Bitcoin cycles — halving, ETF, macro

Introduction

Bitcoin has 15 years of history, and a repeating rhythm is already visible in it: a halving every ~4 years, accelerating adoption, overheating, a crash, accumulation. The rhythm is not a clock – the dates are not fixed – but the structure of the cycle is measurable: from capitulation, through recovery, to euphoria. New elements have joined it: the spot ETF and global macro liquidity.

The goal of this lesson is to understand the mechanics of the cycle so that you can set risk filters instead of guessing tops. You will not learn to predict the day of the ATH. You will learn to recognise the regime and match your position size to it.

The mechanics of the halving — where the supply cycle comes from

Bitcoin has a fixed supply of 21M. The emission of new coins falls by half every 210,000 blocks (~4 years).

Daily BTC inflation after the 4th halving:
450 BTC * price = miners' selling pressure to cover energy costs
If daily ETF + exchange demand > 450 BTC, supply declines net -> upward pressure
If demand < 450 BTC -> supply accumulation on the miners' side

Stock-to-Flow (for reference, not for trading):
SF = Stock (existing) / Flow (annual emission)
After the 4th halving SF ~109 (for comparison, gold ~60)
High SF = hard money, but it does not value anything directly

The halving does not raise the price straight away. Historically it took 100-200 days after the halving to break the ATH again, but each cycle is shorter in % return and longer in time spent consolidating. That means percentage gains are shrinking.

The 4 phases of the cycle — an operational definition

We combine on-chain, price and sentiment:

Time rule (historical, not a guarantee):
Bear market low to halving: ~400-500 days
Halving to ATH: ~300-500 days
ATH to the low: ~300-400 days

Measure, do not guess. If 400 days have passed since the halving and MVRV Z-Score >7, you are statistically in the overheating zone, not in the "early accumulation" zone.

Spot ETF — a new demand structure

Since January 2024 the spot BTC ETF (BlackRock IBIT, Fidelity FBTC and others) has changed the structure of the market:

• Institutional demand measurable daily (ETF net inflow/outflow).
• Correlation with the equity market (Nasdaq) has risen intraday, because the ETF trades during US equity hours.
• Miners have a counterparty — previously they sold on CEXs, now the buyer is also the ETF.

How to track it:

• Daily ETF Net Flow (USD and BTC): coinglass.com/bitcoin-etf, Farside Investors.
• ETF AUM vs BTC Market Cap: the bigger the ETF AUM share, the bigger the impact of the flow.
• Coinbase Premium: ETFs buy through Coinbase. A Coinbase premium (Coinbase price vs Binance) >0.1% over the long term indicates US spot demand.
• Grayscale GBTC outflow: in early 2024 a large GBTC outflow neutralised the inflow. Now less relevant.

Estimating the ETF's impact:

ETF Net Inflow 30d (BTC) - Emission 30d (BTC) = Net Demand Surplus

If Net Demand Surplus >0 for >60 days, it is a structural tailwind
If it is <0 for >30 days, it is a headwind – supply accumulation on the side of ETF market makers

The ETF does not guarantee growth. It is a demand channel that has its own volatility. In a panic (for example recession risk) the ETF also records an outflow — we saw that in August 2024.

Global liquidity — the macro backdrop for cycles

Bitcoin correlates with global liquidity (M2, the Fed balance sheet, reverse repo).

• When the Fed does QT (shrinks the balance sheet) and reverse repo falls, liquidity falls.
• When the global money supply (M2) grows and the Fed cuts rates, risk-on assets have a tailwind.

You do not have to be a macro economist. A dashboard is enough:

Macro filter for a BTC trader:
If Fed Net Liquidity 60d MA rising + DXY 60d MA falling = Macro risk-on, let the swing position breathe wider
If Fed Net Liquidity falling + DXY rising = Macro risk-off, tighter stops, smaller exposure

It is a filter, not a signal. You do not trade M2, you only take the wind into account.

Cycles and altcoins — correlation, not causation

Bitcoin dominates the liquidity narrative. In practice:

• Early phase of a BTC bull market: BTC dominance rises, alts lag slightly behind.
• Middle phase: BTC consolidates after the ATH, capital rotates into large alts (ETH, SOL).
• Late phase (euphoria): memecoins and small alts do 10x, BTC dominance falls sharply, BTC MVRV is high.
• Bear market: alts lose 90-99%, BTC -70-80%.

If you plan exposure to alts, first determine the phase of BTC. In BTC’s capitulation phase alts have a worse risk/reward than BTC.

When the plan says do not trade

1. When more than 400 days have passed since the halving, MVRV Z-Score is >7 and the ETF has had 3 weeks of outflows, and you want to add to a leveraged long. Statistics + flows = the distribution zone, not accumulation.
2. When BTC is 70% below the ATH, MVRV is <0, but Fed Net Liquidity is falling vertically and DXY is rising. This may not be the bottom yet. Cheap can get cheaper. The plan says accumulate in small tranches, not all-in.
3. When you trade an alt with an MC/FDV of 10% in BTC’s euphoria phase without checking unlocks. The BTC cycle will not save a token with toxic supply.
4. When you look only at price and ignore STH Cost Basis. In a bull market price returns to STH CB many times. If you do not know where that level is, you do not know where the market defends the trend.
5. When the “the ETF will buy everything” narrative blinds you to outflows. The ETF was a net buyer for 3 months, but for 2 weeks it has been a net seller. The flow trend has changed. The plan needs an update.

The mistakes that cost the most

1. Using Stock-to-Flow as a price forecast. S2F is a model of supply, not of demand. It broke in 2021. Do not trade S2F.
2. Assuming that every cycle is a copy of the previous one down to the day. “Last time the ATH came 500 days after the halving, so it will be the same now.” The market has different liquidity conditions and different participants.
3. Ignoring ETF flow when trading intraday. A large ETF outflow in the US at NY midday often pushes BTC down in the afternoon. If you trade in the EU in the evening, that is context.
4. Holding alts in BTC’s capitulation phase “because they are cheap”. Alts’ beta to the downside is bigger than BTC’s. Capital flees alts first.
5. No selling plan in euphoria. “This time is different, BTC at $200k for sure.” The market does not reward the absence of a plan. DCA out by MVRV or NUPL is a process, not guessing the top.

Measurable exercise

A cyclical dashboard — once a week, 20 min:

Build a table:

Task:
Fill it in for 8 weeks.
At the end answer:
- How many times did your phase assessment change from Accumulation to Recovery based on STH CB?
- Did ETF Net Flow correlate with the weekly change in the BTC price in your window (calculate the Pearson correlation in a spreadsheet)?
- If you were to apply DCA out: which MVRV Z-Score levels would you choose to sell 10% * 5 tranches? Write down the rules.

Goal: To build a filter that tells you when to reduce risk, not when to guess the top.

Check yourself

1. How much BTC reaches the market daily after the 4th halving, and why does that matter for the ETF?
2. Describe the 4 phases of the BTC cycle according to on-chain.
3. How do you calculate the Net Demand Surplus from the ETF?
4. What do you need STH Cost Basis for in a bull market?
5. Why do DXY and Fed Net Liquidity matter for BTC?

Frequently asked questions

Does the halving still matter with the current BTC inflation of 0.8%? It does, but less than 4 years ago. From 1800 BTC a day to 450 is a 75% drop in new supply. With ETF demand of the order of 500-1000 BTC/day net, the halving creates a structural deficit. It is no longer the only driver, but it still sets the lower limit of supply.

Does the spot ETF mean the end of 4-year cycles? Not the end, but a deformation. Cycles may lengthen or shorten because of ETF liquidity. LTH accumulation/distribution is still visible, but institutional inflows smooth the bottoms and speed up the recovery. Treat the cycle as a regime, not a calendar.

Is DXY always inverse to BTC? Not always, the correlation is variable. In risk-off both can fall (for example in March 2020). But in a risk-on trend a weaker dollar favours assets with limited supply. Use DXY as a filter, not as a signal.

When BTC dominance rises, is that bad for alts? Usually yes, in the short term. Rising dominance = capital in BTC, not in alts. But over a longer horizon a strong BTC creates the foundation for rotation. Measure dominance as an indicator of risk appetite in crypto.

How do you use MVRV to sell? You do not sell on an MVRV Z-Score >7 in one block. You build a ladder. An example of a research process (not advice): sell 10% at a Z-Score of 6, another 10% at 6.5, and so on. You write the plan before euphoria, when you have a cool head. In euphoria you execute the plan, you do not create a new one.

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