Global crypto markets are reassessing bitcoin’s cycle dynamics as structural pressures intensify. Asset manager Canary Capital published its “ Bitcoin’s Four-Year Cycle: The 2025 Reality Check” report earlier this month, examining why the current downturn emerged earlier than expected and what it signals for the broader market.
The report states that bitcoin’s four-year cycle remains fundamentally tied to miner economics despite changes in market structure and broader institutional participation. Rising electricity costs, driven in part by the rapid expansion of AI data centers, disproportionately affected small and mid-sized miners exposed to variable pricing models, forcing earlier liquidation of bitcoin reserves. As the report explains:
“This resulted in widespread miner capitulation earlier in the cycle than historical norms.”
A second pressure point emerged through the collapse of the bitcoin basis trade following the introduction of spot exchange-traded funds (ETFs), which compressed futures premiums and reduced arbitrage incentives.
Addressing claims that the cycle itself has broken down, Canary Capital maintains:
“The four-year cycle remains intact. Bitcoin peaked in October at approximately $126,000, consistent with prior cycle timing.”
The analysis further challenges assumptions that new investment vehicles have neutralized miner influence, noting: “The claim that ETFs and DATs will unlock enough new institutional and retail capital to eliminate the role of miners is simply not true, at least not this cycle. Over the long term, perhaps, but not now. While improved access has increased demand across investor classes, behavior matters just as much as availability.”
Looking ahead, the report links market trajectory to macroeconomic policy and investor behavior. Diverging central bank paths, including a more dovish U.S. stance alongside Japanese tightening, historically align with periods of bitcoin weakness, while subdued consumer spending limits retail participation.
Read more: Is the Bitcoin Four-Year Cycle Broken After 2025’s Unexpected Finish?
On downside risk, Canary Capital outlines expectations clearly: “Each halving cycle delivers diminishing marginal impact, but forced sellers, particularly miners, remain structurally influential. Both upside and downside volatility have moderated with each cycle.” Steven McClurg, founder and CIO of Canary Capital Group, added:
“I expect this bear phase to result in a 50–55% peak-to-trough decline. With BTC already down roughly 30%, a gradual decline over the next 6–9 months is reasonable. This trajectory aligns with expected Federal Reserve policy shifts and suggests a cyclical trough forming in mid-to-late summer, followed by recovery.”
Beyond the downturn, the report points to a more selective environment ahead, concluding, “2026 is likely to be defined by adoption and real business profitability, with emphasis on on-chain lending and borrowing, tokenization of real-world assets and stablecoins & payments infrastructure,” signaling a shift toward fundamentals-driven differentiation across the crypto sector.
- Why did the bitcoin downturn arrive earlier in this cycle?
Rising electricity costs, miner capitulation, and the collapse of the bitcoin basis trade accelerated selling pressure. - Does the report say bitcoin’s four-year cycle is broken?
No, Canary Capital states the four-year cycle remains intact despite changing market dynamics. - How have ETFs affected bitcoin price behavior?
ETFs improved market efficiency and access but have not eliminated miner-driven selling this cycle. - What does the report expect for bitcoin after the 2025 trough?
It projects recovery into 2026 driven by adoption, on-chain lending, tokenization, and payments infrastructure.
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