Bitcoin Cycle Law: Analyzing the Opportunities and Risks of the Next Market Cycle from $88.75K

Currently, Bitcoin’s price has reached $88.75K, just one step away from the all-time high of $126.08K. At this moment, reviewing the past four bull market cycles and understanding their patterns is crucial for grasping future investment opportunities.

From the Chicago Bank Crisis to the 2013 First Bull Run

Bitcoin’s first real bull run occurred in 2013. It surged from $145 to $1,200, a 730% increase. During this period, the Cyprus banking crisis prompted investors to seek alternative assets, and Bitcoin, as a decentralized store of value, entered the public eye for the first time.

However, the Mt. Gox exchange bankruptcy in 2014 dealt a cold shower to the market, causing BTC to fall below $300. Although this crisis shook confidence, it also exposed infrastructure vulnerabilities, laying the foundation for subsequent institutional development.

Key Insight: Early bull runs are often accompanied by external economic events and infrastructure upgrades.

2017 ICO Boom and Retail Investor Awakening

2017 was the year Bitcoin truly broke out of its niche. From $1,000 to $20,000, a 1,900% increase. The ICO craze attracted millions of retail investors, with daily trading volume soaring from $200M to $15B.

But this bull market came with high speculation and regulatory crackdown. China banned ICOs and exchanges, leading the market into an 84% deep bear phase, with BTC dropping to $3,200. This lesson taught the market that growth without regulatory framework is unsustainable.

Key Insight: Retail enthusiasm drives prices higher, but regulatory uncertainty can quickly reverse sentiment.

2020-2021: Institutional Entry Reshapes the Rules

The liquidity flood and ultra-low interest rate environment triggered by the pandemic led institutional investors to reconsider Bitcoin. MicroStrategy, Tesla, and other tech companies began allocating BTC, pushing the price from $8,000 to a peak of $69,000, with an interim high of $64,000 (up 700%).

A key shift during this period was: Bitcoin no longer belongs solely to tech geeks and speculators but has become part of mainstream asset allocation. The launch of Bitcoin futures and non-US exchange-traded funds (ETFs) provided regulated channels for institutional investment.

Key Insight: Institutional participation brings liquidity and stability, transforming the price discovery mechanism.

2024-25: ETF-Driven Rise from $40K to $88.75K

We are now in the fourth cycle. Starting the year at $40K, BTC has touched highs of over $93K in multiple months. Since the approval of the US spot Bitcoin ETF in January 2024, over $28B has been attracted, even surpassing the inflows into gold ETFs during the same period.

Unique aspects of this period include:

Institutional Maturity: Spot ETFs allow traditional investors (pension funds, insurance companies) to hold BTC exposure directly, without needing to understand private keys or wallets.

Scarcity Reinforcement: After the fourth halving in April 2024, new BTC issuance was cut in half, while institutions like MicroStrategy continue to accumulate, further reducing circulating supply on-chain.

Policy Expectations: The pro-cryptocurrency stance of the Trump administration and discussions around a “Strategic Bitcoin Reserve” pave the way for potential national-level allocations.

Technological Upgrades: Proposals like OP_CAT are underway, signaling Bitcoin’s evolution from mere “digital gold” to a multi-functional asset.

Five Dimensions to Identify Bull Market Signals

On-Chain Data Speaks

Don’t focus solely on price. Pay attention to:

• Exchange Outflows: BTC moving out of exchanges indicates accumulation by institutions and large holders.
• Stablecoin Inflows: Large inflows of USDT/USDC into exchanges suggest readiness to buy.
• Wallet Activity: Large addresses beginning to transfer funds indicate accumulation.

Currently, over 55 million addresses hold BTC, indicating unprecedented retail participation.

The Value of Technical Indicators

Golden cross of the 50-day and 200-day moving averages has historically been a strong bullish signal. RSI breaking above 70 indicates buying momentum, but also warrants caution for overheating. During the 2024 rally, these signals appeared multiple times but were often driven higher by positive news.

Macro Environment Context

Global central bank policies, Federal Reserve rate expectations, geopolitical tensions—these macro factors often determine institutional allocation directions. Although liquidity has tightened post-pandemic, global debt pressures continue to boost demand for non-correlated assets.

Regulatory Attitudes Shift

From the US SEC approving spot ETFs, to countries like El Salvador and Bhutan including Bitcoin as reserves, and the friendly stance of the Trump team—regulation has shifted from opposition to compromise and support. This is the most positive signal in a decade.

Supply Constraints

The fixed total supply of 210,000,000 BTC is embedded in Bitcoin’s DNA. The halving every four years strictly limits new coin issuance. As institutional and national demand increases while supply shrinks, the mathematical support for higher prices grows.

Current Risks That Cannot Be Ignored

Even with strong fundamentals, Bitcoin faces several major risks:

Volatility Remains Fierce: The range from $88.75K to the historic low of $67.81K, or up to the high of $126.08K, remains in the same magnitude. A sudden event could trigger a 15-20% intraday drop.

FOMO and Leverage Traps: Retail investors often chase high prices, especially via perpetual contracts with leverage. Once liquidation triggers, chain reactions can amplify declines. Similar situations have occurred multiple times in 2024.

Regulatory Uncertainty: Although current policies are friendly, they can reverse quickly. Allegations of terror financing, money laundering, or escalation of geopolitical conflicts could lead to bans again.

Macroeconomic Recession Risks: If the global economy enters recession, even Bitcoin, viewed as a “safe asset,” could be sold off. History shows exceptions during major crises.

Mining Energy Pressure: ESG investors are increasingly concerned about Bitcoin’s carbon footprint. Regulatory adjustments to energy policies could restrict hash rate growth.

How to Prepare for the Next Bull Market

Based on historical patterns and current conditions, the following suggestions are worth considering:

Educate Yourself: Deeply understand Bitcoin’s technical principles, economic models, and historical cycles. Avoid blind FOMO; be responsible for your decisions.

Dollar-Cost Averaging (DCA): If optimistic about long-term prospects, don’t go all-in at once. Use DCA strategies to buy in different price ranges, averaging your cost.

Choose Reliable Platforms: Exchange security is critical. Check for features like cold storage, 2FA, regular security audits.

Consider Hardware Wallets: If holding for over a month’s income, transfer to hardware wallets (Ledger, Trezor). Your coins are truly safe from exchange bankruptcy or hacking.

Monitor Key Events: Next halving (expected 2028), ETF inflow data, national policy statements, technological upgrades—these are potential turning points.

Set Stop-Loss and Take-Profit: Don’t let emotions control you. Predefine target prices and execute when reached, rather than waiting. Many tops have been missed due to greed.

Diversify Portfolio: While Bitcoin is attractive, it shouldn’t constitute 100% of your holdings. Mix with other crypto assets, stocks, bonds to reduce overall volatility.

Looking at Future Cycles from History

First cycle (2013): Infrastructure sprouting
Second cycle (2017): Retail explosion
Third cycle (2021): Institutional entry
Fourth cycle (2024-25): System maturation

Participants and driving factors differ each cycle, but the underlying logic remains: Scarcity + Demand Growth + Supply Constraints = Price Rise.

The current $88.75K is in the middle of this logic. Whether it can challenge the $126.08K high depends on inflow speed, regulatory stability, and macro environment.

For investors, it’s essential to identify opportunities while respecting risks. Bitcoin’s fifteen-year history proves that long-term holders often profit handsomely, but high-frequency traders’ success rate isn’t as high as imagined.

Before the next bull market arrives, do your homework, keep a balanced mindset, and make a plan. When opportunities come, you’ll be able to seize them calmly rather than be swept away by emotions and FOMO.