The idea that Bitcoin follows a predictable four-year rhythm is being put to the test once again, as two separate reports argue the pattern remains remarkably intact. The DeFi Report and asset manager 21Shares have each published mid‑year assessments, pointing to leverage cleansing, on‑chain cost bases, and post‑halving price behavior that mirror earlier cycles.
Mike, an analyst at The DeFi Report, laid out a framework that sees the four‑year cycle not as a coincidence but as a natural interplay of psychology, credit, and media attention. He noted that calls of “this time is different” during bull markets, or declarations that Bitcoin is a Ponzi during bear phases, have been proven wrong four times in a row. Central to the analysis is the Realized Cap – the net fiat actually injected into Bitcoin – now estimated at around $1.1 trillion. Because Bitcoin lacks a traditional book value, this realized floor acts as the most dependable support in bear markets. Currently, the premium built by leverage, DeFi loans, and speculation has largely evaporated, pulling the price back toward that capital base.
Key indicators underscore the deleveraging. Active DeFi loans on Ethereum have dropped 57% from their peak, while open interest in Bitcoin futures sank 52%, signaling a near‑complete expulsion of speculative froth. Even miners, who Mike describes as the cycle’s most critical actors, have faced capitulation, operating below cost at the worst possible moment. On the liquidity side, stablecoins – now accepted as the on‑chain world’s native currency – are expected to bring fresh supply that could kickstart the next uptrend, although the timing remains uncertain. Mike also revealed a portfolio tilt toward Bitcoin and specific dApps, citing Ethereum’s failure to outperform BTC in the last cycle and Solana’s chart showing potential saturation.
Meanwhile, 21Shares revised its 2026 forecasts, conceding that the four‑year cycle did not break as the firm had anticipated. Bitcoin peaked near $126 000 in October 2025 and then fell sharply, yet the current 50% drawdown is far milder than the 80%+ bear markets of prior cycles. The firm highlighted that BTC has not dropped below its aggregate cost basis of roughly $54 000, a floor that aligns with The DeFi Report’s realized‑cap thinking. 21Shares now sees a year‑end recovery toward $100 000, not a new all‑time high, as investors continue to weigh Bitcoin against equities, commodities, and AI‑linked assets. The arrival of spot ETFs and greater institutional ownership has altered market structure, but the fundamental halving rhythm persists.
Beyond Bitcoin, 21Shares offered a mixed scorecard. Global crypto exchange‑traded product assets stalled near $140 billion, well short of a $400 billion target, though many investors held their positions through volatility. Stablecoin supply reached about $320 billion and is now projected to end the year between $400 billion and $600 billion, helped by the GENIUS Act and MiCA but slowed by debates over yield‑bearing models. Prediction markets emerged as a bright spot, with $57.5 billion in volume through May, putting the sector on track to surpass the firm’s $100 billion annual target ahead of the FIFA World Cup and U.S. midterms. In contrast, decentralized finance stumbled, with total value locked stuck near $140 billion after more than $840 million in exploit losses across over 50 incidents, including the KelpDAO and bridge exploits. Corporate crypto treasuries also reflect a cautious environment, with the value of public companies’ holdings near $100 billion, often trading below net asset value.
The combined narrative suggests that while the crypto market is maturing, the underlying cyclical forces – leverage, miner economics, and investor psychology – still drive Bitcoin’s price rhythm, even as DeFi grapples with security setbacks and capital outflows.
