Four Decades of Volatility: How Bitcoin Cycles Will Reshape Crypto Investments

From First Surges to the Era of Institutions: A Brief History of Reimagining Value

Bitcoin, launched in 2009, has transformed over a decade and a half from an experimental project into a multi-billion-dollar financial asset attracting both retail speculators and large investment funds. Each growth cycle leaves a unique mark on the market, opening new investment opportunities and exposing systemic risks. Understanding this evolution is critically important for navigating current market conditions.

Anatomy of Bull Cycles: What Triggers Them and How to Recognize Them

A Bitcoin bull cycle is not just a price increase. It’s a complex interplay of technical factors, macroeconomic conditions, and mass psychology. Events such as halving (reducing block rewards approximately every four years), influxes of capital from major investors, or regulatory approvals become catalysts for multi-month or multi-year upward trends.

On a technical level, the start of a bullish period is often accompanied by a breakout above key moving averages (50-day and 200-day). The Relative Strength Index (RSI) rising above 70 signals increasing buying pressure. Signs appear in the network: address activity grows, stablecoin inflows to exchanges increase (indicating readiness to buy), and the number of coins stored on trading platforms decreases (reflecting investors’ intention to accumulate).

Current data shows a paradoxical situation: with BTC at $88.62K (data from December 2025), the market shows a slight monthly increase (+1.76%), but has already retreated significantly from the historical maximum of $126.08K. This indicates consolidation after a substantial move, not the start of a new rally.

2013: When Bitcoin First Leaves the Shadows

The first significant jump occurred under very different conditions. In 2013, when crypto infrastructure was minimal and the number of traders was in the hundreds, Bitcoin rose from ~$145 in May to ~$1,200 in December — a 730% increase. Many consider this the first real proof of the concept’s viability.

What ended the rise? The Cyprus banking crisis in 2013 indirectly helped Bitcoin: concerned citizens, worried about deposit safety, viewed digital currency as an alternative to traditional banks. Simultaneously, growing media coverage attracted speculators.

What stopped it? The hacking and collapse of the largest exchange, Mt. Gox, in early 2014, which handled 70% of all transactions. The loss of trust was so profound that Bitcoin fell below $300 — a correction of 75%.

2017: Mass Madness and the ICO Bubble

If 2013 was a niche event, 2017 was the year Bitcoin hit the mainstream headlines. The price soared from $1,000 in January to nearly $20,000 in December — an incredible 1,900%.

The driving forces were entirely different from 2013. This time, retail investors, gaining access through user-friendly mobile apps and new exchanges, flooded into the market. Simultaneously, the ICO boom (created new entry points for speculators).

Daily trading volumes exploded from $200 millions at the start of the year to $15 billions by the end — a fiftyfold increase that inevitably attracted crypto thieves and scammers.

Consequences: By December 2018, Bitcoin plummeted to $3,200 — an 84% loss from the peak. Regulatory pressure, especially China’s ban on ICOs and local crypto exchanges, created a shock response in the market.

2020-2021: The Era of Mass Adoption and Bull Run 2021

If 2017 was the era of retail mania, 2020-2021 marked a turning point in institutional perception of Bitcoin. It was a pivotal moment defining the current status of cryptocurrency.

Beginning: The COVID-19 pandemic and unprecedented monetary stimulus from central banks created ideal conditions. Investors, fearing inflation, began seeking alternative stores of value. Bitcoin, with its limited supply (just 21 million coins), appeared compelling.

Rise: From $8,000 in January 2020 to $64,000 in April 2021 — a 700% increase. But what distinguished this period from previous ones was the quality of capital inflow. MicroStrategy, initially just a small analytics firm, invested hundreds of millions in Bitcoin. Tesla announced a purchase. Square followed suit. Major banks and funds, which in 2017 had not even seriously considered crypto, now integrated Bitcoin into their portfolios.

The 2021 bull run was marked by the introduction of Bitcoin futures (approved in 2020) and spot ETFs in other jurisdictions. These tools allowed conservative investors to gain exposure without direct coin holdings.

Volatility was immense — a correction from $64,000 to $30,000 in summer 2021 showed the market remained sensitive to news of bans and environmental concerns.

2024-25: ETFs as the New Frontier

The approval of spot Bitcoin ETFs in the US in January 2024 created an effect difficult to overstate. Unlike futures, spot ETFs provide direct exposure to Bitcoin through a familiar investment fund mechanism.

Scale: By November 2024, total inflows into US spot Bitcoin ETFs exceeded $28 billion. For comparison: this surpasses the total inflow into gold ETFs during the same period. BlackRock via IBIT holds over 467,000 BTC. Other major asset managers also secured portions of this growing pie.

Price action: Bitcoin reached $93,000 in November 2024 — a historic high at that time. Over the year since January, this represents a 132% increase. However, the current pullback to $88.62K (according to December 2025) shows that even with massive institutional inflows, the market remains volatile. Daily fluctuations in the range of $2.68K ($86.89K - $89.57K) are typical for Bitcoin regardless of price level.

Halvings: The Rhythm of Regularity in the Crypto World

One of the most reliable cyclical factors is Bitcoin halving. Every four years, the protocol automatically cuts the block reward in half. This reduces the rate of new coin creation and, according to scarcity theory, should increase the price.

Historical examples:

• After the 2012 halving: +5,200%
• After the 2016 halving: +315%
• After the 2020 halving: +230%
• The April 2024 halving preceded the current growth cycle and subsequent consolidation

The decreasing percentage of growth after each halving may reflect several factors: an increasing base on which the percentage is calculated; growing market maturity; and diversification of price-driving factors.

Regulatory Triumphs and Organizational Shifts

Approval of spot Bitcoin ETFs is not just a trading instrument. It’s a signal from regulators that Bitcoin has reached a certain level of legitimacy. The SEC, which had long rejected such proposals, finally approved them.

Simultaneously, discussions about adopting Bitcoin as a strategic reserve are growing. US Senator Cynthia Lummis proposed the Bill BITCOIN Act 2024, which envisions the US Treasury purchasing up to 1 million BTC over five years. While the law’s adoption remains uncertain, its introduction signals a shift in attitude.

Bhutan and El Salvador have already included Bitcoin in their national reserves, signaling readiness among some nations to use crypto in sovereign capital management.

Challenges That Remain

Despite progress, Bitcoin faces serious obstacles:

Environmental concerns: Energy consumption in mining remains a contentious point for eco-conscious investors. Although the share of renewables in mining energy is increasing, criticism continues to influence perception in some sectors.

Speculation and FOMO: Retail investors entering at cycle tops driven by fear of missing out (FOMO) often become victims of corrections. Leverage use further exacerbates losses.

Macroeconomic sensitivity: Rising interest rates or economic downturns can shift demand from Bitcoin to traditional safe assets. Data shows Bitcoin’s 1-year return is -10.86%, indicating a more complex period compared to its all-time high.

Technological competition: While Bitcoin remains the most liquid, innovative altcoins can divert capital. The proposed OP_CAT upgrade, if approved, could open DeFi opportunities on Bitcoin, but it still lags behind Ethereum in this area.

How to Prepare for the Next Cycle

1. Education: Understand not only Bitcoin’s price but also its macroeconomic context. Study how halvings work, how ETFs operate, and the role regulators play.

2. Strategy: Define your investment horizon. Are you accumulating for long-term holding or trading short-term fluctuations? Different approaches require different tools.

3. Diversification: While Bitcoin is the crypto star, full focus on it ignores opportunities in other assets and altcoins. A balanced portfolio better manages risk.

4. Security: Use hardware wallets for long-term storage. Keep only the necessary amount on exchanges for trading. Two-factor authentication is a minimum.

5. Psychology: Bitcoin’s volatility can unsettle you. Stop-loss orders protect against catastrophic losses, but only if you actually use them.

6. Monitoring: Watch key triggers: macroeconomic indicators, regulatory news, technical levels, network activity, and behavior of large holders.

Technological Horizon: OP_CAT and Bitcoin’s Future

The possible revival of the OP_CAT code, which was disabled for security reasons, could open a new chapter for Bitcoin. It would enable more complex smart contracts, including Layer-2 solutions and DeFi applications directly on Bitcoin.

If activated, Bitcoin could potentially process thousands of transactions per second, competing with Ethereum in decentralized finance applications. This is not just a technical upgrade — it’s a rethinking of the network’s fundamental functionality.

Such evolution could attract a new class of developers and create new entry points for investors interested in functionality beyond mere store of value.

Conclusion: The Rhythm of Cycles and Market Chaos

Bitcoin’s history is a series of periods of euphoria and despair, each leaving a more mature market. From the niche experiment of 2013 to the institutional ecosystem of 2024-25, cryptocurrency has evolved faster than most financial innovations.

The next cycle will likely differ from previous ones. Improved infrastructure, potential government recognition, and technological upgrades create a new foundation. But the core principles remain: scarcity drives demand, demand drives prices, and prices attract media and new investors.

Armed with knowledge of history, understanding of the current state (current price $88.62K with ETF inflows $28 billion and 24h volatility of $2.68K), and risk management caution, investors can capitalize on the next wave of Bitcoin growth while protecting themselves from potential reversals. The crypto market will never be fully predictable, but that’s part of its appeal.