Why is the latest cycle of Bitcoin different from the rest?

Bitcoin's halving cycles have long been viewed as a catalyst for explosive bullish runs when supply is cut down according to a predetermined schedule, often leading to exhilarating price surges. However, this time, everything seems to be deviating from the old script.

Instead of the usual euphoria following each halving, the market is now enveloped by a more hesitant sentiment than enthusiasm. This is clearly reflected in the data: profits are shrinking, volatility is sharply decreasing, and something fundamental is quietly changing in the way Bitcoin operates.

No longer reacting instinctively to supply shock, Bitcoin today is more sensitive to macroeconomic signals, especially inflation expectations and statements from central banks.

This is the new era of Bitcoin: Halving still matters, but the market's gaze has shifted away from the block rewards, and is now closely listening to every word in Jerome Powell's press conferences.

Bitcoin's price peak after halving is declining

Each halving cycle has promised enormous profits. The first cycle brought a staggering profit of 6,400%. The second halving cycle saw that number cut in half. The third cycle is still impressive, but much more modest — around 1,200%. And the current cycle has so far only just crossed the threshold of over 100% — even as Bitcoin reached a new all-time high.

Source: IntoTheBlockThe numbers don’t lie: the bullish runs after Bitcoin’s halving are becoming increasingly limited. But what’s truly noteworthy lies behind those numbers. The current model shows that the market no longer reacts to supply shocks from halving with the blind euphoria seen in previous cycles.

This change reflects a new reality: as major financial institutions enter the market and macroeconomic factors become dominant, Bitcoin is shedding its image as a wild speculative asset to gradually become a more mature instrument, sensitive to inflation, interest rates, and global liquidity.

Halving is still important. It still tightens supply and sets the stage for growth. But now, it is no longer the main character on stage. Instead, Bitcoin increasingly reflects the rhythms of traditional financial markets: liquidity cycles, monetary policy expectations, and language from the Fed.

If that sounds like Bitcoin is gradually being absorbed into the financial system it once wanted to replace, then it indeed is. The shrinking profits after halving may not be a sign of weakness, but rather a sign of a profound transformation in the role and nature of Bitcoin itself.

Bitcoin is “dancing” to a different tune

After the mining cycles, the true rhythm of Bitcoin can be set by... inflation expectations!

Recent data shows that BTC prices increasingly reflect the expected inflation rates over the next 5 and 10 years, which are the market forecasts for future inflation.

These rates are calculated from the yield spread between nominal treasury bonds and TIP ( inflation-protected bonds), which has become an extremely important measure of market sentiment.

!()https://img.gateio.im/social/moments-c057e65b897ac1579d29a5d31e157c01[bitcoin]Source: AlphractalWhen BIR rises, it indicates higher inflation expectations and often leads investors to seek alternative fiat assets. At that time, Bitcoin becomes attractive as a hedge against inflation. Previously, BTC's price was almost completely detached from macroeconomic indicators. But since 2020, its price has been closely tied to inflation expectations, reacting more to Jerome Powell's tone than to halving hashrate events.

This connection shows that Bitcoin is becoming a mature asset, increasingly engaging in broader economic adjustments. In summary, Bitcoin is maturing and its sensitivity to BIR proves that it is no longer immune to moves from central banks.

Bitcoin is evolving and here is why it matters

Bitcoin was created as a hedge against the failures of the traditional financial system and the threat of uncontrolled inflation. But by 2025, its behavior tells a different story.

Rather than acting purely as a hedge against inflation, Bitcoin is becoming increasingly sensitive to the very forces it once sought to escape: Fed policy, liquidity cycles, and real interest rates.

However, this does not necessarily indicate a contradiction. As acceptance from financial institutions surges and capital flows sensitive to macroeconomic conditions pour in, the price action of Bitcoin now reflects policy changes — not just mining mechanisms or CPI indices.

The increase in interest rates dries up the cash flow, but non-restrictive policies reignite that flow. Everything becomes more reflexive, more tightly intertwined.

However, this evolution raises complex questions: Can Bitcoin still be viewed as "digital gold" if its value fluctuates according to the same macroeconomic factors that are driving the stock market? Or has it now become a liquidity sink — an asset that absorbs surplus capital during periods of cheap money, only to retreat when real interest rates rise?

The core of Bitcoin remains unchanged. But the market in which it trades and how it is valued has changed. Bitcoin may still be a risk hedging tool, but now it is a tool that always listens to every word of the Fed.

And that is the price of maturity.

Disclaimer*: This article is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions*

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