Bitcoin’s current cycle has challenged nearly every assumption traders rely on to identify a full market cycle. Price has climbed steadily over the past two years, but the explosive move that points to the late stages of a Bitcoin bull phase has been absent.
According to an analysis shared on X by crypto analyst Sykodelic, the confusion is due to a structural change that separates this cycle from every major Bitcoin rally that came before it. The difference is not psychological or technical in the usual sense of a four-year cycle.
Liquidity Difference In This Cycle
The disconnect between Bitcoin’s current price action and previous four-year cycles has led to questions among crypto analysts over whether the cycle has already peaked or if something different is influencing its behavior beneath the surface.
For instance, during the 2020-2021 bull market, Bitcoin’s peak coincided with a period of extreme liquidity expansion. Bitcoin followed that inflowinto a classic parabolic blow-off once liquidity conditions reached their most expansive point.
The chart shared by Sykodelic shows this trend clearly. The liquidity index peaked near the price top in 2021 after a stretch of growth from the quantitative expansion in late 2019. This was followed by a fall that aligned with the 2022 bear market, which eventually ended with the bear market bottom.
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Interestingly, that pattern of Bitcoin’s price action following the liquidity index has repeated in every previous bullish cycle. This time, the structure is inverted. The liquidity index did not peak around Bitcoin’s most recent all-time high above $126,000. Instead, the liquidity has been ranging and only recently began stabilizing back around levels seen during the 2022 bear market bottom.
One of the most unusual aspects of this cycle is how far Bitcoin has already traveled despite limited liquidity support. Sykodelic points out that Bitcoin advanced from the $15,000 region to well above $100,000 while global liquidity was range-bound, a trend that has never happened before.
Bitcoin/US Dollar. Source: @Sykodelic_ on X
Why The Parabola Has Been Delayed, Not Cancelled
The absence of a parabolic surge has led many to assume the cycle is nearing exhaustion. However, Sykodelic argues the opposite. According to his interpretation of the global liquidity index, Bitcoin is not transitioning into a late-stage distribution phase but is currently bouncing from a liquidity trough.
Previous crypto cycles relied heavily on unpredictable flows of money, but this cycle has leaned on new structural demand sources. Spot Bitcoin ETFs have introduced persistent institutional inflows, while government-level adoption has changed Bitcoin’s role in crypto investment portfolios.
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Furthermore, the AI-stock boom has led to traditional equity markets absorbing much of the available liquidity, leaving less capital to rotate aggressively into altcoins and broader crypto markets.
The chart shows liquidity beginning to turn upward just as quantitative tightening winds down and liquidity conditions start to increase. The projection is that once the liquidity starts to rise and quantitative easing expands, then Bitcoin might start the missing parabolic behavior that will take it to new price highs.
Featured image created with Dall.E, chart from Tradingview.com