Bitcoin’s New 2-Year Cycle? What It Means for 2026

The four year cycle that shaped every bitcoin bull and bear market is dead. And now investors are scrambling for a new framework to understand what's coming next.

What's different about this cycle versus the past 10 years is in the past 10 years, AI was not an investable opportunity. And if there's ample capacity for money to flow in, maybe it'll go to bitcoin, but maybe actually this cycle it might not go to bitcoin because there's other things people are chasing.

In this interview with Jeff, partner and CIO at ProCap BTC, he explains why Bitcoin could be shifting to a two year cycle and what that could mean for the price of BTC moving in 2026. Before we get started, as always, this video is for educational purposes only and does not constitute financial advice. If you like our content. Also, don't forget to smash the like button and subscribe to our channel. I'm Giovanni. Let's get started.

Foreign.

What the bitcoin market is going to look like in the future, whether we are still in this framework or a new framework, is emerging There are different theories out there and we're going to touch upon a few of them in this interview. But first, I know that you have your own theory according to which the four year cycle is over and it's going to be replaced by a two year cycle. So can you guide us through this theory?

First of all, I'd love to, yes. So at the center of this conversation we first have to define why do cycles even exist? Right. And at some level cycles exist because there's some technical basis for fundamental reasons. And then the other half is psychology. And the combination of those two things lead to some reflexivity as to there being cycles in most assets, not just in crypto, but in across commodities, equities, credit, et cetera. And ultimately what this means is, as Paul Tudor Jones says it best, trading at its most simple. It's all about just finding price imbalances and exploiting them. And so it comes down to this notion that something like Bitcoin specifically, which behaves most like a commodity, the price is always determined by where the marginal demand intersects with marginal supply. And so if there's more demand, if there's more supply, those things at the pressure points drive price and cycles across behaviors. So I think that's really key. Everyone knows that already. But it's important to understand foundationally that cycles are half driven by logic, but it is half driven by emotional components as well. So you know, why did the original four year cycle exist. The original four year cycle was rooted upon this technical belief that, that the bitcoin having, which happens every 210,000 block every four years, creates a supply shock. Right. And so the technical ideation of the original four year cycle was that this supply shock, which is real and it's fundamental issuance will drop significantly, creates a cascade of behavior starting with minor dynamics where the weak miners end up capitulating and therefore hash rates drop. And it has the supply pressure and demand then lags the supply. And then of course there is price gains that come from it, that is compounded by momentum in the feedback loop of the media coverage, etc. That accelerates inflows.

Right.

So that's, that's kind of the original four year cycle. And what you heard there is that yes, there's like a technical reason, but the latter half is really carried by behavioral psychology of investing behavior. Something's changed. And what I would say that's changed more dramatically is both on the demand side and on the supply side. For example, on the supply side we now know that the having is just less important because that's the whole point of the halving cycles in which there's less issuances coming online and so that additional supply itself is just incrementally becoming less significant. On the other hand, you actually have a totally new buyer class that has emerged post ETF era that no prior cycles have ever shown that behavioral pattern for. So the marginal demand that we're seeing come into Bitcoin from the institutional channel is growing, while the marginal supply that is coming from the issuance schedule is decreasing. So this is the crux of why I argue that the four year cycle is essentially over. And it's quite straightforward in the sense of that dynamic. But then what I try to do a step further is to imagine what the news cycles are going to look like. And here Giovanni, you pointed out that I am labeling it as the two year cycle, but I don't necessarily mean that it's definitively a two year cycle as a, as a, as a timeframe that we have to lock ourselves into, but more of a mindset and how to think about the emergent behavioral pattern that is going to dictate Bitcoin price action from the marginal supply and the marginal demand perspective.

Okay. And if we're going to go into how this new type of cycle would work, as far as I understand it has mainly to do with institutional cash flows into bitcoin, am I correct?

Yes, that's exactly right. And so historically, before The ETF era, a lot of the four year cycle and the patterns were noticeable generally with on chain behaviors because all of the Bitcoin moved on chain. So the footprints and the profit loss taking endeavors were rather visible by institutional participation, by miners and really by retail investors. And that was pretty much it. And the retail investors of course bought directly on the exchanges and they owned the coin. So you could see those footprints pretty, pretty easily. Now though, the marginal buyers are what I call off chain. Like they're not actually going to show their footprint because the ETFs themselves don't necessarily show footprints the same way that each individual retail wallets would have shown. But this is essentially the new longer term holders that have come online. These ETF investors are sticky and they have longer duration of capital that they're willing to underwrite and they behave differently because at some level you have to imagine some of the asset managers are not investing on a principal capacity, they're investing as a fiduciary of, of other people's capital, as advisors. And those create different incentive alignment. Now on the other side, I think the question is on the marginal sellers, who are those people? That has changed. And I would say if you believe the ETF holders are coming in now to establish their cost basis point, you might have to believe that the marginal sellers are still going to remain the old wallet holders that have been in it for a long time, but that they're more likely to be profit taking and they are the ones that are pushing incremental supply at a level that is more likely to result in short term price action than it would be from the, from the buying side. And so that's the context and how to think about what the new two year cycle could look like. And so just looking at the institutional behaviors, institutions behave pretty differently than retail investors, right? Because again as I mentioned, they're fiduciaries. And so when they go to committee and they have to pitch the case for buying Bitcoin into their fund or their strategy, they have to have broad based planning around managing that risk. So it means they need a timeline as to underwriting the thesis. And they need a drawdown tolerance that they're willing to able to showcase their investment management capabilities. So their drawdown tolerance is different and their holding horizon is different. And at a hypothetical scenario for what most institutional funds look like, they will generally go to their investment committee and say, hey, Bitcoin looks really attractive here. And my pitch is that it's going to generate 35% per year. It'll outperform almost any other asset class. You can see it could be over a two year cycle, it could be over a three year cycle, but it almost certainly is not a ten year bet. Right. Because these fund managers are not in the business of holding something on for 10 years and hoping to be paid on it. Right. They're meant to dynamically allocate capital across different competing opportunities that exist in their broad based toolkit. So what this means is the selling pressure that comes out of Bitcoin is not just price anymore, right. It's not enough that the price is the trigger for how people will start thinking about whether they want to sell or hold or buy. It's. It's also going to be related to how long they've held onto a certain position for. So what this means is let's say I bought Bitcoin Today, it's a 90K and the goal is I'm going to make 35% per year. Now we're in 20, 26, December and Bitcoin's still at 90K. Let's say it's flat. You and I as retail investors will not have a huge difference upon whether the opportunity looks more attractive or less attractive based on that alone next year versus now. But for an institutional investor, actually now you need Bitcoin to go up like 60% in one year to justify that. You've held onto it for two years for it to have made 30, 35% per year, right? So now it's actually a big bogey. You really, really, really need it to perform. And if it doesn't perform and it goes down well, then you've held onto something for two years that essentially not only like didn't go up, but now you've tolerated a lot of drawdown. So what this means is ultimately the combination of the holding pattern and the seasoning of that versus where we are in the price point is actually the thing that on the margin will drive a lot of these institutional fund behaviors. And so what I think is going to be really interesting and important is you have the ability to see ETFs now where there's months of inflows and months of outflows and they're not perfect ever. As to showing you kind of what exactly everyone's cost basis is, you know, their settlement delays as to how these things could be. And bitcoin moves very quickly in even like a couple days. But just proxying that, this could be generally a good barometer. You can start establishing dollars of ETF inflows at different Price points for which you can start extrapolating the prices required for them to continue holding on, or when you might think that they're going to start profit taking. And I think at the, at the level in which these institutional behaviors are now participating, this is very different than the historical, you know, retail investors or principal investors who are willing to hold on to Bitcoin for a very long period of time, let it go down 80%, let it go up to 100%, all to say, some of these behaviors, I think will start cuffing the tails a little bit in kind of the extreme abilities for Bitcoin to have moved. And you have to account for that possibility for these institutional fund behaviors that wasn't really present, I would argue, in prior cycles.

That's a very interesting theory and it sounds absolutely logical. I also was listening to an interview that you did on the Pompliano podcast. You were saying that you were hoping for Bitcoin to close the year in the red. That was a pretty controversial statement. But it has to do with this theory that you have regarding cycles and regarding the Fourier cycle being already outdated. Can you explain better to me? Why do you hope that Bitcoin closes this year in the red?

Yeah, sure. So look, the reality is an uncomfortable truth of the Bitcoin supply as it exists today is that we still have a very large amount of Bitcoin that is held by a concentrated group of investors that have very, very, very low cost basis. Um, if you look at the Bitcoin wallets that hold over 1,000, I believe the wallet counts with the associated bitcoins roughly amounts to a third of the Bitcoin supply. So if you think about these OG investors, as you would think through their holding patterns, they believe in the four year cycle because that's what they believed in. And so I think there is some element to which these things can still be self fulfilling prophecies. And what I think that I'm intimating for to reset that is a clean break from having to explain a phenomenon which it no longer holds, means that perhaps you can also remove that superstition from that particular group of investors who I think still very much believe in the self fulfilling reflexivity of their own trading patterns. Right? Because if you have a third of the bitcoin supply that believes in it, and I'm just ignorantly categorically calling all of that third of supply as OG investors that believe in the four year cycle. But even if you thought it was half a third of that group, I mean they are essentially the Price setter, right? Prices set by those who have the capacity and liquidity to move. And this is the largest cohort that we know influences price patterns as we've now seen over the past two months, in the ways that we have sudden price movements in Bitcoin driven by the selling pressure that comes often out of this particular group. And it's not a recent phenomenon. Right. It's always been the case that this investor cohort has been selling for as long as, you know, the past two to three years. The difference had always been though that with new inflows coming from the institutional channel, it was able to absorb that liquidity a lot more efficiently than in the past. But make no mistake, without that demand channel, it is still a seller's market that sets the price. And getting rid of the four year cycle, I'm hoping will also get rid of that selling pattern in a way that proves to be acute, in a way that October has proven out to be and November has proven out to be okay.

So creating a clear cut that let everybody forget about this self fulfilling prophecy which somehow it's the four year cycle. And now I want you to comment on another theory which I read online today by Ram Neuner. He put out this theory on Twitter on X where he was saying that the four year cycle is over because it never existed in the first place and that it was just sort of coinciding with liquidity cycle, essentially liquidity expanding and therefore pushing the price of Bitcoin up. And that happened just to coincide with the, with, with the Alving, with the halving schedule. And now what we are seeing is that this latest bull market was not so impressive as the previous ones because unlike previous ones, we didn't have the liquidity push that we had in previous ones. And therefore he's making the argument that now that we are seeing quantitative tightening, ending global liquidity going up, we are going to see potentially a bull market in 2026. So he said the bull market may start right now. What is your view on this cycle theory and whether it can be somehow complementary to your own theory?

Yeah, it's a really good question. I think overall there's truth to Bitcoin being a proxy for global liquidity as the fastest source for risk on sentiment. And at the same time I would argue that the last few years has not necessarily been an environment where you would have expected also for Bitcoin to then have performed right. It's been a period of high interest rate, it's obviously been a period of QT in its existence. And yet bitcoin did perform. And so I think some of these dynamics too, is really helping the new investor class learn about what Bitcoin is that represents their portfolio positioning that they historically never considered. Because to that logic, one of the disappointing experiences that I think all bitcoiners have had so far this year is that it's underperformed gold so meaningfully. So if you think about just the aspect of global liquidity and debasement and how Bitcoin represents the possibility to be a hedge against that, I'm not totally sure that this year would have been the proxy for global liquidity in that success barometer either, especially the last few months. So, you know, I think at the end of the day, the unique challenge, and maybe even the opportunity with Bitcoin is that it tends to be relatively amorphous as to how people consider it to be like a risk on asset or a risk off asset. Sometimes people want it to be like gold, but sometimes people also want it to be like tech and risk gone from like inflation hedging. And I think at the end of the day, you could also even make the argument that equities valuation today are an inflation hedge too. So if you think that gold and equities are actually more similar in that they're both hedging for inflation, it's really hard to think about a world of like, risk on and risk off in the ways that bitcoin, I think, is like an amalgamation of both. So at the end of the day, I think I generally subscribe to the model of really following where the flows are. And if there's ample capacity for money to flow in, maybe it'll go to bitcoin, but maybe actually this cycle, it might not go to bitcoin because there's other things people are chasing. And so the reality is, what's different about this cycle versus the past 10 years is in the past 10 years, AI was not an investable opportunity, right? So there really was a dearth of things to buy and people were struggling to yeek out some kind of gain anywhere and everywhere they can find it. But here, now, in 2025, we have a mega thesis on the age of abundance that is coming through the Cambrian explosion of AI. And you've seen incredible gains that are possible there. And almost like a winner takes all mentality, almost at an existential level of competition, where it's now married all the forces of geopolitics and economic power, and it's, it's, it's getting to a Level where the ROI itself is far more compelling than potentially holding onto Bitcoin on a relative composition. I might argue macro liquidity aside, that return of capital opportunity elsewhere has also been a big component in driving flows in or out of Bitcoin. So that I think is, is, is another part of the future of this cycle that just looks different than the past. Whether the cadence of the four year liquidity cycles are matching, the advent of AI is new and really that should be accounted for as well.

Okay, that's interesting. And now another theory regarding cycles and the Bitcoin cycle. So this is from Raoul Paul, from Real Vision. He put out his theory not long ago. He said that essentially the four year cycle is actually this time a five year cycle. Because he made the point that Bitcoin actually has been following the so called business cycle, which is based on the ism, which is a key economical indicator for economic strength. According to his projection, the ISM should peak somewhere around Q2 2026 and therefore he expects Bitcoin to follow as well, peaking in somewhere Q2 2026. What do you think about this theory? Is it complementary to what you're saying or you don't agree?

You know, I regret I'm not as familiar with that particular manufacturing index correlation factor. You know, I think there's lots of ways we can always retrofit interesting patterns and the question always is whether that causality is actually correlation or vice versa. And at the end of the day, and I know it sounds so basic, but it's really ultimately just driven by flows. And whether there actually is ample capacity that has appetite for risk. And as risk becomes different over time for what Bitcoin represents, that also just changes the calculus. There are lots of people that I now meet who think about Bitcoin as the most risk off asset just because they do really believe that fundamentally it is a store of value where they're not really thinking about like the price action as much as like just thinking like about it as savings. You know, that's a very different like pattern than anything that otherwise would have been from like a speculative behavior. And so cycles exist for a reason. And like I've said from the very beginning of this conversation, it exists because there are people who take profits, there are people who realize losses and they are assessing their cost of capital opportunity versus other things that are available. And they are doing that in the context of broad portfolio construction and understanding what those correlation dynamics look like. And so it's so hard for me to pinpoint of Bitcoin having any particular kind of, like, pattern that is underwritable for a long period of time because it's always changing. There is another case to be made where the value of bitcoin for professional money managers is that it needs to be uncorrelated, like uncorrelated to gold and uncorrelated to equities, because that helps me push out the efficient frontier. And that now is an argument that it's not even about returns. It's actually not even about whether bitcoin delivers returns or not, but rather the role it serves in reducing the portfolio volatility at the marginal level of pushing out the return of the total portfolio. And so, you know, we haven't really kind of talked about that element, but if bitcoin can be, you know, flat, but it actually is, like, uncorrelated with equities and gold at all the right times, that helps investors build a better, modern portfolio that is a positive EV asset to have in your portfolio, even if it generates zero return. And I think there's elements of this, too, that we're just trying to figure out as these. There's a whole cohort of new investors coming in and out, and, you know, the price pattern can be really erratic. I think that's ultimately the key to understanding the psychology for bitcoin.