Bitcoin Cycles: Halving, Stock-to-Flow, and Market Reality

Version: 1.0 | Updated: December 2025 Category: Macro-Crypto & Cycles | Level: Expert

Table of Contents

1. AT A GLANCE
2. INTRODUCTION
3. HISTORY OF BITCOIN CYCLES
4. THE HALVING: MYTH OR REALITY?
5. THE STOCK-TO-FLOW (S2F) MODEL
6. OTHER CYCLE MODELS
7. WHY THIS CYCLE COULD BE DIFFERENT
8. IMPLICATIONS FOR INVESTORS
9. 2024-2028 CYCLE SCENARIOS
10. FAQ
11. CONCLUSION
12. SOURCES & REFERENCES

AT A GLANCE

All key halving and cycle figures at a glance.

1. INTRODUCTION

Between promises of fortune and skepticism, let us analyze Bitcoin cycles with rigor.

"Bitcoin cycles" are the most debated topic in crypto analysis. Between mathematical models promising seven-figure prices and skeptics denouncing charlatanism, the reality is nuanced.

After four halvings and sixteen years of existence, Bitcoin offers enough data to analyze what has worked, what has failed, and what could be different in upcoming cycles.

Objective of This Article

This article offers a critical and fact-based analysis:

• Historical: What actually happened during each cycle
• Models: Stock-to-Flow, Rainbow, Pi Cycle -- accuracy and limitations
• Structural changes: Why this cycle could differ
• Implications: What investors can reasonably extract

2. HISTORY OF BITCOIN CYCLES

Four cycles, four lessons: diminishing returns but confirmed resilience.

2.1. Defining a "Cycle"

A Bitcoin cycle is generally defined as the period between two halvings (~4 years), comprising:

1. Accumulation: Low prices, little media interest
2. Expansion: Gradual rise, growing interest
3. Euphoria: Parabolic rally, ATH, mainstream media coverage
4. Correction: 70-85% crash, capitulation

2.2. The Four Cycles

Cycle 1: Genesis (2009-2012)

Context: Experimental phase, tiny market, first exchanges.

Cycle 2: First Major Bubble (2012-2016)

Context: Mt. Gox, Silk Road, first early adopters.

Cycle 3: ICO Mania (2016-2020)

Context: ICOs, Ethereum, first CME futures, mainstream media coverage.

Cycle 4: Institutionalization (2020-2024)

Context: MicroStrategy, El Salvador, Terra/Luna, FTX collapse, ETF approval.

2.3. Comparative Cycle Table

KEY OBSERVATION

Returns diminish with each cycle (diminishing returns). From 97x to 40x to 18x. If the pattern continues, cycle 5 could offer 5-10x maximum from the bottom.

3. THE HALVING: MYTH OR REALITY?

Correlation or causation? Separating fact from fiction on the halving's impact.

3.1. What Is the Halving?

The halving cuts the miner reward in half every 210,000 blocks (~4 years):

3.2. Theory: Why the Halving Should Matter

The bullish argument:

1. New supply is halved
2. Demand remains constant (or increases)
3. Price = supply/demand equilibrium -> price rises
4. Buying pressure > new supply = rally

The gold analogy:

• Gold is valued for its scarcity (difficult to mine)
• Bitcoin becomes "scarcer" with each halving
• Stock-to-Flow increases -> value increases

3.3. Critique: Is the Halving Already "Priced In"?

Arguments against the impact:

• Efficient Market Hypothesis: Predictable event = already priced in
• Low issuance: At 0.9% inflation, marginal impact diminishes
• Demand > Supply: Demand drives price, not supply
• Correlation is not Causation: Macro cycles also correlate

CRITICAL ANALYSIS

The halvings of cycles 2 and 3 preceded major rallies. But correlation is not causation. Macro conditions (QE, low rates) likely played an equally important role.

3.4. Empirical Data

Prices around halvings:

Observation: Post-halving returns diminish dramatically as the market matures.

4. THE STOCK-TO-FLOW (S2F) MODEL

Why PlanB's star model failed and yet remains useful.

4.1. What Is Stock-to-Flow?

Created by PlanB (@100trillionUSD) in 2019, the S2F model applies a concept from the gold market to Bitcoin:

Formula:

Stock-to-Flow = Existing Stock / Annual Issuance Flow

For Bitcoin post-2024 halving:

• Stock: ~19.6M BTC
• Flow: ~164,000 BTC/year (3.125 x 6 x 24 x 365)
• S2F ~ 120

Comparison:

4.2. The S2F Prediction

The original model predicted a logarithmic relationship between S2F and price:

• Post-2020 halving: $100,000 predicted
• Post-2024 halving: $500,000-1M predicted

4.3. What Worked

• Direction: Correctly predicted the post-halving rally
• Order of magnitude: Cycles 1-3 within the model's range
• Narrative: Powerful educational tool on scarcity

4.4. What Failed

MAJOR CRITIQUE

The S2F model was statistically invalidated in 2022-2023 when the price moved outside the confidence interval. PlanB has since revised his predictions multiple times.

4.5. Fundamental Limitations

1. Ignores demand: Only supply is modeled
2. No macro factor: Rates, liquidity, regulation
3. Cointegration issues: Gold is not a good comparison (different market)
4. Sample size: 4 halvings = statistically insufficient
5. Self-fulfilling then self-defeating: The narrative attracted and then disappointed

4.6. Conclusion on S2F

Useful for: Understanding scarcity, long-term vision Not useful for: Precise price predictions, timing

5. OTHER CYCLE MODELS

Rainbow, Pi Cycle, and MVRV: more reliable alternatives than S2F?

5.1. Rainbow Price Chart

Concept: Logarithmic color bands based on historical data.

Performance: Wide bands, so often "correct," but not very actionable.

5.2. Pi Cycle Top Indicator

Concept: The crossover of two moving averages (111 DMA and 350 DMA x 2) signals the top.

Track record:

Conclusion: Worked twice, failed once. Insufficient sample size.

5.3. 200-Week Moving Average

Concept: The 200 WMA as the ultimate bear market support level.

Track record: Bitcoin has never closed below the 200 WMA for an extended period. It serves as a psychological "floor."

5.4. MVRV (Market Value to Realized Value)

Concept: Compares market capitalization to the average "cost basis" of holders.

Performance: More reliable than S2F for identifying extremes.

6. WHY THIS CYCLE COULD BE DIFFERENT

Institutionalization, macro correlation, and diminishing returns are changing the game.

6.1. Structural Changes

Massive institutionalization:

• $100B+ in ETFs
• Corporate treasuries (Strategy/MicroStrategy)
• Potential US strategic reserve

Impact: New sources of demand, but also new sources of selling (institutional rebalancing).

6.2. Diminishing Returns

Explanation: The larger the market capitalization, the more capital is required to move it.

6.3. Macro Correlation

Bitcoin increasingly correlates with risk assets:

Implication: Bitcoin cycles could synchronize with macro cycles (recession, Fed liquidity).

6.4. Global Liquidity

Some analysts (Raoul Pal, Michael Howell) argue that Bitcoin follows global liquidity more than halvings.

Observed correlation:

• Massive QE 2020 -> Bitcoin rally
• Tightening 2022 -> Bitcoin crash
• QE anticipation 2024 -> Bitcoin rally?

6.5. The 2024 Halving: Too "Priced In"?

Unlike previous halvings, the 2024 halving occurred after a major rally (ETF-driven):

• Pre-halving price: ~$63,000 (already near ATH)
• Expectations: Very high (ETF + halving narrative)
• Risk: "Buy the rumor, sell the news"

7. IMPLICATIONS FOR INVESTORS

What we can affirm, what we cannot predict, and how to act wisely.

7.1. What We Can Reasonably Affirm

Bitcoin has historically appreciated over the long term

• Each cycle has established a higher floor
• Lindy effect: 16 years of existence, proven resilience

Halvings reduce inflation

• Mathematical fact, not speculation
• Contributes to the store-of-value thesis

Volatility remains high

• 70-85% drawdowns are normal
• A long-term horizon is necessary

7.2. What We CANNOT Predict

The exact timing of tops and bottoms

• No model has been consistently reliable

The exact future price

• S2F and others have failed on precise predictions

The duration of cycles

• They could lengthen as the market matures

7.3. Reasonable Strategies

Dollar Cost Averaging (DCA)

• Regular investment regardless of price
• Eliminates timing risk
• Recommended approach for the majority

Bear market accumulation

• For those with conviction and capital
• Historically the best entry points

Gradual profit-taking

• During periods of obvious euphoria
• Do not try to time the exact top

Do not use leverage

• Forced liquidations = value destruction
• Simple holding > trading with leverage

8. 2024-2028 CYCLE SCENARIOS

Three possible scenarios with probabilities and price targets.

Bullish Scenario (30% probability)

Assumptions:

• US strategic reserve adopted
• Continuous ETF flows ($100B+ additional)
• Favorable macro cycle (QE)

Target: $200,000-$300,000 (2x-3x ATH)

Base Scenario (50% probability)

Assumptions:

• Progressive institutional adoption
• No major macro shock
• Diminishing returns continue

Target: $100,000-$150,000 (stabilization)

Bearish Scenario (20% probability)

Assumptions:

• Severe recession
• Restrictive regulation
• Black swan event (major hack, etc.)

Target: $40,000-$60,000 (support retest)

9. FAQ

Does the halving always push the price up?

Historically yes, but with variable delays (12-18 months) and diminishing returns. It is not guaranteed for the future.

Is the Stock-to-Flow model reliable?

Not for precise price predictions. It is useful as a conceptual framework on scarcity.

When will the next bottom be?

Impossible to predict. Historical bottoms form 12-18 months after tops, during peak pessimism.

Should you wait for the bear market to buy?

If you have a 10+ year horizon, regular DCA is probably superior to market timing.

Will cycles continue?

Probably, but their amplitude could diminish with maturity. Bitcoin could increasingly resemble gold (less pronounced cycles).

What is the best strategy?

• Long-term: DCA + Hold
• Strong conviction: Aggressive accumulation in bear markets
• To avoid: Active trading, leverage, market timing

10. CONCLUSION

Bitcoin cycles are a historical fact. Four times, the price rallied after a halving, then crashed 70-85%, then established a new floor. This pattern could continue.

What Is Certain

• Halvings reduce issuance (mathematical fact)
• Bitcoin has survived and thrived over 16 years
• Volatility remains extreme

What Is Uncertain

• The timing and amplitude of future cycles
• The actual impact of the halving vs. other factors
• The validity of any predictive model

Recommendations

1. Do not blindly trust models (S2F, Rainbow, etc.)
2. Have a long-term horizon (minimum 4 years)
3. Use DCA to eliminate timing risk
4. Accept volatility as a feature, not a bug
5. Stay humble: nobody truly knows

Related Articles -- Macro Crypto Cycles

Deepen your understanding with our complementary crypto market analyses.

• Bitcoin Macro Correlation: Fed and Liquidity

11. SOURCES & REFERENCES

Data Sources

• Glassnode (on-chain metrics)
• CoinMetrics (historical data)
• TradingView (prices)

Analytical Sources

• PlanB (Stock-to-Flow): @100trillionUSD
• Willy Woo (on-chain): @woonomic
• Lyn Alden (macro): lynnalden.com
• Nic Carter (S2F critique)

Academic Sources

• "Bitcoin Stock-to-Flow Cross-Asset Model" - PlanB (2020)
• S2F critiques: Nic Carter, Eric Wall

Article written in December 2025 -- Past cycles do not guarantee future performance.

This content is for educational purposes and does not constitute investment advice.