The 4-Year Crypto Cycle Is Over! What Next?

AI disrupted the natural rhythm of the 4-year crypto cycle during a period when the market was already bracing for an economic downturn?

Normally, when the economy weakens → the Fed cuts interest rates → businesses borrow more, → growth returns → crypto rallies.

And then when the economy overheats → inflation rises → the Fed raises rates → everything cools down → the cycle resets.

This pattern has repeated for decades and is the foundation behind crypto’s historical boom-and-bust cycles.

In 2022, right as the Fed raised rates to slow the economy, the expected economic downturn didn’t fully play out, but the rise of AI boosted productivity and corporate earnings just enough to counteract the slowdown.

Perhaps the AI boom also played a part in drawing people’s attention away from everything else.

Instead of the economy dipping into the weakness needed for rate cuts, the AI boom - driven almost entirely by the tech sector, held things up.

This kept rates higher for longer, delayed liquidity, and ultimately disrupted the timing of the 4-year crypto cycle.

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⚡ Why This Economic Downturn Could Spark a Delayed 2026 Super Cycle

As the Magnificent 7 kept exploding in value, they began dominating the entire US market to an insane degree. Today, those seven companies make up more than half of the S&P 500’s total weight.

But this created a new problem: Because AI was pumping so much strength into the tech sector, the broader economy never reached that “sweet spot of weakness” the Fed normally waits for an economic downturn before cutting rates.

→ The AI boom masked the slowdown everywhere else, so the Fed had to delay rate cuts far longer than usual.

And without those rate cuts, businesses outside the AI bubble couldn’t access the cheap loans they needed to hire, build, or expand again. Crypto felt this even harder.

So instead of a retail-driven bull run powered by cheap money, crypto had to rely on institutional inflows and slightly friendlier US regulatory conditions to push prices up. That’s why the 4-year crypto cycle felt slower, heavier, and far more “controlled” than the last three.

As inflation spiked in 2022, the Fed raised rates aggressively. If you look at the ISM Manufacturing Index next to BTC, manufacturers immediately cut back on spending because loans got too expensive, which is why ISM dropped sharply.

If you pay attention, you’ll notice that Bitcoin $BTC.X ( ▼ 3.18% ) peaks have always happened during periods of very low interest rates, usually around 1%.

But right now, rates are still high at around 4% and have only just started to show signs of coming down. That means there’s still plenty of room for upside once rates fall further.

AI entered the scene at the same time, injecting enough economic strength to counteract the slowdown. This forced the Fed to keep rates elevated much longer, blocking crypto from getting its usual low-rate tailwind.

BTC still grew, but only because institutional capital flowed in through ETFs, not because of a classic liquidity-driven 4-year crypto cycle.

So the deeper the current economic downturn becomes, the higher the probability that we finally get the rate cuts the cycle has been waiting for.

⚡ Key Takeaway

• AI disrupted the natural rhythm of the 4-year crypto cycle by preventing the economy from weakening enough for the Fed to cut rates, even though the market was already heading into an economic downturn.

• The Fed’s usual playbook didn’t trigger, because the AI boom boosted productivity and corporate earnings just enough to offset the slowdown, keeping rates higher for longer and delaying liquidity.

• The Magnificent 7 became so dominant that their AI-driven growth masked weakness across the rest of the economy, stopping the Fed from reaching the “sweet spot” for rate cuts.

• Crypto couldn't rely on cheap money this cycle, so instead of a retail-driven bull run, the market was carried by institutional inflows through ETFs and regulatory tailwinds.

• Historical BTC peaks align with low interest rates, but today’s rates are still around 4 percent, meaning there’s significant upside potential once cuts begin.

• AI indirectly forced the Fed to stay hawkish, which blocked the classic liquidity wave that normally powers mid-cycle expansions in the 4-year crypto cycle.

• The deeper the economic downturn gets, the higher the chance the Fed finally cuts rates, creating the delayed liquidity event that could set up a powerful 2026 supercycle.

⚠ This newsletter is for informational purposes only and should not be considered investment advice. Traders should conduct thorough research, understand the risks, and carefully evaluate their decisions before investing in cryptocurrency.

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