Hello readers,

Crypto adoption cycles typically include three years of growth and expansion, followed by a bear market that lasts approximately one year.

The current expansion phase is now on day 1,044 as measured from the price trough for BTC in November of ‘22. The ‘21 expansion lasted 1,063 days, and the ‘17 cycle lasted 1,065 days.

Measured this way, we are distinctly “late cycle” within the current expansion.

But how do the data and KPIs today compare to where we stood in September 2021?

We’ll answer that question in this week’s report.

Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.

Let’s go.

Realized Profits & Coin Days Destroyed

Realized Profit

Per data from Glassnode, BTC investors have realized $857b in profits so far this cycle — 65% more than the ‘21 cycle.

Of course, we should expect to see this given that a higher BTC price equates to more gains for long-term investors each cycle.

One way to normalize this is to compare the realized profits to the market cap in each cycle.

• The ‘21 cycle peaked at a market cap of $1.26 trillion, resulting in a realized profit to market cap ratio of .41.

• BTC’s current market cap is $2.28 trillion, making the current realized profit to market cap for this cycle .38.

The takeaway? From a “wealth creation” perspective, we are currently at similar levels reached in the entire ‘21 cycle.

Coin Days Destroyed

Another way to examine profit taking is through the lens of “coin days destroyed.”

Per Glassnode, this metric measures the total number of days that coins were held before being spent.

As we can see below, we’ve already exceeded the total “coin days destroyed” in this cycle by 15% when compared to the ‘21 cycle.

Again, this aligns with “late stage” dynamics.

Long-Term Holder Supply

We’ve observed similar behavior from long-term holders in this cycle, as we did in the last cycle.

In the period from October ‘20 through March of ‘21, the long-term holder supply dropped 13.5% (into the first price peak in April of ‘21). LT holder supply then rebounded and rose for the rest of the cycle.

Similarly, the long-term holder supply dropped 12.4% from December ‘23 through Feb. ‘25 before rising back to its current level of 73%.

Takeaway: long-term holders tend to distribute coins into new money entering the market. In the ‘21 cycle, this occurred at the first price peak in April of ‘21.

In the current cycle, this occurred in Q4 of last year and continued into Q1 of this year.

If we’re going to see an explosive Q4, we need to see new money entering the market — something we didn’t see in the last cycle, relative to earlier in the cycle.

Bitcoin Dominance

In the past two cycles, the markets peaked with Bitcoin Dominance declining toward 40%.

We’ve come nowhere near that level so far in this cycle. We think there are a few reasons why:

1. Financialization of BTC via the ETFs and participation from institutions this cycle.

2. Maturity of the crypto markets. In the last cycle, every L1 besides Ethereum was a “shiny new object” for investors to speculate on. Furthermore, NFTs and DeFi were powerful ideas in their nascent stage — when investors could wildly overestimate their maturity, use cases, and sustainability. That’s not the case today. Again, the markets have matured.

3. In the ‘21 cycle, we experienced a massive influx of fiscal and monetary support due to COVID, which we may never see again. There was little incentive to be in BTC when altcoins were outperforming it wildly. That’s not the case today, where asset selection is critical.

We still believe that BTC dominance will fall lower, but not to the levels we’ve seen in the past.

200 Week Moving Average

Two reasons we keep a close eye on the 200-week moving average:

1. In bear markets, Bitcoin tends to trade down to its 200-week moving average.

2. In the last two cycles, Bitcoin topped when the 200-week moving average converged on the prior cycle high.

The 200-week moving average is currently $53.1k.

Will we ultimately reach $66k (prior cycle high) this year?

It’s doubtful, as our estimates would place the 200 WMA in the $57k range — even if we saw a significant 40% move over the next few months. Of course, it’s possible to get to those levels if the cycle extends into next year.

Takeaway: the law of diminishing returns is playing out with each passing cycle, as seen below.

Realized Price & MVRV-Z Score

Realized Price

Bitcoin’s realized price (proxy for cost basis of all coins on the network) is currently $53.8k per Glassnode.

Similar to the 200-week moving average, Bitcoin tends to trade back to its realized price in bear markets, with cycles typically topping out when the realized price reaches levels that align with the prior cycle's high.

Similar to the 200-week moving average, we do not expect to see this metric reach the prior cycle high this year — further highlighting the law of diminishing returns.

MVRV-Z Score

The MVRV-Z score measures how “stretched” Bitcoin’s market value is from its realized value, scaled by historical volatility with the z-score.

The current reading of 2.28 indicates that Bitcoin’s market cap is approximately 2.28 standard deviations from its historical norm relative to its cost basis.

Interestingly, we are at higher levels now than at the same point in the ‘21 cycle. Back then, Bitcoin rose roughly 50% in October/November to finish the cycle with an MVRV-Z score of 3.49.

If we were to get to a level approaching 3 in this cycle, the BTC price would likely hit the $160k-$170k range (a 40-50% move).

Fear & Greed Index

If you think the markets are nervous today, they were even more skittish in ‘21 at the same stage. In fact, we were in extreme fear back in Sept. ‘21. At that time, BTC had just corrected 20%, trading down to $43k before rising to its $66k top (53% move) over the following five weeks.

Closing Thoughts

There is no law that requires Bitcoin to continue on the “four-year cycle” path we’ve historically followed.

But when you look hard at the data, it’s difficult to fade the idea of a Q4 top.

Why?

We believe there are multiple reasons why the “four-year cycle” framing tends to hold:

1. Narrative anchoring. Investors expect a “post-halving bull market,” which influences investor positioning, marketing cycles for crypto-native firms, and media coverage. Reflexivity makes the pattern self-fulfilling.

2. Liquidity & credit cycles. The halving cycle has historically aligned with global debt refinancing cycles, amplifying the liquidity needed to produce crypto bull markets.

3. Mechanics of the four-year halving cycle and how that plays into miner operations, with supply tightening just as demand tends to come back into the market.

4. Product/innovation cadence. Venture capital tends to seed the industry in line with liquidity cycles that have aligned with the four-year halving cycle. These projects then take time to reach the market, with new innovations and narratives emerging in bursts that amplify crypto adoption cycles.

5. Volatility. Investors expect deep bear markets in crypto, where they can buy their favorite assets at a discount. Naturally, this influences profit-taking, creating a self-fulfilling feedback loop.

Given the observed data and entrenchment of these qualitative/behavioral elements, our base case is that BTC will peak again in Q4.

What does that mean for portfolio management?

Portfolio Management