'BTC Reserve Act' may break the Halving cycle. Will this four-year cycle unfold in a different way? Are we entering a mythical Supercycle?

More and more speculations suggest that the incoming President Donald Trump may announce the establishment of a BTC reserve by signing an executive order on his first day in office, or establish a reserve through legislation during his term. Many people wonder if this will lead to a cryptocurrency Supercycle.

Since Wyoming Senator Cynthia Lummis introduced the "BTC Reserve Act" earlier this year, similar proposals have also been put forward in states such as Texas and Pennsylvania. It is reported that Russia, Thailand, and Germany are also considering their own proposals, which further increases the pressure.

If governments around the world are competing to ensure their own BTC reserves, will we say goodbye to the cryptocurrency's four-year boom-bust cycle that many people believe is caused by BTCHalving?

Cryptocurrency lending institution Nexo's analyst Iliya Kalchev believes that the 'BTC Reserve Bill' may be a milestone moment for BTC, indicating its 'recognition as a legitimate global financial instrument'.

'Every BTC cycle has a narrative that attempts to push the idea of "this time is different." The conditions have never been so ideal. Cryptocurrency has never had a pro-cryptocurrency US president who controls the Senate and Congress.'

The BTC bill proposed by Lummis in 2024 will allow the US government to introduce BTC by purchasing 200,000 BTC annually over five years and store it as a reserve asset in its treasury, accumulating 1 million BTC and holding it for at least 20 years.

Strike founder and CEO Jack Mallers believes that Trump 'might use executive orders to buy BTC', but he warns that this does not mean buying 1 million BTC.

Dennis Porter, co-founder of the non-profit organization Satoshi Act Fund, which supports the US policy bill for BTC, also believes that Trump is exploring the establishment of a strategic BTC reserve through executive order.

Dennis Port announced that Trump is considering an executive order on strategic BTC reserves. Source: Dennis Port

So far, Trump's team has not directly confirmed the claims about the executive order, but when Trump was asked on CNBC whether the United States would establish a BTC reserve similar to its oil reserves (which could mean legislation), he replied, 'Yes, I think so.'

However, executive orders lack stability as subsequent presidents often overturn such orders. The only way to ensure the long-term future of strategic BTC reserves is through legislation supported by the majority.

As the Republican Party dominates Congress and holds only a slim majority in the Senate, BTC supporters within the Trump team have good reason to push for the Lummis bill. However, as long as a few Republican defectors are influenced by progressives' anger, they may block the bill, believing that it would transfer government wealth to BTC holders. Please provide the text to be translated.

Results of the U.S. Senate and House of Representatives elections after the 2024 election. Source: Associated Press

Do not compare this cycle with previous cycles anymore

At the beginning of this month, Alex Krüger, founder of the macro digital asset consulting firm Asgard Markets and economist, said that the election results made him believe that 'BTC is very likely to enter a Supercycle'.

He believes that the unique situation of Bitcoin can be compared to gold. Due to former US President Richard Nixon's announcement of the US abandoning the gold standard, ending the Bretton Woods system, the price of Bitcoin soared from $35 per ounce in 1971 to $850 in 1981.

Kruger does not rule out the possibility of BTC experiencing a bear market as it did in the past. However, he urges cryptocurrency investors not to compare this cycle with previous ones, as this time may be different.

Trump's actions so far undoubtedly indicate that government policies will develop in a favorable direction. After Gary's departure, he nominated Paul Atkins, who supports cryptocurrencies and relaxed regulation, as chairman of the US Securities and Exchange Commission.

He also nominated cryptocurrency advocate Scott Bessent as Treasury Secretary, and appointed former PayPal COO David Sacks as the czar of AI and cryptocurrency, responsible for establishing a clear legal framework for the cryptocurrency industry.

The Supercycle theory has never achieved super results

However, the concept of "this time is different" has appeared in every previous BTC bull market, each time with narratives supporting mainstream and institutional adoption.

During the bull market of 2013-2014, the Supercycle theory gained international attention for its support of BTC as a substitute asset for legal tender.

In the 2017-2018 cycle, the rapid rise in price was seen as a sign adopted by mainstream finance and the start of BTC being accepted by the mainstream. Institutional interest will flourish.

In the 2020-2021 cycle, when technology companies such as MicroStrategy, Square, and Tesla entered the BTC market, they believed that many technology-related companies would follow suit.

The price of BTC has reached peaks and troughs in the previous cycles. Source: Caleb & Brown

However, in each cycle, the narrative of the Supercycle has not materialized, ultimately leading to a sharp price drop and supporters going bankrupt, entering a prolonged bear market. Su Zhu, co-founder of Three Arrows Capital, is the most prominent advocate of the Supercycle theory in 2021. He believes that even without a sustained bear market, the cryptocurrency market will remain bullish, and BTC will eventually reach a peak of $5 million.

3AC did indeed borrow money, just like how the Supercycle theory is true, and when it was finally liquidated, the cryptocurrency market value fell nearly 50% due to the news, leading to lenders such as Voyager Digital, Genesis Trading, and BlockFi going bankrupt and facing financial difficulties.

Therefore, Supercycle is a dangerous theory and should not be used to gamble with your life savings.

For Chris Brunsike, a partner at the venture capital firm Placeholder and former head of blockchain products at ARK Invest, BTCSupercycle is just a myth.

The Supercycle is undoubtedly a collective illusion. Nevertheless, given the support of the U.S. President, the results of the U.S. election have provided unprecedented and extremely bullish conditions for BTC, and the U.S. President seems to be fulfilling his commitment to supporting cryptocurrencies, including never selling the BTC in the U.S. BTC reserves.

Potential Global Domino Effect

If the 'BTC Reserve Act' is passed, it may trigger a global competition to hold BTC, and other countries may also follow suit to avoid falling behind.

George S. Georgiades, a lawyer who switched from providing financing advice to Wall Street companies to serving the cryptocurrency industry in 2016, told Cointelegraph that the introduction of the "BTC Reserve Bill" will mark a turning point in the global adoption of BTC and may "prompt other countries and private institutions to follow suit, promoting wider adoption and enhancing market liquidity."

Basel Ismail, CEO of the cryptocurrency investment analysis platform Blockcircle, agrees and approves that it will be "one of the most exciting events in crypto history" because "it will catalyze a race to acquire as much BTC as possible."

Other countries will have no say, they will be forced to act. Turn or compete, or perish. "Most of the G20 countries, which are the most powerful and economically advanced countries in the world, will follow suit and build their own reserves," he said.

Chris Dunn, a veteran crypto investor and BTC educator, told Cointelegraph that this FOMO-based buying frenzy between countries could revolutionize the current crypto market cycle.

If the United States or other major economic powers start accumulating, BTC may trigger FOMO, which could create a market cycle and supply-demand dynamics that we have never seen before.

OKX Exchange CEO Hong Fang told Cointelegraph that other countries may have already prepared for such a competition.

Game theory may have quietly come into play.

However, Ismael said that most BTC purchases will be conducted through over-the-counter brokers and settled in large trades, so it "may not have a direct impact on the price of BTC", but it will form a lasting demand force, ultimately driving up the price of BTC.

The new wave of cryptocurrency investors may change the dynamics of the cryptocurrency market.

If the country becomes a buyer in the market, the BTC market may undergo fundamental changes. A new wave of investors from global financial centers will pour into the cryptocurrency market, changing market dynamics, psychology, and reactions to certain events.

Nexo analyst Kalchev said that although this legislation may disrupt the well-known four-year Halving cycle of BTC, which is still speculative, there may be several dynamic changes.

BTC is a unique market, driven by retail buying and selling so far, with prices reacting strongly to market psychology. The emergence of new investors may change market dynamics and alter historical cycles.

Ismail believes that "the behavior of investors in the stock market will be different from" the overreacting retail investors. Institutional investors have abundant capital and advanced risk management strategies, which enable them to treat BTC differently from retail investors.

Over time, the involvement of Wall Street will help create a more stable and less reactive market environment. Stability is another way of saying reduced volatility, which logically means that bear markets will not be as intense as in past cycles.

Georgiades believes that "the price cycle will continue", but "continued demand from large buyers such as the US can reduce volatility and the volatility we have seen in past cycles."

At the same time, Ismail pointed out that the performance of the BTC market has been different from the previous four-year cycle. The price of BTC has fallen below the all-time high (ATH) of the previous cycle in the current cycle, 'everyone thought this was impossible', and then set a new all-time high before the official Halving.

The four-year cycle has been exposed and broken many times

So far, BTC has only gone through four Halvings, with nearly thirty Halving events yet to occur. 'It's hard to imagine that all these Halvings will follow the same predictable four-year pattern,' said Carlchev, especially with broader macroeconomic and political factors, such as central bank policies and regulatory developments, having a greater impact on the market trends of BTC.

Kalchev believes that the price trend of BTC will no longer be so influenced by internal mechanisms such as Halving, but more by external factors such as institutional adoption and geopolitical events.

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