For over a decade, Bitcoin’s price movements followed a predictable four-year cycle driven by halving events. But new data now shows this rhythm may be changing — and the implications could reshape how investors understand Bitcoin’s future.
Bitcoin’s Bubble Behavior and Historical Patterns
Financial bubbles have long fascinated economists. Professor Didier Sornette’s 2014 study defined a bubble as a phase of unsustainable growth where prices rise faster than exponentially — always ending in a crash.
Bitcoin has mirrored this pattern in the past. After explosive rallies, it has endured brutal “crypto winters,” with historical drawdowns of -91%, -82%, -81%, and -75%. These cycles often aligned with Bitcoin halving events occurring roughly every four years, bringing waves of hype followed by deep corrections.
The Diaman Ratio and Bitcoin’s Changing Growth Structure
Diaman Partners, alongside Professor Ruggero Bertelli, introduced a tool called the Diaman Ratio (DR) to measure Bitcoin’s growth sustainability. When DR > 1, it signals more-than-exponential growth — the textbook definition of a bubble.
Historically, Bitcoin experienced clear “bubble phases” where DR exceeded 1. But in the latest cycle, data tells a different story. Even after U.S. Bitcoin ETFs were approved and BTC broke its 2021 highs before the 2024 halving — a first in Bitcoin’s history — the Diaman Ratio barely rose above zero.
This suggests that Bitcoin’s explosive, bubble-like growth pattern may be stabilizing.
Volatility Decline Signals a Mature Bitcoin Market
To test this shift, analysts examined Bitcoin’s volatility across four-year halving windows. The findings are striking: annual volatility dropped from over 140% in Bitcoin’s early years to around 50% today.
Lower volatility typically means lower potential returns but greater price stability — a sign of market maturity. Bitcoin is evolving from a speculative asset into a more stable store of value.
The Four-Year Cycle May Be Fading
Rolling annual returns confirm this trend. In Bitcoin’s early days, annual gains often reached extreme highs, but in the past three years, returns have flattened. This indicates that the once-reliable four-year pattern — dramatic bull runs followed by deep winters — may no longer apply.
Despite this moderation, Bitcoin’s performance remains strong. From December 2022 to recent highs near $126,000, BTC delivered significant gains — but without the manic surges of previous cycles.
Why Bitcoin’s Returns Are Naturally Declining
As Bitcoin’s market cap grows, doubling in price becomes harder. A $20 billion asset can easily multiply — but a $2 trillion asset cannot. Data shows average annual returns declining steadily over four-year observation periods, a natural outcome of Bitcoin’s scale and maturity.
Still, the wealth generated in this current cycle already exceeds previous ones. Bitcoin remains unmatched in its ability to create long-term value, both as a financial network and as an asset class.
What the Data Really Tells Us
From a statistical viewpoint, Bitcoin entered “bubble territory” four times in its history. But unlike typical bubbles that collapse in months, Bitcoin’s growth remains resilient. Its long-term trajectory follows a power law — sustained, compounding growth rather than unsustainable bursts.
In recent years, these bubble phases have weakened in both duration and intensity. In the 2024 cycle, Bitcoin hasn’t shown any signs of more-than-exponential growth.
The ETF Effect and the New Bitcoin Era
The introduction of U.S. spot Bitcoin ETFs, such as BlackRock’s IBIT, has further changed market dynamics. IBIT reached $100 billion in assets under management in less than three years — making it the fastest-growing financial product in history.
This institutional adoption appears to have broken Bitcoin’s traditional four-year rhythm. Instead of sharp boom-and-bust cycles, the future may bring gradual growth, softer corrections, and a more mature market environment.
What’s Next for Bitcoin
With returns and volatility both decreasing, projections of Bitcoin reaching millions per coin by 2040 are statistically unlikely. Yet, Bitcoin’s evolution points toward greater stability and resilience.
Future “crypto winters” may not bring the 80% crashes of the past but rather moderate corrections — alternating between dips and new highs as Bitcoin continues its transition from a speculative asset to a global financial cornerstone.
