Bitcoin Cycle

Current Situation

Last updated: July 25, 2026

Bitcoin price action showed signs of a bullish reversal this week, reaching $66,000 as technical indicators suggested the asset may be forming a bottom. Institutional appetite surged, evidenced by US-listed spot Bitcoin ETFs recording $900 million in inflows last week—the highest since early May—and BlackRock’s South Korea ETF seeing a record weekly inflow of over $2.8 billion. While Tesla reported it held its $825 million in Bitcoin through Q2 2026, other companies using the asset for treasury purposes suffered financial losses following a steep price plunge.

Legislative momentum for the Crypto Clarity Act reached a critical juncture, with Senate Majority Leader John Thune planning a vote as early as next week. However, the introduction of a new draft banning federal officials from sponsoring digital assets created friction, leading Senate Democrats to oppose the current version and causing Polymarket odds for the bill's passage to decline. This regulatory uncertainty is contrasted by intensifying institutional lobbying, as both Goldman Sachs and Fidelity have publicly urged the Senate to pass the legislation.

Global regulatory frameworks are expanding, with Russia passing a bill to establish a legal cryptocurrency framework and Nigeria forming a virtual asset council. In the US, the Treasury froze a $130 million wallet linked to Iran's IRGC, while the CFTC began restricting the use of "self-certifying" boilerplate contracts for prediction markets. Additionally, court filings surfaced alleging that Commerce Secretary Howard Lutnick and a White House aide previously influenced legislation to favor Tether.

Key variable to watch: Whether Senate Republicans and Democrats can finalize the Crypto Clarity Act before the summer recess despite opposition to the current draft's ethics provisions.

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Background

Bitcoin's Architecture

Bitcoin is a decentralised digital currency and store of value — a network of computers (nodes) maintaining a shared transaction ledger (the blockchain) with no central authority. Its supply is algorithmically fixed at 21 million coins, with new issuance halved roughly every four years (the "halving"). This deflationary supply schedule, combined with growing institutional adoption, is the framework most Bitcoin bulls use to justify long-term appreciation.

Bitcoin was created in 2008 by the pseudonymous Satoshi Nakamoto and launched in January 2009 as a response to the financial crisis — a system that could not be debased by central banks or confiscated by governments. It has evolved from cypherpunk experiment to a $1 trillion+ asset class held by sovereign wealth funds, corporate treasuries, pension funds, and retail globally.

The Halving Cycle

Bitcoin's four-year halving — where the block reward paid to miners is cut in half — has historically driven multi-year price cycles. Halvings reduce new supply; if demand holds or grows, price must rise to clear the market.

• 2012: reward 50 → 25 BTC; price rose from ~$12 to ~$1,100 (2013 peak).
• 2016: reward 25 → 12.5 BTC; price rose to ~$20,000 (2017 peak).
• 2020: reward 12.5 → 6.25 BTC; price rose to ~$69,000 (2021 peak).
• 2024 (April): reward 6.25 → 3.125 BTC; the current post-halving cycle.

The cycle is not clockwork — each has had different macro conditions, regulation, and institutional participation. But the supply reduction is a recurring fundamental tailwind that has historically produced new highs 12–18 months after each halving.

Spot ETF Approval (January 2024)

US spot Bitcoin ETFs were the single most significant regulatory development in Bitcoin's history. For the first time, US retail and institutional investors could gain exposure through a brokerage account without managing wallets, keys, or custody. BlackRock's IBIT, Fidelity's FBTC, and ARK's ARKB became among the fastest-growing ETF launches ever. The structure permanently changed Bitcoin's demand profile — a persistent institutional channel with daily, trackable flows. Crucially, ETF flows now cut both ways: the same vehicle that channels institutional buying in bull phases produces visible, large-scale outflows in risk-off periods, and those outflow figures have become one of the most-watched real-time sentiment indicators in the market.

Macro and Correlation

Bitcoin has moved through several regimes. In 2020–22 it traded as a high-beta risk asset — rising with tech stocks in liquidity booms, falling with them in tightening. That correlation partly persists. Bitcoin is also developing a more distinct "digital gold" identity, though this thesis is more aspirational than proven: unlike gold, Bitcoin does not yet have a broad sovereign/central-bank accumulation base, so its safe-haven behaviour is inconsistent and it often still trades as a leveraged bet on liquidity. When real rates fall and the dollar weakens, BTC tends to outperform; when liquidity contracts, its volatility makes it vulnerable to sharp drawdowns despite the fixed supply.

Key Actors

BlackRock / Larry Fink: BlackRock's embrace of Bitcoin after years of scepticism was a watershed for institutional legitimacy; IBIT holds tens of billions in BTC, and Fink's "digital gold" framing carries weight with allocators.

MicroStrategy (Strategy) / Michael Saylor: The software company that converted its treasury to Bitcoin and keeps buying aggressively, largely funded by issuing debt and equity. Its stock functions as a leveraged Bitcoin proxy and trades relative to the net asset value of its BTC holdings — the "mNAV" multiple. When that multiple compresses toward (or below) 1.0×, it signals the market is no longer paying a premium for its accumulation strategy, and the leverage that amplifies gains in bull markets amplifies losses in drawdowns.

US Bitcoin Strategic Reserve: The Trump administration's executive order establishing a Strategic Bitcoin Reserve from seized BTC was a significant political signal — official acknowledgement of Bitcoin as a strategic asset rather than a threat.

Market Exposure

BTC Spot / Futures: CME Bitcoin futures are the primary regulated derivative; Coinbase, Kraken, and Binance are the main spot venues; Hyperliquid and dYdX offer perpetual futures with high leverage.

Spot ETFs: IBIT (BlackRock), FBTC (Fidelity), ARKB (ARK), BITB (Bitwise) — track spot closely with minor fee drag. Net flow data is the key sentiment read.

Mining Companies: Riot, Marathon, CleanSpark — leveraged exposure to BTC price with added operational risk from hash rate and electricity costs.

MSTR (Strategy): A leveraged Bitcoin holding company; watch its mNAV premium/discount and its debt load.

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