Key takeaways
- Bitcoin has typically peaked 480 days after a halving, with average returns of 4,400%, though gains have diminished each cycle.
- We are at day 483 post-halving, with Bitcoin up 95%, well below historical averages.
- Unlike prior cycles, global balance sheets have been contracting since 2022, though rate cuts may reverse that trend.
- ETFs now hold 1.5mn BTC (7% of supply) and public companies own another 1mn BTC, together controlling over 10% of all Bitcoin.
- The next 1–2 months could reveal whether Bitcoin remains in its halving-driven rhythm or is entering a new regime more closely tied to global and traditional markets.
(Source: Coinmetrics)
Halving cycles
Every 210,000 , roughly every four years, Bitcoin undergoes a “halving,” a programmed event that reduces the number of new BTC issued into the market by 50%. This sharp reduction in supply growth has historically triggered a supply shock. When demand remains steady, or rises, while new issuance is slashed, prices have typically increased to restore market equilibrium. It’s a textbook case of supply and demand dynamics.
There have been four halving cycles to date, and we are currently still in the fourth. The post-halving rallies that followed each prior event have been significant:
- 2012 Halving: 367 days to peak, +9,583% return
- 2016 Halving: 526 days to peak, +2,935% return
- 2020 Halving: 547 days to peak, +684% return
On average, Bitcoin has peaked 480 days after each halving, delivering an average return of 4,400%, though each cycle has seen progressively lower gains. As of today, we are 483 days into the current post-halving cycle, with Bitcoin up approximately 95% from the halving date. While this return is significantly lower than the historical average, it aligns with the trend of diminishing returns. If Bitcoin were to follow the pattern of the last three cycles, we’d be nearing the tail end of the window: just roughly 60 days remain for this cycle to peak and still fit within historical norms.
(Source: Coinmetrics)
Liquidity cycles
When conventional monetary policy runs out of room, such as when interest rates approach zero, central banks often turn to balance sheet expansion, better known as (QE). By purchasing assets, they inject liquidity into the financial system, effectively increasing the money supply. The intent is clear: to stimulate economic activity as a last-resort tool. But the side effects are equally significant. QE shapes inflation expectations and, more importantly, fuels monetary expansion, what many see as a form of currency debasement. Bitcoin, with its fixed supply and store-of-value characteristics, offers a counterbalance. At Sandmark, we view Bitcoin not merely as an inflation hedge, but as a long-term hedge against global currency debasement.
(Source: Coinmetrics, TradingView)
The chart above highlights how closely Bitcoin’s returns have moved in tandem with major central bank's balance sheet expansion. Both metrics peaked in late 2017, surged again following the unprecedented COVID-era stimulus in 2020, and then reached another high in early 2021. Since 2022, however, global QE has moved into negative territory, effectively a phase of , while Bitcoin has still managed to deliver positive, though muted returns compared to prior cycles. According to this cycle theory, Bitcoin’s true bull cycle has yet to begin. With major central banks now shifting into a rate-cutting phase, keeping an eye on major central banks’ balance sheets and their interaction with Bitcoin will be important going forward.
Traditional finance movement
In Jan 2024, the SEC approved all 11 spot Bitcoin ETFs after years of anticipation. By 2025, under a crypto-friendly US administration, several landmark policies have further reshaped the landscape: the establishment of a US Strategic Bitcoin Reserve, the GENIUS Act providing regulatory clarity for , and the approval for 401k plans to allocate to Bitcoin, opening up a potential $10 trillion retirement market to digital assets. The message is clear: with regulation now in place, the door is wide open for institutional capital to flow into crypto. And flow it has. Assets under management in the largest Bitcoin ETFs have doubled over the past 12 months, reaching roughly $150 billion. To put that into perspective, gold ETF have grown about 66% to a record $345 billion over the same period.
(Source: The BOLD report)
Bitcoin ETFs now hold nearly 1.5 million BTC, roughly 7% of the total 21 million supply. But ETFs are not the only major buyers. Public companies have also entered the market in size, fueling a new trend known as Digital Assets as Treasury (DAT). According to Bitbo data, public firms collectively hold more than 948,000 BTC on their balance sheets. Combined with ETFs, institutional players now control over 10% of Bitcoin’s , underscoring the accelerating shift of crypto into mainstream portfolios.
With this surge in institutional adoption, a key question arises: will Bitcoin continue to follow its familiar four-year cycles, or are we entering a new regime shaped by deeper integration into traditional markets? In such a regime, Bitcoin’s performance could become more closely tied to broader risk assets, with liquidity conditions, rate expectations, and equity trends playing a larger role.
On-chain metrics
data offers a real-time window into investor behaviour and market positioning, helping gauge whether Bitcoin is at extremes. One widely followed indicator is the MVRV Z-Score, which compares Bitcoin’s market value to its “fair value”. Historically, Bitcoin has entered overheated territory when the Z-Score rises above 6, a level that has reliably marked prior market tops and coincided with Bitcoin's halving peaks.
(Source: Coinmetrics)
Today, the metric sits near 2, well below historical danger zones. That doesn’t guarantee further upside, but it does suggest Bitcoin is not yet in the kind of euphoric overvaluation that has preceded past cycle peaks. It’s also worth noting that in 2021 the Z-Score jumped from 2.7 to over 6.6 in less than a month. If a similar move were to unfold, there is still ample time, roughly 60 days, for the Z-Score to climb into peak territory before this halving window closes. If it doesn’t, Bitcoin would be entering uncharted territory.
Conclusion
Bitcoin is now at the edge of its historical halving-cycle window, with returns so far running well below prior averages. The next few weeks will help clarify whether it continues to follow its established halving pattern or is instead transitioning into a new regime, one more closely driven by global liquidity and broader risk-asset dynamics, or something in between. Monitoring central bank balance sheets alongside key on-chain valuation signals such as the MVRV Z-Score will be essential to understanding which path ultimately takes hold.
