Bitcoin: Starting from $87K, how the cryptocurrency cycle shapes wealth opportunities

Bitcoin is currently hovering around $87.27K, still with room to rise toward its all-time high of $126.08K. Behind this market rally lies a pattern repeatedly validated by the market—every few years, this largest crypto asset experiences a fierce cyclical rotation. Understanding these cycles is crucial for investors to seize the next opportunity.

The “Breathing” of Cryptocurrency: What Truly Defines a Bull Run

A bull run is not just about price increases; it is a systemic rise driven by both market fundamentals and psychological expectations. A genuine Bitcoin bull run has several hallmark features:

Technical Indicators Signaling

RSI (Relative Strength Index) exceeding 70 often indicates strong buying pressure, while breaking through the 50-day and 200-day moving averages confirms trend reversals. In the 2024-25 cycle, Bitcoin’s RSI repeatedly entered strong zones, and key moving averages were consecutively broken—clear technical evidence of a bull run.

On-Chain Data Truths

What speaks louder than price charts is on-chain activity. Surges in wallet activity, inflows of stablecoins into exchanges, and continuous decline in Bitcoin reserves on exchanges—all point to genuine buying power entering the market. Since 2024, over $4.5 billion has flowed into spot Bitcoin ETFs, with institutional investors voting with real money.

Market Sentiment Resonance

Social media buzz, trading volume spikes, and media coverage—these “virtual” indicators often foreshadow a shift in market psychology. Historically, every major bull run has been accompanied by widespread discussion from professional circles to the general public.

Four Classic Cycles, One Repeating Story

2013: Bitcoin soared from $145 to $1,200

This was Bitcoin’s first true entry into the public eye. From May’s $145 to December’s $1,200, a 730% increase. The driving forces were pure: media attention and early adopters’ conviction. The Cyprus banking crisis further cemented Bitcoin’s role as a “safe haven asset.”

However, the 2013 boom also planted hidden risks. At that time, Mt. Gox, the largest Bitcoin exchange, handled 70% of global transactions. This centralization risk culminated in 2014 when security vulnerabilities led to a platform collapse, causing Bitcoin to plunge by 75%. This painful lesson spurred upgrades in industry infrastructure.

2017: FOMO frenzy and deep correction

From $1,000 to nearly $20,000—a 1,900% surge within a year. This wasn’t just a niche tech crowd’s game but involved retail investors en masse. ICO booms, a proliferation of exchanges, and discussions of coin doubling opportunities flooded social circles—dreams of universal wealth.

Daily trading volume skyrocketed from less than $200 million at the start of 2017 to over $15 billion by year-end, reaching unprecedented participation levels. But regulatory crackdowns soon followed, especially China’s crackdown on ICOs and crypto exchanges. By the end of 2018, Bitcoin fell from $20,000 to $3,200—a decline of 84%. The burst bubble’s severity left many new investors still in loss today.

2020-2021: Institutional capital enters

This cycle was different. From $8,000 to $64,000 (later touching $69,000), but the driving force shifted from retail to institutions. MicroStrategy, Tesla, Square, and other well-known companies began adding Bitcoin to their balance sheets. The launch of futures products and approval of ETFs outside the US opened a door for institutional investors.

The narrative of “digital gold” gained popularity—against the backdrop of global central banks flooding the system and rising inflation expectations, Bitcoin was repositioned as a hedge. This shift from “speculative asset” to “asset allocation tool” paved the way for subsequent institutional recognition.

2024-25: Policy and halving resonance

The current upward cycle is unfolding in a very different context. In January, the SEC approved the first US spot Bitcoin ETF, absorbing over $10 billion in a few weeks. By November, the total size of spot Bitcoin ETFs exceeded $28 billion, with BlackRock’s (IBIT) alone holding over 467,000 BTC.

Meanwhile, the April halving event, following historical patterns, should once again trigger scarcity premiums. Political shifts have also led some investors to reassess crypto policy prospects. As a result, Bitcoin rose from $40,000 at the start of the year to $93,000 in November—a 132% increase. Despite a recent pullback to $87.27K, the fundamentals remain supportive.

Halving Cycles: Bitcoin’s Innate Supply Shock

Why does Bitcoin, a virtual asset, repeatedly experience cyclical surges? The answer lies in the halving mechanism.

Every four years, Bitcoin’s block reward is halved. This means miners’ new coin creation rate drops by 50%, directly reducing the network’s inflation rate. Theoretically, with supply decreasing and demand stable (or increasing), prices should rise. Historical data fully confirms this logic:

• Post-2012 halving, Bitcoin surged 5,200%
• Post-2016 halving, surged 315%
• Post-2020 halving, surged 230%

This is no coincidence but an inevitable outcome of Bitcoin’s economic model. Each halving acts as a supply-side shock, and markets tend to react in anticipation before the event occurs.

On-Chain Data Speaks: The Real Temperature of the Current Market

Looking at price alone isn’t enough; we need to observe the true flow of funds.

Institutional Holdings Growing Rapidly

By the end of 2024, total holdings across all Bitcoin spot ETFs exceeded 1 million BTC, with BlackRock alone holding nearly 500,000 BTC. Companies like MicroStrategy continue increasing their holdings, indicating a trend of corporate asset allocation toward Bitcoin.

Bitcoin on Exchanges Decreasing

This is a positive sign. When Bitcoin moves from exchange wallets to private or cold wallets, it indicates holders are locking in their assets rather than selling. Data shows exchange balances have been steadily declining this year, signaling supply-side control.

Stablecoins Building Up

An increase in stablecoin inflows into exchanges suggests significant “firepower” ready to enter the market. This is a leading indicator often observed before a bull run begins.

What the Next Cycle Might Look Like

If history repeats, the next major Bitcoin rally could be triggered by:

Government Reserves Accumulation

Senator Lummis proposed the “Bitcoin Act,” recommending the US Treasury buy up to 1 million BTC over five years. While the implementation path is uncertain, the concept itself signifies official recognition of Bitcoin as a strategic asset. Bhutan already holds over 13,000 BTC; El Salvador owns 5,875 BTC. If more countries follow suit, national-level demand could become a new upward driver.

Technological Upgrades Empowerment

Updates like OP_CAT could unlock Bitcoin’s DeFi potential, transforming it from just “digital gold” into a smart contract platform. If Bitcoin can handle more transactions and generate higher fee income, miners’ revenue models will improve, positively impacting network security.

Product Innovation Continues

Currently, we have spot ETFs; next could be Bitcoin futures funds, derivatives, or even Bitcoin-backed stablecoins. Each product innovation attracts new investor segments.

Practical Investment Advice

Understanding cycles is important, but execution is key.

First, Educate Yourself

Don’t be scared by price swings. Spend time understanding Bitcoin’s fundamentals, historical cycles, and current policy environment. Knowledge boosts your confidence in decision-making, not emotions.

Second, Make a Plan and Stick to It

Define your investment goals (short-term gains or long-term holding), risk tolerance, and time horizon. Then develop a strategy—avoid chasing highs in bull markets and panic-selling in bear markets.

Third, Choose Reliable Platforms

Safety first. Use exchanges with strong security measures (two-factor authentication, cold storage, regular audits). For large holdings, consider hardware wallets.

Fourth, Diversify Risks

While Bitcoin is the crypto market leader, it shouldn’t be your entire portfolio. Consider other asset classes to balance volatility.

Fifth, Prepare for Tax Implications

Crypto assets are taxed in many jurisdictions. Consult tax professionals, keep detailed records of all transactions to avoid future issues.

Sixth, Stay Rational

FOMO (Fear of Missing Out) is the biggest enemy in crypto markets. Don’t get caught up in social media hype or leverage tools. Most catastrophic losses come from irrational all-in bets.

Looking Ahead

Bitcoin’s journey from $145 to $87,270K is fundamentally a process of moving from the fringe to the mainstream. Each bull run pushes this forward: entering public consciousness in 2013, attracting retail in 2017, gaining institutional recognition in 2021, and now witnessing formal institutional capital inflows in 2024.

The next bull run won’t replicate the frenzy of 2017 or the innocence of 2013, but there is still room for growth. With policy acceptance, product innovation, and technological upgrades advancing together, Bitcoin’s asset fundamentals are becoming more solid.

The key is not to miss the cognitive upgrade. Those who are late to realize in the previous cycle often become the losers in the next. Understanding history and current realities is essential to seize opportunities.