Has Bitcoin Reached Its Peak?

Since its emergence, the price of Bitcoin is believed to follow a four year cycle. Four years is also the interval of each Bitcoin halving. This has been considered an indicator for investors; at least up to now, this hypothesis still holds. However, with capital flows growing and the arrival of Wall Street giants, is this cyclical pattern still accurate. Since early 2024, the BTC price has broken its ATH three times, which raises the question of whether BTC has already peaked for this cycle or can still continue to rise. Let us explore this in the article through the correlations between macroeconomics and Bitcoin and take a brief look at altcoin season.

Global M2 vs Bitcoin Price

The Global M2 Money Supply reflects the total amount of money that can circulate in the economy, including cash, demand deposits, and savings that can be withdrawn immediately. It serves as a gauge of global liquidity. When M2 rises rapidly, money becomes cheaper, the cost of capital falls, and capital tends to flow into risk assets such as equities, real estate, and especially crypto. Over the past decade, Bitcoin has shown a close correlation with movements in M2. When global money supply rises or falls, the Bitcoin price reacts almost immediately, with a short delay.

• Between 2020 and 2021, to rescue the global economy from the COVID-19 pandemic, money was continuously injected into markets. In March 2021, Global M2 year-over-year growth surged above 20%. Soon after, Bitcoin repeatedly set new highs at $61k in April 2021 and $67k in November 2021, while altcoins also rallied strongly.

• Conversely, when the money supply is tightened and the Global M2 year-over-year growth turns negative, BTC tends to fall sharply and enter a bottoming zone. For example, in November 2022, after the Fed raised interest rates at the fastest pace in 40 years, Bitcoin fell sharply and hit a cycle bottom around $16k. Earlier this month, global M2 growth stood at -3.7%.

• At present, although US interest rates remain high above 4%, Global M2 year-over-year growth has begun to recover to around 7% to 8%, and Bitcoin has set a new peak at about $125k at the end of Q3 2025. Expectations of a monetary policy pivot have prompted investors to act in advance.

Bitcoin vs U.S. Federal Funds Rate

In the cycles of 2013, 2017, and 2021, Bitcoin peaked when the Fed rate was below 1.3%. That was the era of cheap money, where investors were willing to accept risk to seek superior returns. Along with the substantial expansion of M2, abundant liquidity inflated the value of risk assets.

What is special about the current cycle is that Bitcoin has continued to break its ATH even as the Fed has kept rates above 4%, something that has never happened before. The reason does not lie in cheap money, but in the structural shift of capital flows and market confidence. Several factors may explain why the Bitcoin price keeps breaking ATH even though the Fed has tightened monetary policy for a long time:

• The fourth Bitcoin halving took place in April 2024, reducing the block reward from 6.25 BTC to 3.125 BTC.

• Spot Bitcoin ETFs from BlackRock, Fidelity, Ark Invest, and others have legalized institutional capital flows, bringing Bitcoin into mainstream asset portfolios.

• Digital Asset Treasuries of listed companies such as MicroStrategy, Tesla, and Block hold BTC as long-term reserves, locking up part of the circulating supply.

• Expectation of a Fed Pivot. Investors are positioning early for a monetary easing cycle in 2025 when the Fed cuts rates.

Four-Year Cycle

For nearly two decades, the ‘Four Year Cycle’ model of Bitcoin price has been considered an essential reference framework for some investors. Every 210,000 blocks, the block reward is halved - an event called Halving. After each Halving, Bitcoin’s supply growth slows (supply becomes more deflationary), which can influence BTC’s price. In previous cycles, Bitcoin has typically gone on to reach a new all-time high (ATH) roughly one year after the Halving. This remains true to this day, after the Bitcoin halving in April 2024.

After each halving, the average cost to mine 1 BTC also rises sharply. According to The MinerMag, in Q2 of 2025, this figure is estimated at $60k to $90k per BTC. This is the economic floor of the network. When the price falls below this level, miners exit the market, causing the hashrate to decrease and the market to enter a self-balancing phase. This self-balancing mechanism makes Bitcoin resemble a digital commodity with a real production cost, creating long-term stability across cycles.

If the hypothesis about the Four Year Cycle remains accurate, then 2026 is forecast to be a year when BTC price will go down and will set a new ATH in 2029, which coincides with the time when interest rates are lower, around 2.5% according to the Fed’s dot plot projections.

However, there are still variables that may render the Four-Year Cycle no longer correct. In previous cycles, BTC was primarily held by miners, while in this cycle, there has been a clear shift as most BTC is currently held by ETFs. Unlike miners, who need to sell BTC to free up capital and reinvest in new hardware as their machines become outdated over time, ETFs are backed by investors and traditional funds, who tend to hold for the long term. In addition, after halving the estimated BTC mining cost from $60,000 to $90,000, the BTC price will not decline as profoundly as in previous cycles.

Role of Stablecoins

Similar to Global M2, stablecoins represent the total money supply injected into the crypto market. The total supply of stablecoins reflects the health of on-chain liquidity. When supply increases, new money enters the market. When supply decreases, capital flows out.

From after the halving in April 2024 to Q3 2025, the total stablecoin supply doubled, increasing from approximately $154 billion to $308 billion, following a prolonged decline from 2022 to 2023. This shows that on-chain liquidity is being reactivated alongside Bitcoin's rise.

Stablecoins play the role of the Global M2 of the crypto market, reflecting the readiness of investors to allocate capital.

• When the Fed tightens, investors hold stablecoins as a short-term refuge similar to keeping cash in the traditional system.

• When pivot expectations appear, stablecoins are released into the market, flow into liquidity pools, DeFi yield, or are swapped into BTC and ETH.

A notable point is that, in the previous cycle, stablecoins were backed only by companies such as Tether or Circle. In this cycle, however, stablecoins have emerged as a narrative, and more stablecoin issuers have appeared, including USDf of DWFLabs and USD1 of WLFI. This helps bring abundant liquidity and more choices for users.

An altcoin season?

Most people expect an altcoin season similar to the one in 2021. However, the current context is very different from the previous cycle. Although Bitcoin's price continues to break records and global M2 continues to rise, in altcoins, it is the opposite. Most altcoins have declined, and capital rotates quickly in line with narratives and ecosystems rather than growing together as in the previous cycle. See more about the altcoin season in the article here.

Ethereum is considered the flagship of altcoins, but in this cycle, it has not experienced a significant breakout. Although there are Spot ETFs and DATs for ETH, capital inflows remain significantly weaker than for Bitcoin, as investors can stake ETH directly, earning a yield of 4% to 5% per year. In contrast, ETFs do not provide this reward, and the companies that currently account for ETH's DATs, such as those in the ETH ecosystem, only represent a small, insignificant share compared to BTC DATs. The BTC Dominance index is currently around 59%, indicating that capital remains concentrated in Bitcoin, as the leading asset for institutions to focus on.

Conclusion

Overall, the Four-Year Cycle thesis remains valid to this point. If we follow this framework and the observed correlation between Bitcoin price and the U.S. Federal Funds Rate, BTC may have already reached the peak of this cycle.

However, this cycle is not identical to previous ones. The launch of spot Bitcoin ETFs has brought in long-term institutional capital. ETFs are now the largest holders of Bitcoin instead of miners, as in previous cycles, which may cause this cycle to not fully repeat the old pattern. Liquidity conditions also support further upside: global M2 is recovering, and the total supply of stablecoins has roughly doubled since 2024. The above factors may act as catalysts for the price of Bitcoin to continue setting new all-time highs in the near term.

At the same time, Bitcoin is increasingly being treated as a long-term reserve asset similar to digital gold, while its total market capitalization is still far below that of gold. In the long run, Bitcoin still has significant upside potential when compared to other assets such as gold.