TLDR
- Arthur Hayes says Bitcoin cycles are controlled by Federal Reserve and Chinese central bank monetary policy, not four-year timing patterns
- Previous Bitcoin bull markets ended when central banks tightened money supply, not because of halving schedules
- Current market conditions include $2.5 trillion Treasury injection, Fed rate cuts, and Trump administration easier monetary policy
- China is ending deflationary policies, removing a key factor that ended previous cycles
- Hayes predicts Bitcoin will continue rising as US and Chinese policymakers increase money supply
BitMEX co-founder Arthur Hayes has rejected the popular four-year Bitcoin cycle theory. In a detailed blog post, Hayes explained that cryptocurrency price movements follow monetary policy decisions, not predictable timing patterns.
The four-year cycle theory suggests Bitcoin bull markets align with halving events. Hayes dismisses this concept as outdated and inaccurate.
Hayes argues that Bitcoin prices respond to changes in USD and Chinese yuan money supply. Central bank decisions drive crypto markets more than any other factor.
Historical Cycles Followed Money Supply
Hayes examined past Bitcoin cycles to support his argument. The first major bull run occurred alongside Federal Reserve quantitative easing and Chinese credit expansion.
That rally ended in late 2013 when both central banks reduced money printing. The second cycle in 2015 was powered by yuan credit expansion and currency devaluation.
Bitcoin crashed when Chinese credit growth slowed and the Fed tightened conditions. The third cycle during COVID-19 ran primarily on US dollar liquidity.
China maintained tight monetary policy during that period. The rally collapsed when the Federal Reserve began raising rates in late 2021.
Why This Cycle is Different
Hayes identifies multiple factors creating unique market conditions. The US Treasury is moving $2.5 trillion from the Fed’s Reverse Repo program into financial markets through increased Treasury bill issuance.
President Trump is pushing for easier monetary policy to reduce debt burdens. Bank deregulation plans aim to boost lending capacity across the financial system.
The Federal Reserve has resumed cutting interest rates despite inflation exceeding target levels. CME futures markets indicate 94% probability of an October rate cut and 80% chance of a December cut.
These policy shifts create conditions that differ from previous cycles. Traditional four-year patterns do not account for these changes.
China’s Policy Reversal
Hayes notes China will not drive this rally as strongly as past cycles. However, Chinese policymakers are abandoning deflationary policies in favor of neutral or mildly expansionary approaches.
This policy reversal removes a major headwind that ended previous bull markets. US monetary expansion can now push Bitcoin higher without Chinese deflation counteracting the effect.
Hayes stated that policymakers in Washington and Beijing are clearly indicating cheaper and more abundant money. Bitcoin prices reflect expectations of this policy direction.
Some market analysts maintain belief in cyclical patterns. Onchain analytics firm Glassnode reported in August that Bitcoin price action resembles historical patterns.
Gemini’s APAC head Saad Ahmed told reporters he expects some form of cycle to continue. Hayes maintains that monetary conditions will determine Bitcoin’s future price movements regardless of timing theories.
