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Bitcoin: More Than Just a Cryptocurrency
Why has Bitcoin become the benchmark of the cryptocurrency market, beyond being a simple digital asset? The answer cannot be explained by superficial reasons like ‘recognition’ or ‘history’ alone. Bitcoin functions almost like collateral in the market, serving as the reference point that influences the prices and sentiments of other assets.
The Structural Reason Behind Bitcoin Becoming the ‘Reference Asset’
Although the cryptocurrency market consists of countless coins, Bitcoin always remains at the center of market movement. This is because many altcoins tend to react like leverage to expectations about Bitcoin’s direction (up or down), rather than forming their prices solely through independent supply and demand.
As a result, market participants first ask themselves, “Is now the time to take on Bitcoin risk?” before branching out to other assets.
Bitcoin and Market Cycles: Why Its Price Follows ‘Patterns’
Another unique aspect of Bitcoin is that its cycles don’t flow entirely at random. The halving event, occurring approximately every four years, is a protocol event that changes the supply structure, repeatedly impacting the market’s long-term trends.
After a halving, mining rewards decrease, reducing supply pressure while investment demand combines to create a favorable foundation for upward phases.
‘Changes’ in the Bitcoin Market: More Mature, More Complex Timing
However, recently, the timing of cycles has increasingly failed to align as simply as before. With variables like institutional participation and evolving regulatory environments growing, even a strong signal like the halving sees market responses becoming more complex and evolved.
Yet, one unchanging truth remains: to understand the cryptocurrency market, you must ultimately start by understanding Bitcoin’s structure and role.
The Unique Power Exclusive to Bitcoin: The Secret of Its Collateral Role
If all cryptocurrencies depend on Bitcoin’s price, what does Bitcoin’s collateral function truly mean? The key is simple. When the market shakes, Bitcoin serves as the benchmark investors rely on to decide “what to base risk calculations on, and what to trust to maintain their positions.”
Why Bitcoin Becomes the ‘Standard Collateral’
Though many assets in the cryptocurrency market seem to move independently, they are actually heavily influenced by Bitcoin’s direction. This is because Bitcoin simultaneously fulfills the following roles:
- Benchmark for market prices: The bullish or bearish trends of numerous assets, including altcoins, are interpreted based on Bitcoin’s movement.
- Liquidity hub: With the largest trading volume and participant pool, cashing out or seeking safe assets in times of crisis naturally centers around Bitcoin.
- Risk measurement standard: Investors strongly tend to judge “whether it’s a phase to take on more risk” by following Bitcoin’s trend.
Ultimately, Bitcoin is not just the “most famous coin,” but rather the central axis that the entire market refers to when making decisions.
How the Collateral Role Influences Market Sentiment
The key function of an asset accepted as collateral is to either trigger or ease the chain reaction of leverage and liquidations as its price moves. When Bitcoin’s volatility rises, market participants become cautious; conversely, when Bitcoin stably rises, risk appetite grows. The typical patterns in this process are:
- Bitcoin’s bullishness and stability → improved sentiment → expanded risk appetite: Funds spread into altcoins and other assets, energizing the whole market.
- Bitcoin’s sharp drop and increased volatility → shrunken sentiment → heightened risk avoidance: Investors reduce positions, leading to a cascading selling pressure.
In other words, Bitcoin’s collateral role functions beyond mere price fluctuations—it acts like a device that adjusts the very limits of market participants’ risk tolerance.
Conclusion: Understanding Bitcoin Reveals the ‘Strength of the Entire Market’
If the crypto market is an ecosystem, Bitcoin is the central pillar supporting its credit and liquidity. When Bitcoin wavers, other assets shake alongside it; when Bitcoin stabilizes, the market gains room to bear risk. Thus, grasping Bitcoin’s collateral function provides a more fundamental way to read market sentiment than simply following news or trends.
Bitcoin’s Quadrennial Halving: The Starting Point That Transforms Market Structure
The halving is not just a simple event. What ripple effects does this protocol, which halves supply every four years, create in the market? The key lies not in “news” but in structural change. Bitcoin is an asset with issuance controlled by code, and the halving is the most visible moment when that control mechanism is in action.
What Changes in a Bitcoin Halving?
The halving is a protocol event where mining rewards are cut in half every certain number of blocks mined. In other words, the rate at which new bitcoins “flow” into the market slows down. This change is not someone’s decision but a systemic rule, leading market participants to repeatedly ask:
“How will prices react when supply decreases?”
How Bitcoin’s Supply Reduction Affects Price
The first thing that changes after a halving is the structure of selling pressure from miners. Miners continuously sell part of the bitcoins they mine to cover electricity, equipment, and operational costs, but when rewards are reduced, they must adjust their strategies to cover the same costs.
- Newly released bitcoin supply decreases → overall selling pressure eases
- Demand remains steady or grows → supply-demand imbalance may widen
- The market moves with the psychology of anticipating this → a catalyst for increased volatility
The crucial point is that while the halving does not guarantee an immediate bull market, it strengthens the conditions (supply constraints) under which a bull market can develop.
Halving as the Starting Point of Bitcoin Cycles
Historically, the halving has served as a reference point for understanding Bitcoin market cycles. After the halving, the market typically follows these phases:
- Accumulation: Quiet buying during periods of waning interest after price drops
- Advancement: Demand surpasses supply, fueling price trends upward
- Distribution: Profit-taking increases amid overheated sentiment and high volumes
- Decline: Liquidity diminishes, selling pressure dominates, and corrections deepen
This pattern is not a “prophecy” but rather a recurring market behavior observed under the common condition of supply reduction.
Modern Variables in Bitcoin Halvings: Timing Has Become More Complex
Recently, developments after halvings have become less straightforward than before. Expanded institutional participation, changing regulatory environments, and macroeconomic factors (interest rates, dollar liquidity) combine to make timing more nonlinear.
Nonetheless, the halving remains highly relevant—not as a predictive tool but as the most structural starting point explaining why Bitcoin experiences cycles.
The Four Stages of the Bitcoin Cycle: A Dramatic Journey from Accumulation to Decline
Beneath the surface of rising and falling prices lies a recurring pattern known as the four stages of the Bitcoin cycle. Each phase is more than just a chart shape; it’s a concentrated flow of shifting market psychology and investor behavior patterns. Let’s break down what happens at each stage—from accumulation to markup, distribution, and markdown—highlighting the core dynamics.
Bitcoin Cycle Stage 1: Accumulation — A Quiet Build-Up of Conviction
After a prolonged bear market, prices stop plunging and begin to stabilize in a sideways pattern. Market sentiment turns generally cold, with many saying, “It’s over.”
Yet this is precisely the period when long-term capital quietly re-enters the market.
- Psychology: Indifference, fatigue, distrust (“Any rebound will just fall again”)
- Behavior: Decreasing trading volume, reduced volatility, gradual buying in by long-term investors
- Observation Point: Even bad news causes less of a drop, and lows start to slowly inch higher
Bitcoin Cycle Stage 2: Markup — When Demand Starts to Outpace Supply
Once the accumulation phase ends, prices begin to break resistance levels and form a new trend. Signs that “the mood has changed” appear simultaneously in the news, communities, and capital flows.
Bitcoin, as the benchmark asset, often acts as a catalyst; its rise sparks increased risk appetite across other asset classes.
- Psychology: Growing optimism, spreading conviction, FOMO (fear of missing out)
- Behavior: Rising volume, buying by trend followers, increased volatility on the upswing
- Observation Point: Corrections hold at previous highs or support zones, followed by renewed upward moves
Bitcoin Cycle Stage 3: Distribution — When Everyone’s Optimistic, Some Are Selling
After a solid run-up, the market overheats. Narratives like “This time it’s different” become pervasive, and price targets grow unrealistic. However, during this phase, early investors quietly begin to take profits (distribution).
Though the market appears strong on the surface, upward momentum often weakens internally.
- Psychology: Overexuberance, excessive confidence, dulled sense of risk
- Behavior: Sideways trading near highs, sharp spikes followed by quick drops (upper shadows), chasing buying driven by “last chance” sentiment
- Observation Point: New highs are made but the trend lacks smoothness, with volatility increasing
Bitcoin Cycle Stage 4: Markdown — Liquidity Dries Up and Selling Wins
Following distribution, the market becomes fragile—small shocks cause large swings. Buying pressure weakens, and rallies lose steam quickly. Ultimately, a downtrend becomes established, shattering the hopes built during the rise.
- Psychology: Denial, fear, resignation (“All rebounds are traps”)
- Behavior: Selling intensifies on every bounce, cascade liquidations from leverage, volume spikes due to panic
- Observation Point: Support levels break with failed rebounds, and lows continue to fall
The Bitcoin cycle isn’t just about good times when prices rise and bad times when they fall. Each stage carries dominant emotions and participant goals, which in turn drive price movements. What matters is not hastily labeling which stage we’re in, but rather understanding the common psychological and behavioral patterns throughout the cycle to stay grounded and clear-headed.
The Evolution of the Bitcoin Cycle: New Uncertainty Born from Institutional Integration
In the past, simple formulas like “rising after the halving” worked relatively well. However, the timing of the cycle has now become noticeably more complex. This is because institutional investors and regulatory environments have begun to intervene in the speed and direction of the market. So, how has this change transformed the Bitcoin cycle?
Institutional Capital in the Bitcoin Market Changes ‘Structure’ More Than ‘Volatility’
When institutional participation grows, it’s not just the scale of capital that increases. The very way the market operates changes.
- The motives for buying and selling differ. Individuals react quickly to prices and news, but institutions move according to rule-based decision-making such as rebalancing, risk management, and accounting treatment. As a result, sharp fluctuations may decrease, but liquidity can suddenly become thin in certain segments.
- The time horizon lengthens. Even with supply shocks like halving, institutional capital tends to build up gradually rather than entering all at once, causing cycles to unfold not “short and sharply,” but in a longer and more complex manner.
In other words, although Bitcoin’s 4-year cycle structure remains valid, the changing nature of capital layered on top is blurring its timing.
Bitcoin Regulation Determines the ‘Path,’ Not Simply ‘Good’ or ‘Bad’ News
Regulation is often seen as a one-time factor that instantly raises or lowers the price, but in reality, it changes the scope of market participants and trading pathways.
- Regulatory clarity can either open the door for new capital inflows or slow down the pace. Clear standards make it easier for institutional funds to enter, but compliance costs and restrictions can simultaneously suppress overheating.
- Market expectations become dispersed. While events such as the halving once formed the core narrative, now policy variables like approvals, sanctions, tax policies, and accounting standards collectively shape price expectations. Consequently, cycles can no longer be explained by a single signal.
Ultimately, the Bitcoin market is shifting its focus from an “event-driven” to a “policy and capital-structure-driven” framework.
Perspectives on Reading Bitcoin Cycles Must Also Evolve
If the cycle has evolved, so must the observational framework. The crucial question is no longer “Does it always go up after the halving?” but rather, how open is the pathway where supply reductions meet demand within the institutional framework, and whether regulations widen or narrow that pathway.
In summary, the Bitcoin cycle hasn’t disappeared—it is evolving into a more complex form through institutional integration. Understanding this inflection point will be key to gauging the direction ahead.
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