One year post-halving, the Bitcoin narrative feels different. The roar of promised revenue has been quieted by the mutter of more predictable progress. The price is up roughly 31% since that halving. By contrast, we saw a staggering 436% increase in the same period during the last cycle. Yet that’s not merely a slowdown, but rather a seismic change.

This Ain't Your Daddy's Bitcoin Cycle

Consider Bitcoin’s early years the California Gold Rush of the 1850s. Everybody jumped on it, purely speculative and the expectation of being a millionaire overnight. Now, picture that same gold rush — except this time, Goldman Sachs is purchasing half the shovels and pickaxes. That's the difference we're seeing now: institutional involvement.

The surge we did see? It was front-loaded, occurring in advance of the halving, from October-December 2024. Then the consolidation, the correction – the market collectively exhaling. This isn't the predictable, post-halving rocket ship we've come to expect. Instead, we’re witnessing a twistier confluence of effects, in which the halving itself starts to lose its bite. Are we, as some have suggested, just giving a little too much weight to one hearing?

Are Long Term Holders Really Winning?

Long-Term Holder (LTH) MVRV ratio paints a bleak picture. Net unrealized profit/loss ratio is a basic way of evaluating the unrealized profits of long-term BTC holders. It's declining. Imagine the corporation’s loyalty rewards program, but the rewards keep shrinking each year.

Ouch. That's a massive drop. In other words, it indicates that long-term holders are not profiting to the same degree as witnessed in past cycles at their respective profit multiples. In short, our golden goose is still laying some eggs, but they might just be getting a little smaller. It’s more than the dollars and cents. It’s less about the fundamentals and more about the promise of Bitcoin, which provides the outsized returns for those bold enough to believe. That promise is being challenged.

  • 2016-2020 Cycle: LTH MVRV peaked at 35.8
  • 2020-2024 Cycle: LTH MVRV peaked at 12.2
  • Current Cycle: LTH MVRV peaked at only 4.35

Bitcoin's explosive upside potential is compressing. It’s a little like trying to shove an elephant into a Mini Cooper—the room just isn’t available in that vehicle anymore. This is more than just the halving — I mean look at Bitcoin’s overall size. As Bitcoin’s market capitalization grows, it gets harder and harder to generate the same percentage increases as early on. Maintaining that growth in value will require extraordinary diligence and creativity. The low-hanging fruit has been picked. Interest rates, liquidity and the fickleness of institutional investors rule our world. As such, they have a larger impact than the planned impact of reducing block rewards over time.

Have Explosive Gains Already Passed?

Think of it like this: imagine investing in Apple when it was just a garage startup versus investing in it today. That’s where the potential for exponential growth is drastically different. Bitcoin is inevitably following a similar trajectory.

So, what does this mean for you? If you’re just arriving at the shindig, sorry to scare you off. Those might be the biggest “acceleration” gains we ever see, and they’re already in the rearview mirror. Of course, that doesn’t mean Bitcoin is dead, quite the opposite. All this really means is that you should make different assumptions—and consequently, a different investment strategy.

The Bitcoin narrative is not dead, it’s just changing. We could be entering a phase of growth where the hype gives way to moderation and stability, reinvigorated by fundamentals. More institutional involvement may result in longer accumulation phases and less sudden profit-taking. As positive as this trend is, it means that the era of low-hanging, explosive gains are likely over.

Actionable Path Forward For Investors

  • Diversify: Don't put all your eggs in one basket, especially not a basket that's showing signs of wear and tear.
  • Manage Risk: Understand your risk tolerance and invest accordingly. This isn't a get-rich-quick scheme; it's a long-term game.
  • Do your research: Don't rely on hype or speculation. Base your decisions on solid data and analysis.
  • Consider Alternatives: There are other investment options out there, both within and outside the crypto space. Explore them.

It's time for a dose of realism. Bitcoin’s still got lots of potential, but the era of declining returns has arrived.

It's time for a dose of realism. Bitcoin still has potential, but the era of diminishing returns is upon us.