Policy Changes Alter Bitcoin Trading Patterns as Four-Year Cycle Loses Influence

Shifting Market Dynamics: The Waning Influence of Bitcoin’s Four-Year Cycle

Recent trends indicate that political decisions are now having a greater impact on financial markets than traditional internal indicators, diminishing the significance of Bitcoin’s established four-year cycle.

Although stock markets experienced gains in 2025, Bitcoin’s performance lagged behind, highlighting a shift where liquidity expectations and policy decisions are now more influential than overall risk sentiment.

Historically, the four-year cycle would suggest that early 2026 marks a period of market slowdown or decline for Bitcoin. However, current trends show that investors are postponing this phase, with policy developments now outweighing the effects of the halving cycle.

Ryan Yoon, a senior analyst at Tiger Research in Seoul, explained to Decrypt, “Bitcoin tends to move ahead of the curve when markets anticipate liquidity-boosting measures. Its sensitivity to liquidity means it often leads broader market movements.”

Quasi-quantitative easing (quasi-QE) refers to government actions that provide liquidity and lower borrowing costs through fiscal or administrative means, rather than direct asset purchases by central banks.

Policy Shifts and Financial Repression

According to Binance’s Full-Year 2025 and Themes for 2026 report, a combination of pre-election government spending and blurred lines between monetary and fiscal policy has created an environment of “financial repression.”

The report notes that measures such as tariffs imposed by former President Trump and public pressure on Federal Reserve Chair Jerome Powell to reduce interest rates have increasingly intertwined fiscal, trade, and monetary policies.

This has led U.S. policymakers to focus on keeping borrowing costs low and managing financial conditions through increased government spending and administrative actions, rather than relying solely on traditional monetary tightening.

Binance’s report suggests that the dominance of fiscal policy and ongoing financial repression are creating favorable conditions for digital assets. As government spending rises and real yields remain suppressed, traditional government bonds become less attractive, prompting investors to explore alternative assets like cryptocurrencies.

With governments, especially in the U.S., rolling out massive spending programs ahead of the 2026 midterm elections, high public debt is increasingly seen as limiting the Federal Reserve’s options and raising the likelihood of quasi-QE measures.

Looking Ahead: The Role of Policy in Bitcoin’s Future

Policy decisions are expected to play a decisive role in shaping Bitcoin’s trajectory in 2026, working alongside persistent institutional demand.

Regulation and Institutional Demand: What Lies Ahead?

Progress on the delayed crypto market-structure bill has become a major factor influencing prices, overshadowing traditional blockchain-based indicators. Regulatory developments are now seen as the primary catalyst in the near term.

Peter Chung, head of research at Presto Research, told Decrypt, “With the crypto industry amassing over $100 million for lobbying and the midterm elections approaching, lawmakers have strong incentives to pass legislation favorable to the sector.”

Chung added, “Market narratives are always shifting. At present, the CLARITY Act deserves attention, as it will have a lasting impact on the industry’s growth.”

While institutional interest, particularly through ETFs, continues to provide underlying support, policy changes will ultimately shape institutional strategies and demand.

Chung emphasized, “Policy developments will undoubtedly influence institutional appetite, especially as these investors focus on long-term fundamentals.”

Echoing this view, Yoon noted that the direction of policy will determine whether governments and institutions continue to drive demand for digital assets.

“The coming year is crucial,” Yoon stated. “If new regulations do not coincide with periods of increased liquidity, their effectiveness will be limited.”