally occurred in 2013. In just eight months, the price soared from about $145 in May to $1200 in December, a 730% increase. Behind this rally were three driving forces:

Media Amplification: The sharp price increase triggered widespread media coverage, attracting capital beyond tech enthusiasts.

Geopolitical Risks: The Cyprus banking crisis made some investors realize Bitcoin’s potential as a value store outside government control.

Initial Infrastructure Development: The increase in exchanges lowered participation barriers.

However, this bull market also exposed market vulnerabilities. In early 2014, Mt.Gox exchange was reported to have had its managed BTC stolen, handling about 70% of global Bitcoin trading volume at the time. This security breach triggered a confidence crisis, and Bitcoin subsequently fell below $300, dropping over 75%. Despite this, the market’s subsequent consolidation fostered greater resilience.

2017: Retail Wave Peak

If 2013 marked Bitcoin’s entry to the masses, 2017 was the carnival for retail investors. The annual increase reached 1900%, rising from $1000 at the start of the year to $20,000.

Key drivers of this rally included:

ICO Boom: Initial Coin Offerings opened the door for many new projects to raise funds, with large capital flows into the crypto space, boosting demand for Bitcoin as a “hard currency.”

Exchange Facilitation: New-generation trading platforms lowered trading barriers, and mobile apps enabled ordinary people to participate easily.

Self-Reinforcing Sentiment: Rising prices → media coverage → new entrants → further price increases, creating a classic FOMO-driven positive feedback loop.

During this period, daily trading volume jumped from less than $200 million at the start of the year to over $1.5 billion by year-end.

However, regulatory crackdowns soon followed. China banned ICOs and exchanges, and many financial regulators expressed concerns over market manipulation and investor protection. By the end of 2018, Bitcoin’s price collapsed from the $20,000 high to around $3,200, an 84% decline. This correction lasted throughout the bear market cycle, once again highlighting the high-risk nature of crypto bull markets.

2020-2021: Institutional Entry

If the previous two bull markets were driven by retail and speculation, 2020-2021 marked the turning point where Bitcoin gained institutional recognition. In just 16 months, Bitcoin’s price jumped from $8,000 at the start of the year to $64,000, a 700% increase.

Major changes during this period included:

Macro Environment: Global central banks’ ultra-loose monetary policies and fiscal stimulus measures led to declining yields on traditional assets. Bitcoin’s appeal as “digital gold” and an inflation hedge increased.

Institutional Adoption: Public companies like MicroStrategy, Square, and Tesla began holding Bitcoin on their balance sheets. By the end of 2021, corporate holdings exceeded 125,000 BTC, with institutional capital inflows surpassing $10 billion.

Product Innovation: Bitcoin futures products received approval at the end of 2020, and ETF products launched in the US and other jurisdictions, providing regulated investment channels for institutions unwilling to hold physical Bitcoin directly.

This period also faced challenges. Environmental advocates criticized Bitcoin mining’s carbon footprint, and ESG investors’ hesitations grew. Coupled with a correction in July 2021 (price dropping to $30,000), the market experienced a retracement.

2024-2025: The Era of Spot ETFs Begins

The current bull cycle exhibits features different from previous ones. The approval of a spot Bitcoin ETF by the US SEC in January 2024 is a milestone event.

Data Comparison:

• Early 2024: Bitcoin around $40000
• Mid-December 2025: current price $88680
• Yearly increase: 122%
• ATH record: $126080

ETF Capital Inflows: Within months of approval, US spot Bitcoin ETF inflows exceeded $4.5 billion, with the latest monthly net inflow surpassing $1 billion. BlackRock’s IBIT product alone holds 467,000 BTC.

Supply-Side Pressure: Institutions like MicroStrategy continue to build holdings, and the available Bitcoin in exchanges further declines, creating structural supply tightness.

Policy Expectations: US policymakers have signaled plans to include Bitcoin in national strategic reserves. A senator’s proposal calls for the US Treasury to acquire 1 million BTC over five years, elevating Bitcoin’s recognition at the national level.

Practical Checklist for Recognizing Bull Market Signals

Investors can look for the following signs to anticipate a new upward trend:

Technical Indicators: RSI entering the 60-70 range (a pre-overbought signal); price stabilizing above the 200-day moving average; moderate volume increases.

On-Chain Data: Increase in large wallet addresses; rising withdrawal pressure from exchanges (indicating holders prefer self-custody); accumulation of stablecoins on exchanges (preparing for buying).

Macro Environment: Central banks shifting toward easing policies; US dollar index weakening; rising geopolitical risks.

Market Sentiment: Current market sentiment is balanced at a 50:50 bullish/bearish ratio, reflecting uncertainty but also potential for a critical point in trend direction.

Traps to Avoid During Bull Markets

FOMO-driven Buying: Entering during rapid price surges is a common mistake among beginners. Historically, nearly every late-stage bull market has seen retail investors rushing in.

Over-leverage: Borrowing to speculate on Bitcoin can trigger chain liquidations during price corrections. Multiple liquidation events in 2024 serve as warnings.

Ignoring Risk Management: Stop-loss settings and capital allocation plans must be carefully implemented. Heavy single-position bets on volatile assets violate basic investment principles.

Blindly Trusting “Insider News”: Information asymmetry in crypto markets far exceeds traditional markets; blindly following rumors can lead to losses.

Preparing for the Next Wave of Gains

Investors wishing to participate in future markets should pay attention to:

1. Knowledge Building: Understand Bitcoin’s technical fundamentals and economic logic, not just price chasing. Reading the white paper and engaging with technical communities are essential.

2. Platform Selection: Choose exchanges with robust security measures, transparent operations, and sufficient liquidity. Verify if they implement cold storage, regular security audits, and two-factor authentication.

3. Self-Custody Skills: For long-term holders, hardware wallets are preferred. Leading products like Ledger and Trezor offer secure offline storage solutions.

4. Information Monitoring: Subscribe to authoritative sources for market analysis and policy updates. The 90 days before halving events are often golden windows for market movements.

5. Tax Planning: Cryptocurrency trading can have different tax implications depending on jurisdiction. Consult professionals in advance to avoid disputes.

6. Psychological Preparation: Bitcoin’s volatility means unrealized losses are common. Developing a long-term holding mindset and resisting panic during daily fluctuations are key to success.

Long-term Imagination Space for Technological Upgrades

Beyond macro cycles, technological advancements are also supporting Bitcoin’s valuation. The restoration of the OP_CAT opcode could open doors for Bitcoin layer-2 solutions, potentially enabling thousands of transactions per second. Once DeFi ecosystems form on Bitcoin, its application scope could expand from “store of value” to “computing platform,” representing a qualitative leap for long-term investment logic.

Additionally, if more countries emulate pioneers like El Salvador and Bhutan by including Bitcoin in their foreign exchange reserves, institutional demand for Bitcoin could reach astronomical levels. Bhutan has already accumulated 13,000 BTC through its national investment company, ranking among the top government holdings worldwide.

Long-term Observation of Risk Factors

It cannot be ignored that crypto bull markets face multiple pressures:

Regulatory Uncertainty: While the US SEC’s attitude toward crypto has softened, regulatory policies worldwide vary significantly. Strict policies in a single country could trigger chain reactions.

Environmental Pressure: Although Bitcoin’s energy efficiency is improving, public concern over its carbon footprint persists.

Increasing Competition: Ethereum and other Layer-1 blockchains have early advantages in application ecosystems. Bitcoin must innovate technologically to redefine its value proposition.

Macroeconomic Recession Risks: If the global economy enters recession, risk assets generally decline, and Bitcoin, as a high-risk asset, may also suffer.

Conclusion: Cycles of Regularity and Irregularity

Bitcoin’s bull market cycles show certain regularities—roughly every four years, the halving cycle correlates with periodic market sentiment heating. However, behind this regularity, increasing irregularities are emerging: deeper institutional participation, accelerated technological innovation, changing policy environments—all disrupting simple historical repetition.

Currently, Bitcoin is trading at around $88,680, having retraced from previous highs, but still with nearly 32 times the decline to the all-time low of $67.81 (in absolute terms). This reflects both the market’s resilience and its risks.

For investors, the most important thing is to develop a sense of the cycle rather than blindly betting on the next surge. Learning to manage risks during uptrends and maintaining conviction during downturns is the key to navigating multiple cycles. The future Bitcoin bull market may become more gradual as market participants become more rational; it could also become more intense as institutional allocations remain in early stages. But one thing is certain: Bitcoin, as the flagship asset of the crypto market, will continue to shape the rhythm of the entire ecosystem.