Policy Forces Reshape Bitcoin Trading as Four-Year Cycle Weakens
TL;DR
Bitcoin's traditional four-year cycle is weakening as policy announcements now drive markets more than internal metrics. Fiscal stimulus and financial repression are creating a supportive backdrop for crypto, with regulatory developments like the CLARITY Act becoming key price catalysts.
Key Takeaways
- •Policy forces (fiscal stimulus, quasi-QE, regulatory developments) are now more influential than Bitcoin's traditional four-year halving cycle in driving price action.
- •Financial repression through suppressed borrowing costs and expansionary fiscal policy is eroding traditional investments like bonds, increasing crypto's appeal as an alternative.
- •Regulatory clarity, particularly the U.S. CLARITY Act, has emerged as a critical near-term catalyst that could eclipse traditional on-chain signals.
- •The 2026 outlook depends heavily on whether policy developments align with liquidity expansion timing, with institutional demand following policy direction.
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A new regime in which political announcements move markets more than internal metrics has begun to undermine the relevance of Bitcoin’s four-year cycle.
While equities rallied in 2025, Bitcoin lagged, pointing to a market increasingly driven by liquidity expectations and policy timing rather than broad risk appetite.
Under the traditional four-year model, early 2026 would typically mark a late-cycle or post-peak phase. Instead, price action suggests investors are deferring that transition, with policy signals exerting greater influence than the halving-based cycle.
“Bitcoin reacts preemptively when markets expect quasi-QE,” Ryan Yoon, senior analyst at Seoul-based Tiger Research, told Decrypt. “Since Bitcoin is highly sensitive to liquidity, it is expected to lead the market.”
Quasi-QE refers to liquidity support delivered through fiscal or administrative channels that suppresses borrowing costs, without formal central-bank asset purchases.
Policy paradigm
Pre-election fiscal stimulus and confused monetary boundaries are driving this shift, creating what Binance’s Full-Year 2025 and Themes for 2026 report describes as a backdrop of “financial repression.”
Trump’s tariffs and public pressure on Federal Reserve Chair Jerome Powell to cut interest rates, alongside other policy interventions, have increasingly blurred the lines between fiscal, trade, and monetary policy, the report says.
As a result, U.S. policy has tilted toward suppressing borrowing costs and managing financial conditions through fiscal expansion and administrative action rather than conventional monetary tightening.
“Overall, the combination of fiscal dominance and financial repression creates a structurally supportive backdrop for digital assets,” the report reads. “Expansionary fiscal policy alongside suppressed real yields weakens traditional sovereign debt dynamics, while distortions in regulated credit markets increase the appeal of alternative financial rails.”
In other words, heavy government spending and policy-driven low interest rates are eroding the appeal of bonds and bank credit, prompting investors to seek alternatives such as crypto.
The report adds that governments, led by the U.S., are advancing multi-trillion-dollar spending measures ahead of the 2026 midterm elections, while elevated public debt is increasingly seen as constraining the Federal Reserve and raising the risk of quasi-QE delivered through administrative channels.
What’s next?
Policy forces are likely to play a key role in dictating Bitcoin's 2026 outlook, acting in tandem with sustained institutional demand patterns.
With progress on the delayed crypto market-structure bill emerging as a key driver of prices and eclipsing traditional on-chain signals, the near-term catalyst is regulatory.
“The crypto industry lobby has a warchest exceeding $100 million and a midterm election is coming up in November, so there is every incentive for U.S. lawmakers to hammer out a legislative outcome that favors the crypto industry,” Peter Chung, head of research at Presto Research, told Decrypt.
“The market narrative constantly evolves. Right now, it is right to focus on the CLARITY Act as it is an event that will shape the industry growth in the long run,” Chung added.
Though institutional demand from ETFs remains a structural support, policy development will dictate institutional thinking and, therefore, demand.
“Policy will definitely influence institutional demand, especially given their focus on long-term fundamentals,” Chung concurred.
Yoon had a similar take, suggesting that policy direction will determine whether the remaining demand from governments and institutions materializes.
“The next twelve months are a critical window,” he said. “If these laws do not align with the timing of liquidity expansion, their impact will be limited.”