Bitcoin Cycle Interpretation: The Evolution from Early Frenzy to Institutional Entry in the Bull Run

What Drives Bitcoin’s Bull Run?

Bitcoin’s bull market does not appear suddenly; it results from the accumulation of multiple factors. From the supply-side halving mechanism to institutional deployment on the demand side, and to policy environment shifts, each bull run reflects the evolution of the position of crypto assets within the financial system.

Typical features of a bull market include surging trading volume, increased on-chain wallet activity, inflows of stablecoins, and declining Bitcoin reserves on exchanges—all indicating investor accumulation phases. Compared to traditional markets, Bitcoin’s volatility during bull markets is higher, enabling exponential growth in a short period, which is also a key attraction for investors.

Halving Cycles: The Core Engine of Bitcoin’s Bull Run

The most critical element in Bitcoin’s economic design is the halving mechanism. Approximately every four years, the block reward is cut in half, creating scarcity and serving as an important trigger for each bull run.

Historical data clearly demonstrates this pattern:

• 2012 Halving: Bitcoin surged by 5200%
• 2016 Halving: Increase of 315%
• 2020 Halving: Rise of 230%
• 2024 Fourth Halving: Occurred in April, after which Bitcoin climbed from about $40,000 at the start of the year to over $88,000 by year-end

The halving events artificially restrict supply growth, reinforcing Bitcoin’s “digital gold” narrative and attracting investors seeking inflation hedges.

2013: The Turning Point for Cryptocurrency Entering the Public Eye

2013 marked Bitcoin’s first major bull run, with prices soaring from about $145 in May to over $1200 in December, a 730% increase. This rally propelled Bitcoin from a niche topic to mainstream awareness.

Driving factors included:

Early adopters and tech enthusiasts laid the groundwork. The Cyprus banking crisis in 2013 provided an unexpected catalyst—investors began to realize Bitcoin’s potential as a decentralized store of value. Media coverage surged, further amplifying interest.

But risks also emerged:

Mt. Gox, the largest platform for Bitcoin trading at the time, experienced security breaches in 2013 and ultimately collapsed in early 2014, leading to a sharp decline in confidence and triggering a prolonged bear market. This event also provided lessons for future market infrastructure upgrades.

2017: Retail Investors Driving a Frenzied Cycle

The 2017 bull run was a retail investor frenzy, with Bitcoin rising from about $1,000 at the start of the year to nearly $20,000 in December, a 1900% increase. Daily trading volume exploded from less than $200 million to over $15 billion, reflecting explosive market participation.

Core drivers of this cycle:

The ICO boom attracted large inflows of new capital into crypto markets, boosting demand for Bitcoin. Improved platform usability also significantly lowered participation barriers. More importantly, rising prices created FOMO (Fear of Missing Out), which pushed prices higher and drew in more participants, forming a self-reinforcing feedback loop.

But bubbles also formed:

As prices soared, regulators worldwide grew cautious. The U.S. SEC raised concerns about market manipulation and investor protection, while China banned ICOs and domestic crypto trading. By early 2018, Bitcoin’s price plummeted over 80% from its all-time high, entering a long-term bear market.

This cycle established Bitcoin’s mainstream status but also exposed its speculative nature, guiding future infrastructure development.

2020-2021: Massive Institutional Capital Inflows

Unlike the retail-driven 2017 cycle, the 2020-2021 bull run was led by institutional investors. Bitcoin’s price rose from about $8,000 in January 2020 to over $64,000 in April 2021, a 700% increase.

Fundamental changes in this cycle:

Public companies like MicroStrategy began adding Bitcoin to their balance sheets, setting an example that spurred a wave of institutional investment. By 2021, institutional inflows exceeded $10 billion, and corporate holdings surpassed 125,000 BTC.

Bitcoin futures products received approval in 2020, and new ETFs launched in overseas jurisdictions, providing compliant avenues for institutional participation. Massive fiscal stimulus and ultra-low interest rates further strengthened Bitcoin’s appeal as an inflation hedge.

Challenges also arose:

Concerns about the environmental impact of mining grew, and increased regulatory scrutiny dampened some institutional enthusiasm. Bitcoin’s price declined over 50% from its April 2021 high within a few months.

2024: ETF Boom and Policy Expectations

The ongoing bull run signals a new phase of crypto asset mainstream adoption. Bitcoin has surpassed $88,000 (latest data), and analysts generally see potential to reach $100,000 under certain conditions.

Unique drivers of this cycle:

In January 2024, the U.S. SEC approved a spot Bitcoin ETF, a key turning point. This not only provides convenient exposure for institutional investors but also indicates a softening regulatory stance. To date, Bitcoin ETF inflows have exceeded $28 billion, surpassing many traditional gold ETFs.

The April fourth halving has occurred on schedule, further reinforcing the scarcity narrative. Political shifts also bring new expectations—governments’ attitudes toward crypto assets are evolving, with some showing openness.

Interest in Bitcoin reserves is growing globally. Bhutan has accumulated over 13,000 BTC through state-owned entities, and El Salvador holds about 5,875 BTC. As the first country to adopt Bitcoin as legal tender, its symbolic significance is profound. The U.S. Congress has proposed plans to acquire millions of BTC over five years as strategic reserves.

Potential risks:

High volatility may still cause frequent price corrections. External events like inflation data releases or regulatory news could trigger rapid sell-offs. The influx of retail investors might amplify short-term speculation, increasing market swings. Macroeconomic risks such as rising interest rates or recession could shift investor focus. The energy footprint of Bitcoin mining remains a concern for the public and regulators.

Technological Advances in the Bitcoin Network

Future bull runs may also be driven by technological developments. The potential reintroduction of OP_CAT code could unlock rollups and second-layer solutions, enabling Bitcoin to process thousands of transactions per second and laying the groundwork for DeFi applications.

This upgrade will expand Bitcoin’s use cases beyond store of value, supporting more complex financial operations. Increased transaction activity and fee revenue could offset some of the block reward reductions from future halvings.

How to Prepare for the Next Bull Run

Each Bitcoin cycle presents unique opportunities and risks. Past experience shows that well-prepared investors are better positioned to capitalize on market movements.

Learning and research:

Deep understanding of Bitcoin’s technical principles and economic design is crucial. Analyzing triggers and development paths of past bull runs helps identify patterns. 2013 was driven by early adoption, 2017 by retail enthusiasm, 2021 by institutional entry, and 2024 by regulatory-friendly policies—each shift is traceable.

Developing an investment strategy:

Define your financial goals, risk tolerance, and investment horizon. Short-term traders and long-term holders should adopt different strategies. Diversifying your portfolio rather than betting on a single asset is a fundamental risk mitigation principle.

Choosing secure trading and storage methods:

Use reputable, secure trading platforms. For long-term holdings, hardware wallets offer offline security. Enable two-factor authentication and other basic security features.

Monitoring key indicators:

Track on-chain data (e.g., exchange net outflows, whale wallet movements), technical signals (e.g., RSI), and macroeconomic conditions. Regulatory developments, ETF inflow data, and halving events are also important.

Managing emotions and risks:

Market volatility often triggers emotional decisions. Stick to your predetermined plan, use stop-loss orders to limit potential losses, and avoid trading based on fear or greed.

Tax and record keeping:

Understand your jurisdiction’s crypto tax laws and keep detailed records of all transactions for tax reporting.

Outlook: When Will the Next Bull Run Arrive?

While the exact timing of a bull run is hard to predict, Bitcoin’s history demonstrates resilience and recovery ability. The predictability of halving cycles, gradual institutional involvement, technological progress, and changing government attitudes lay a foundation for future gains.

Compared to early speculative bull markets, today’s market infrastructure is more robust, and participation is more diverse. This could mean future rallies are more sustained and stable, though volatility will remain.

For investors, understanding the uniqueness and commonalities of past cycles is vital for navigating Bitcoin’s high uncertainty. Staying informed, prepared, and risk-aware are essential to seize opportunities and manage risks during the next bull run. Whether you are a long-term holder or a newcomer, the next chapter of the Bitcoin market is worth watching—just be ready to respond.