The Evolution of the Crypto Assets Market: The Decline of the Four-Year Cycle Theory and the Formation of a New Pattern

In recent years, the Crypto Assets market has undergone significant changes, and the traditional four-year cycle theory seems to no longer apply. This article will explore the reasons behind this change and the new trends in the current market.

The Origin of the Four-Year Cycle Theory

The four-year cycle theory originates from the fundamental design of Bitcoin. Every four years, the inflation rate of Bitcoin halves, and the issuance of new Bitcoins decreases by 50%. This mechanism has had a significant impact on the supply and demand balance of Bitcoin in its early days, especially during the first two halving events in 2012 and 2016.

However, over time, the impact of halving events on prices has gradually diminished. The latest halving in 2024 will only reduce the new Bitcoin issuance from 6.25 BTC to 3.12 BTC. Considering that nearly 95% of Bitcoin is already in circulation, the impact of future halving events on prices may become negligible.

The Formation of a New Market Landscape

In the past two years, two key factors have changed the landscape of the Crypto Assets market:

1. The launch of Bitcoin ETF
2. The number of altcoins has surged

At the beginning of 2024, the Bitcoin ETF was approved, opening up the global market for Bitcoin. This allows ordinary investors to include Bitcoin in their retirement portfolios, bringing in a significant influx of new funds. However, these funds mainly flow into Bitcoin, with little going to other Crypto Assets.

Meanwhile, the number of altcoins has surged, diluting market funds. Although some altcoins like SOL, XRP, BNB, and TRX have reached new highs, most altcoins have underperformed and failed to break through historical peaks. This indicates that altcoins are lagging behind Bitcoin.

The Consolidation of Bitcoin's Dominance

Bitcoin's market dominance has continued to rise since 2021, currently exceeding 60%. There are multiple reasons behind this trend:

1. The continuous devaluation of fiat currency
2. Inflation Pressure
3. The quantitative easing policy may be restarted.
4. Global money supply reaches a new high
5. The price of gold continues to rise
6. Bitcoin ETF attracts a large amount of funds
7. Altcoin Dilution Effect
8. National-level procurement increases
9. U.S. Crypto Assets Strategic Reserve Program
10. Lack of better value storage options

Investment Strategy Recommendations

In the current market environment, investors should consider focusing on Bitcoin rather than getting distracted by numerous altcoins. Bitcoin's position as the hardest currency is being solidified, while the competition in the altcoin market is becoming increasingly fierce, making it more difficult to choose the winners.

Although the four-year cycle of Bitcoin may still exist, its impact on price has significantly weakened. However, the reasons to continue investing in Bitcoin are more compelling than ever. In contrast, the risk in the altcoin market has increased, and investors need to be more cautious.

In this new era, the wise approach is to view Bitcoin as a long-term value storage tool, while maintaining a cautious attitude towards altcoins. The changes in the market landscape require investors to adjust their strategies and focus on assets with more lasting value.