Impact of Exchange-Traded Funds (ETFs) on Bitcoin: Has the traditional bull-bear pattern been disrupted?

Impact of Exchange-Traded Funds (ETFs) on Bitcoin: Has the traditional bull-bear pattern been disrupted?

Reimagined Bitcoin Cycle: Maturing Cryptocurrency and Institutional Shifts

In a marked departure from previous cycles, the current phase of Bitcoin's (BTC) bull-bear cycle appears to be undergoing a structural transformation, as evidenced by the DeFi analytics platform, Sentora.

Traditionally, long-term Bitcoin holders (LTH) used to accumulate during bear markets, only to sell during bull runs, particularly around halving events, forming the distinctive bowl-shaped patterns on crypto charts. However, the present cycle has veered from this pattern, confounding even seasoned analysts.

"This time, the script is different," Sentora noted. "Distribution kicked off much earlier, unfolded in a slower, stop-start fashion, and shows none of the clean, symmetrical rhythm we've come to expect."

The perceived shift in the cycle may be due to a greater number of institutions adopting Bitcoin, particularly after the approval of U.S. Spot ETFs in early 2024. CryptoQuant founder Ji Young Ju echoed similar sentiments, revising his bear market call in early 2025, only to see Bitcoin hit a new all-time high just two months later.

Despite these changes in demand and supply dynamics, the present cycle (epoch 5) has been closely tracking the third (blue) and fourth (green) cycles, albeit slightly diverging in January 2025. Since the last April halving, Bitcoin has risen by over 70%, from $63k to over $109k. However, past cycles saw much higher returns, with a 354% pump in the 2020-2021 cycle (epoch 4) and an over 500% gain in the 2017 cycle (epoch 3, blue).

When viewed on a compounded annual growth rate (CAGR) basis, the 4-year BTC cycle CAGR has declined steadily from over 850% in 2015 to about 30% in May 2025. This suggests an overall shrinkage in annual investor returns, a trend some attribute to Bitcoin's increasing maturity as TradFi embraces it. This maturation is also hinted at by the declining volatility, with annualized Bitcoin volatility (30-day) falling from 78% to 35% since the debut of U.S. Spot ETFs.

This new phase of steady growth and reduced volatility could suggest a diminished upside potential for Bitcoin, despite it being the best asset on a risk-adjusted basis compared to most traditional investments. The move towards greater institutional involvement and clearer regulatory frameworks is likely to make Bitcoin more akin to stocks or gold in the future.

Moving forward, while the rhythm of the bull-bear cycle remains, institutional involvement and ETFs may amplify the size and duration of the bull phase, attracting more capital and reducing extreme retracements. This transformation reflects a shift in the market structure from early-stage and speculative to mature and institutionalized.

1. The structural transformation of Bitcoin's (BTC) bull-bear cycle, as observed by DeFi analytics platform Sentora, could be attributed to a greater number of institutions adopting Bitcoin.
2. Crypto markets are witnessing a maturation process, as evidenced by the declining volatility of Bitcoin and the increasing number of institutional investments, making Bitcoin more akin to stocks or gold in the future.
3. Institutional involvement and the approval of U.S. Spot ETFs may cause the bull phase of Bitcoin's cycle to be bigger and longer, potentially attracting more capital and reducing extreme retracements, thus reflecting a shift in the market structure from early-stage and speculative to mature and institutionalized.

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