Former BitMEX CEO Arthur Hayes released his latest essay, “Long Live the King!”, where he analyzes the impact of US and Chinese monetary policies on Bitcoin’s market cycles and explains why the traditional four-year cycle no longer applies. Hayes emphasizes that Bitcoin’s future is dictated largely by US dollar liquidity and the actions of regulators moving toward a more accommodative policy.
Bitcoin and the Evolution of Money
Hayes begins by discussing the fundamental role of money in society: it allocates scarce resources and determines what should be produced, in what quantities, and who receives it.
- Key principle: The value and supply of money are central to any economy.
- Market dynamics: Excessive freedom leads to instability, prompting governments to regulate currency issuance to protect collective interests.
- Modern challenges: In a digital age dominated by centralized states and advanced data systems, maintaining “hard money” is difficult. Bitcoin, however, represents a superior form of money, whose value is measured relative to the US dollar.
Why Bitcoin’s Four-Year Cycle is Obsolete
Historically, Bitcoin cycles occurred approximately every four years. Today, Hayes argues, the factors driving those cycles have changed:
- US dollar liquidity
- Federal Reserve policy changes
- Chinese credit supply and monetary adjustments
These variables have become more important than the previous simplistic time-based cycles.
Historical Bitcoin Cycles
1. Genesis Cycle (2009–2013)
| Year | Fed Rate Changes | USD Credit Supply | Bitcoin Price ($) | Notes |
|---|---|---|---|---|
| 2009 | QE initiated | Rapidly increasing | <1 | Bitcoin launched; global financial crisis |
| 2013 | Policy tapering | Slowing growth | 100–1,200 | End of first bull cycle |
During the genesis cycle, the global financial system faced collapse. The Fed’s quantitative easing and China’s infrastructure spending fueled the early Bitcoin growth.
2. ICO Cycle (2013–2017)
| Year | Chinese Yuan Credit Index | USD Supply | Bitcoin Price ($) | Notes |
|---|---|---|---|---|
| 2014 | Surge | Slight decline | 300–1,200 | Ethereum launches; ICO boom |
| 2017 | Slowing | Fed tightening | 20,000 | End of ICO bull market |
This period saw the rise of Ethereum and smart contracts, with China’s credit expansion driving Bitcoin’s price surge.
3. COVID-19 Cycle (2017–2021)
| Year | US Stimulus ($T) | Fed Rate | Bitcoin Price ($) | Notes |
|---|---|---|---|---|
| 2020 | 2–3 | Near 0% | 10,000–60,000 | Massive stimulus fuels crypto growth |
| 2021 | 3+ | Rising | 60,000 | Inflation concerns; Fed tightens |
US fiscal responses to COVID-19 led to enormous liquidity entering markets, benefiting Bitcoin, while China limited its real estate market support.
4. New Global Order (2021–Present)
| Year | Fed RRP Balance ($T) | USD Credit Supply | Bitcoin Price ($) | Notes |
|---|---|---|---|---|
| 2022 | 2.5 | Declining | 20,000–30,000 | Fed adjusts rates; liquidity tightening |
| 2025 | Minimal | Stable | 120,000+ | Market influenced by Biden admin debt issuance |
Hayes emphasizes that recent cycles are shaped more by complex policy tools like the Fed’s reverse repo program and short-term treasury issuance than by simple four-year timing.
Key Takeaways
- Bitcoin cycles are now dictated by liquidity and regulatory action, not fixed timelines.
- US and Chinese monetary policies are the primary drivers of Bitcoin price movements.
- Historical cycles provide context but cannot reliably predict future market tops.
- Investors should focus on macroeconomic indicators and monetary policy shifts rather than repeating past cycle assumptions.
“Bitcoin remains the best form of money ever created, and its value is inherently tied to USD liquidity. Understanding the interplay between central bank policies and Bitcoin supply is now essential for any market participant.” — Arthur Hayes
Tables help visualize how Bitcoin prices historically responded to Fed rates, USD supply, and Chinese credit dynamics, highlighting why past cycles no longer guarantee future outcomes.
