Is Bitcoin’s Cycle Shifting? The Influence of ETFs and Institutions on BTC’s Volatility and Growth Potential

BTC’s cycle is becoming less predictable – Are ETFs and institutions changing the rules?

• Bitcoin’s latest cycle shares a close resemblance with its 2021 and 2017 cycles.

• However, ETFs and institutions may reduce crazy rallies and painful crashes.

The typical bull-bear Bitcoin [BTC] cycle may be facing a structural shift, according to DeFi analytics platform Sentora (formerly IntoTheBlock).

During previous cycles, Bitcoin’s long-term holders (LTH) accumulated during bear markets and unloaded later during bull runs (mostly halving). This helped form the typical bowl-shaped (red) patterns on the crypto’s on-chain charts.

Source: Sentora/X

However, the current cycle has been different and confusing even to seasoned BTC cycle analysts, noted the analytics firm.

“This time, however, the script is different: distribution kicked off much earlier, has unfolded in a slower, stop-start fashion, and shows none of the clean, symmetrical rhythm we’ve come to expect.”

Cycle is on track, but volatility keeps falling

Most analysts have linked the perceived cycle changes to a greater number of institutions embracing BTC. Especially after the approval of U.S Spot ETFs in early 2024.

In fact, CryptoQuant founder Ji Young Ju shared a similar outlook after making a wrong bear market call in early 2025, only for BTC to hit a new all-time high two months later. He said,

“It feels like it’s time to throw out that cycle theory. New liquidity sources and volume are becoming more uncertain, signalling a transition as the Bitcoin market merges with TradFi.”

Despite the aforementioned changes in demand and supply dynamics, the present cycle (epoch 5) has been closely trailing the third (blue) and fourth (green) cycles. Worth pointing out, however, that it slightly diverged in January 2025.

Source: Glassnode

Since the last April halving, Bitcoin has rallied by over 70%, rising from $63k to over $109k. However, over the same period, the past cycles saw much higher returns.

In the 2020-2021 cycle (epoch 4), BTC pumped by 354% while in 2017 (epoch 3, blue), the asset gained by over 500%.

When the returns were zoomed out on a compounded annual growth rate (CAGR) basis, it revealed a steady decline. The 4-year BTC cycle CAGR dropped from over 850% in 2015 to about 30% in May 2025.

In short, annual investor returns have shrunk over the years – A move some have linked to BTC’s “asset maturity” status as TradFi embraces it. This thesis can also be supported by easing volatility (price swings).

Source: The Block

Since the debut of U.S Spot ETFs, annualized BTC volatility (30-day) has dropped from 78% to 35% – A sign that the asset became relatively less volatile from early 2024.

When zoomed out from 2017, its volatility has been trending southwards, indicating that BTC has become more mature. Further adoption by institutions may make it even more like stocks or gold.

Going forward, BTC’s massive upside potential may diminish. Despite it being the best asset on a risk-adjusted basis, compared to most traditional investments.

Conclusion

In conclusion, as Bitcoin continues to mature within the mainstream financial landscape, understanding its evolving cycle dynamics becomes crucial for investors. The approval of ETFs and increased institutional interest may reshape its traditional patterns, indicating a transition towards stability. Nevertheless, potential investors should remain vigilant, as diminishing returns and lower volatility could signal a new era for this leading cryptocurrency.