The well-known four-year cycle in the cryptocurrency market has become less distinct, primarily due to the asset class maturing and growing institutional involvement, according to Polygon co-founder Sandeep Nailwal.
Speaking on Chain Reaction, Nailwal noted that speculative trading activity has declined, largely influenced by high interest rates in the U.S. and a general lack of liquidity. However, he believes this will change once interest rates decrease and the Trump administration settles into office.
While Nailwal still anticipates market corrections of around 30-40% and acknowledges the Bitcoin halving will impact prices, he argues that the cycle’s traditional structure is weakening. He explained:
“Historically, we’ve seen crypto assets correct by 90% between cycles, which was considered normal. I expect future drawdowns to be milder and for market behavior to appear more structured and professional, particularly for Blue Chip cryptocurrencies.”
He further suggested that once the market enters another prolonged bull run, capital will shift from larger assets into smaller-cap tokens.
Factors Disrupting the Four-Year Cycle
Several key developments are reshaping crypto market behavior. One significant factor is U.S. President Donald Trump’s executive order to establish a strategic Bitcoin reserve, which analysts say is distorting traditional market cycles.
Additionally, the pro-crypto stance of the Trump administration has helped legitimize digital assets in the eyes of institutional investors. This increased acceptance is expected to drive new capital inflows and contribute to reduced volatility.
The introduction of crypto-based exchange-traded funds (ETFs) has also altered market dynamics. By locking capital into investment products that do not allow direct ownership of digital assets, ETFs have limited the free movement of funds between different cryptocurrencies, making price cycles less predictable.
Lastly, macroeconomic pressures and geopolitical uncertainties continue to influence investor sentiment. Many traders shift away from riskier assets like crypto in favor of more stable options such as cash and government bonds during times of uncertainty.
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