Summary
- 21Shares now suggests that Bitcoin's four-year cycle is still intact, with a potential shift expected by 2026.
- The organization noted that the current market cycle is different, highlighted by a less drastic decline and lack of total capitulation as BTC dips below $60,000.
- They also forecasted a substantial increase in crypto ETF assets under management (AUM) and improvements in DeFi total value locked (TVL), although early-year progress has been sluggish.
The cryptocurrency investment firm and ETF provider 21Shares had previously anticipated that Bitcoin would exit its historical four-year cycle by 2026.
However, nearly six months later, the firm acknowledged on Wednesday that this expectation has not yet materialized, coinciding with Bitcoin's second drop below the $60,000 threshold this month.
“As we approach 2026, we thought Bitcoin’s four-year cycle might be over,” the firm stated in their latest “State of the Market” report. “Half a year in, we must admit: the price movements still appear familiar.”
Although the four-year cycle, a historical pattern where BTC peaks and then bottoms out following the quadrennial halving of its mining rewards, has not yet been broken, 21Shares argues that the market dynamics have evolved, suggesting their overall thesis remains valid.
“The market structure has clearly transformed: institutional ownership of ETFs is rising, and the current drawdown of around 50% is significantly less severe than the 80%+ declines seen in past cycles,” the firm remarked.
Currently, Bitcoin is down 52% from its peak of $126,080, trading at $59,781 as of Wednesday. This value remains above its on-chain cost basis of $54,000, according to Glassnode data, indicating that the market has not succumbed to “complete capitulation.”
Despite the influence of Bitcoin ETFs on cycle dynamics, the anticipated influx of investments has not materialized as 21Shares had hoped this year.
In addition to their cycle-breaking forecast, the firm had projected that crypto ETFs would surge to $400 billion in assets under management this year. However, over the past six months, more assets have exited crypto ETFs than have been invested, contributing to declines in both Bitcoin and Ethereum from their all-time highs.
CoinGlass data reveals that nearly $3 billion has been withdrawn from crypto ETFs in the last quarter, with the total down by almost $5 billion since the beginning of the year.
Other anticipated growth areas have also not met expectations, including forecasts for a $1 trillion stablecoin market capitalization, a $300 billion DeFi total value locked (TVL), and $250 billion in assets for crypto treasury firms (DATs). These projections have faced challenges from regulatory uncertainties, ongoing DeFi exploits, and falling crypto prices.
However, one forecast that remains on track is the firm’s positive outlook for prediction market trading volumes, which it expects to exceed $100 billion this year.
Led by platforms like Polymarket and Kalshi, this goal appears achievable; data indicates that prediction market platforms had already surpassed $57.5 billion in volume by the end of May, well ahead of the required pace to reach the target. (Disclaimer: Decrypt’s parent company Dastan operates the prediction market platform, Myriad.)