Bitcoin Cycle Reincarnation: From Early Speculation to Institutionalized Prosperity

Since its inception in 2009, Bitcoin has experienced several dramatic price fluctuations. These cycles are not only reflections of market psychology but also proof of technological adoption. Understanding the drivers behind crypto bull runs is crucial for any participant.

The Essential Characteristics of Bull Cycles

Each upward wave of Bitcoin follows a similar logic: Scarcity Trigger → Expectation Shift → Capital Inflow. Unlike traditional markets, digital assets can see volatility reaching triple-digit percentage increases.

Key indicators of price surges include:

• Sudden increase in trading volume (usually over 10x)
• Surge in social media buzz
• Rising on-chain transfer activity
• Changes in institutional holdings data

Catalysts such as halving cycles (every four years), regulatory approvals, and large institutional entries can trigger these cycles. The halving mechanism creates scarcity by reducing the rate of new coin supply, and historically, each halving has been followed by significant price increases: 5200% after 2012, 315% after 2016, and 230% after 2020.

2013: Bitcoin’s First “Breakout”

That year, Bitcoin soared from $145 in May to $1,200 in December, a rise of 730%. The driving forces at this stage were relatively simple—media attention + early adopters’ enthusiasm.

The Cyprus banking crisis provided a perfect stage for Bitcoin. When traditional financial systems showed cracks, the value proposition of decentralized assets became compelling. However, the collapse of Mt.Gox (which handled 70% of global Bitcoin transactions at the time) also exposed vulnerabilities in market infrastructure.

Lesson from that year: Infrastructure risks can quickly destroy market confidence, with declines reaching 75%.

2017: Retail Investors’ Grand Frenzy

This was one of the most dramatic episodes in crypto history. Bitcoin surged from $1,000 to nearly $20,000, a 1900% increase. Daily trading volume skyrocketed from $200 million to $15 billion—a 75-fold increase.

Driving forces:

1. ICO boom—thousands of blockchain projects raised funds, attracting a large influx of retail investors
2. Improved exchange accessibility—more platforms supported easy purchasing
3. Viral spread—FOMO peaked, even people unfamiliar with blockchain discussed Bitcoin

The cost was equally severe: the following year, Bitcoin fell to $3,200, an 84% drop from the peak. China’s ban on ICOs and domestic exchanges triggered the major crash.

2020-2021: From Hedge Asset to Institutional Mainstream

This cycle was labeled “Digital Gold.” From early 2020’s $8,000 to April 2021’s $64,000 (700% increase), and eventually reaching $69,000.

The turning point was: institutions began massive entry. MicroStrategy, Tesla, Square, among others, incorporated Bitcoin into their asset portfolios. By the end of 2021, publicly traded companies held over 125,000 BTC, with institutional inflows exceeding $10 billion.

Key drivers:

• Federal Reserve’s quantitative easing fueling inflation expectations
• Reinforced narrative of Bitcoin as an inflation hedge
• Approval of futures and non-US ETFs lowered institutional entry barriers

This cycle also experienced a correction (dropping to $30,000 in July, a 53% decline), but the recovery was much faster than in 2018.

2024-2025: Institutionalization and Systemic Integration

Currently, Bitcoin has fully integrated into the traditional financial system. The spot Bitcoin ETF approved in January 2024 marks a watershed—this is the first directly approved Bitcoin investment product by the US SEC.

Data at a glance:

• Current price: $88.80K (based on latest real-time data)
• Year-to-date increase: +132% (from $40K to $93K)
• ETF capital inflows: over $4.5 billion (as of November 2024)
• Global Bitcoin ETF holdings: over 1 billion BTC

BlackRock’s IBIT ETF alone holds 467,000 BTC, making it one of the largest Bitcoin holders globally (second only to some national reserves).

Key events in 2024:

1. Spot ETF approval—opens the door for institutional allocation, with over $10 billion inflowed in the first three months, surpassing gold ETFs
2. April halving—supply growth rate halved from 6.25 to 3.125 BTC per 10 minutes
3. Policy shift expectations—new government policies favor crypto assets, with strategic reserve plans emerging

Recognizing the Signals of a Bull Market Start

For latecomers, how to identify the beginning of the next upward cycle?

Technical indicators:

• RSI (Relative Strength Index) breaking above 70
• 50-day and 200-day moving averages crossing upward
• Breaking through key resistance levels

On-chain data:

• Increased exchange outflows (indicating accumulation)
• Rising whale wallet activity
• Stablecoin inflows into exchanges (fueling buying power)

When Bitcoin hit a new high of $93,000 in November 2024, these indicators all showed positive signals.

Three Major Variables for Future Cycles

1. Government Strategic Reserve Plans

U.S. Senators proposed the “Bitcoin Act 2024,” recommending the Treasury acquire 1 million BTC over five years. If approved, this would create unprecedented demand for Bitcoin. Currently, Bhutan has accumulated 13,000 BTC, and El Salvador holds 5,875 BTC. Once sovereign nations regard Bitcoin as official reserve assets, market size could multiply several times.

2. Protocol Upgrades and Functionality Expansion

Restoration of OP_CAT code could enable Bitcoin smart contracts, supporting DeFi applications and processing thousands of transactions per second. This would break the “store of value only” limitation, allowing Bitcoin to compete with Ethereum.

3. Improved Regulatory Frameworks

Regulators in Europe and North America are drafting clear classifications and tax rules for crypto assets. Clear regulations tend to attract more conservative investors.

Practical Checklist for Investors

Preparation Phase

Learn the basics—understand blockchain technology, Bitcoin supply mechanisms, halving cycles Study historical cycles—compare the drivers behind 2013, 2017, and 2021 bull markets

Execution Phase

Define investment goals—are you aiming for short-term trading or long-term holding? What’s your risk tolerance? Choose secure platforms—ensure exchanges have cold wallets, 2FA, regular security audits Self-custody solutions—for long-term holdings, hardware wallets are preferred (offline storage minimizes risk)

Management Phase

Set stop-loss orders—to protect principal during downturns Rebalance periodically—avoid all-in on a single asset, maintain diversification Monitor tax obligations—different regions have different policies; plan ahead

Risk Prevention

Beware of FOMO—excessive volatility often results from retail investors rushing in Pay attention to macroeconomic factors—interest rate hikes, recession expectations shift investor risk appetite Track policy developments—such as mining restrictions, wallet freezes, which can occur suddenly

The Predictability and Uncertainty of Bull Markets

Bitcoin’s cycles do follow certain patterns—halvings, institutional adoption, policy breakthroughs often accompany price rises. But these patterns are also evolving:

Evolution from 2013 to 2024:

• 2013: 100% driven by speculation
• 2017: Mix of retail enthusiasm and infrastructure growth
• 2021: Rising influence of institutional players
• 2024: Policy and institutional factors become dominant

The future bull market is unlikely to replicate the explosive doubling of 2017, but it also won’t revert to early speculative gambling. Instead, a gradual rise combined with high volatility—supported by fundamentals but amplified by short-term sentiment—is more probable.

Final Thoughts

Bitcoin has only been around for 16 years but has already gone through 5-6 complete bull-bear cycles. Each cycle exposes flaws in old structures and builds new financial infrastructure.

The question now is no longer “Will Bitcoin succeed?” but “Who can seize the opportunity in the crypto financial era?” For investors, a crypto bull run is not an isolated event but part of a continuous institutionalization process.

Do your homework, manage risks, participate rationally—these are the eternal rules for navigating cycles.