Bitcoin’s four-year price cycle is commonly attributed to halvings, but a competing macro framework known as the Everything Code argues that global liquidity and debt cycles are the real driver of crypto and broader market behavior.
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Overview: Two Explanations for Bitcoin’s Repeating Cycles
Since Bitcoin’s creation in 2009, its price has followed an approximate four-year rhythm: accumulation, expansion, euphoria, and correction. Historically, these cycles have aligned closely with the halving schedule, where the block reward for miners is cut in half every 210,000 blocks (roughly every four years).
However, as Bitcoin has matured and become integrated into the broader financial system, its cycles increasingly correlate with global liquidity – the expansion and contraction of money and credit across economies. This has led some analysts, including Raoul Pal and Julien Bittel of Global Macro Investor (GMI), to argue that Bitcoin’s 4-year rhythm is not just coded into its protocol, but synchronized with global macro liquidity waves.
The result: two lenses through which to view Bitcoin’s cycles – one crypto-native and one macro-global – each partially explaining the same pattern from different angles.
The Bitcoin Halving Hypothesis
Definition and Mechanism
Every 210,000 blocks, Bitcoin’s block subsidy halves – reducing the amount of new BTC miners receive for verifying transactions.
- 1st halving (2012): reward cut from 50 → 25 BTC
- 2nd halving (2016): 25 → 12.5 BTC
- 3rd halving (2020): 12.5 → 6.25 BTC
- 4th halving (2024): 6.25 → 3.125 BTC
This hard-coded reduction limits Bitcoin’s new supply (the “flow”) while total supply approaches a fixed cap of 21 million BTC. The logic is simple: if demand remains steady or rises while new issuance drops, prices should trend upward.
Causal Chain
- The halving reduces miner revenue and new BTC entering circulation.
- With fewer coins available for sale, marginal sell pressure declines.
- Market participants anticipate the supply shock, buying in advance.
- A post-halving supply squeeze, combined with investor optimism, fuels a bull run.
- The rally eventually overshoots, leading to correction and consolidation until the next halving.
Empirical Evidence
Historically, this model aligns well with Bitcoin’s long-term chart:
- 2012 halving → 2013 rally: price rose from ~$12 to ~$1,100.
- 2016 halving → 2017 rally: price climbed from ~$650 to nearly $20,000.
- 2020 halving → 2021 rally: price surged from ~$9,000 to ~$69,000.
Each halving has preceded a major bull market, typically peaking 12–18 months later.
Strengths
- Mechanically verifiable – enforced by Bitcoin’s code.
- Predictable schedule creates a strong narrative anchor.
- Explains Bitcoin’s historical rhythm and investor psychology.
Limitations
- The absolute reduction in new BTC becomes smaller as total supply grows; the effect is less pronounced over time.
- It doesn’t explain synchronized moves in other markets (stocks, bonds, commodities).
- It’s vulnerable to “narrative reinforcement” – the belief that price must rise simply because it did before.
The Everything Code Framework
Definition and Mechanism
The Everything Code is a macroeconomic model developed by Raoul Pal and Julien Bittel of Global Macro Investor (GMI). It argues that GDP growth = population growth + productivity growth + debt growth, and since population and productivity are slowing globally, economies now depend on debt expansion and liquidity creation to sustain growth.
This dependence makes asset prices – from equities to Bitcoin – cyclical and liquidity-sensitive. The GMI team summarizes the causal chain as:
Financial Conditions → Liquidity → ISM (business cycle) → Asset Prices
In this model, the rhythm of markets arises not from Bitcoin’s code, but from central bank policy, debt refinancing cycles, and liquidity injections that ripple across all risk assets.
Causal Chain (Simplified)
- Slowing demographics and productivity force governments to rely on debt-driven growth.
- To manage debt burdens, central banks adjust liquidity (through QE/QT, repo, and balance sheet tools).
- Liquidity expansion leads to easier financial conditions and higher risk appetite.
- Liquidity contraction tightens credit, slows growth, and reduces asset prices.
- Bitcoin and other risk assets respond directly to liquidity flows – not just internal events.
Empirical Evidence
- Since 2008, major Bitcoin rallies have coincided with global liquidity expansions (e.g., 2013, 2017, 2020).
- The 2021 cycle ended early because liquidity peaked in March 2021 and contracted throughout 2022.
- GMI reports that Bitcoin’s correlation with global liquidity indices exceeds 90%, similar to tech equities.
Strengths
- Explains synchronization across asset classes – Bitcoin, equities, bonds, and commodities.
- Provides measurable macro indicators (liquidity indices, ISM data) to forecast turning points.
- Fits observed deviations from the halving model, such as the truncated 2021 cycle.
Limitations
- Requires composite liquidity models, which vary by methodology.
- Macro causality can be complex and hard to isolate.
- Timing precision is lower than a fixed halving schedule.
How Each Explains the 4-Year Cycle
FeatureBitcoin HalvingThe Everything CodeCore MechanismSupply reduction every ~4 yearsLiquidity expansion and contraction driven by debt cyclesPrimary DriverBitcoin’s coded scarcityCentral bank and Treasury liquidity managementScopeBitcoin-specificCross-asset (crypto, stocks, bonds, commodities)Empirical PatternRallies occur ~12–18 months after halvingRallies occur during liquidity expansionsPredictabilityExact block scheduleForecastable via liquidity and ISM trendsMain WeaknessIgnores macro liquidity and demandComplex modeling and less precise timingBehavioral ImpactStrong retail narrative and self-reinforcingInstitutional-level liquidity positioningFeatureCore MechanismBitcoin HalvingSupply reduction every ~4 yearsThe Everything CodeLiquidity expansion and contraction driven by debt cyclesFeaturePrimary DriverBitcoin HalvingBitcoin’s coded scarcityThe Everything CodeCentral bank and Treasury liquidity managementFeatureScopeBitcoin HalvingBitcoin-specificThe Everything CodeCross-asset (crypto, stocks, bonds, commodities)FeatureEmpirical PatternBitcoin HalvingRallies occur ~12–18 months after halvingThe Everything CodeRallies occur during liquidity expansionsFeaturePredictabilityBitcoin HalvingExact block scheduleThe Everything CodeForecastable via liquidity and ISM trendsFeatureMain WeaknessBitcoin HalvingIgnores macro liquidity and demandThe Everything CodeComplex modeling and less precise timingFeatureBehavioral ImpactBitcoin HalvingStrong retail narrative and self-reinforcingThe Everything CodeInstitutional-level liquidity positioning
Both frameworks predict roughly multi-year cycles. The difference lies in why they occur. The halving offers a supply-side clock, while The Everything Code describes the liquidity tide that moves all markets simultaneously.
Interaction: How the Two Theories Overlap
In practice, the halving and liquidity cycles likely interact. Halvings set a structural rhythm for Bitcoin’s issuance, while liquidity determines whether that rhythm produces a major rally or a muted phase.
- 2017 cycle: Halving (2016) coincided with global liquidity expansion → strong bull market.
- 2021 cycle: Halving (2020) began amid record liquidity, but tightening later in 2021 ended the rally early.
- 2024 cycle: Halving (2024) began amid renewed liquidity expansion after 2025 debt rollovers, suggesting potential for a more extended, macro-aligned bull market.
The halving provides the spark; liquidity provides the fuel.
Practical Takeaways for Investors
- Use both frameworks together. Halving schedules can guide long-term positioning, while liquidity indicators (financial conditions, ISM, global M2) help time market entries and exits.
- Monitor macro data. Central bank balance sheets, Treasury issuance, and debt maturity calendars often signal major liquidity shifts.
- Expect diminishing halving impact. As Bitcoin matures, liquidity and adoption may dominate future cycle behavior.
- Recognize behavioral feedback. Market participants expecting halving-driven rallies can create self-fulfilling buying patterns – magnified or muted by liquidity trends.
Risks and Limitations
- Halving risks: overreliance on past patterns and neglect of macro shifts.
- Liquidity risks: model uncertainty and potential data lags.
- Macro shocks: wars, inflation spikes, or policy shifts can override both frameworks.
- Narrative overconfidence: assuming one framework fully explains market behavior leads to misinterpretation of cycles.
Both theories capture parts of reality – neither offers perfect foresight.
Conclusion
The Bitcoin Halving Hypothesis and The Everything Code explain the same four-year rhythm from two complementary perspectives. The halving defines Bitcoin’s internal supply cadence – a predictable reduction that underpins long-term scarcity. The Everything Code defines the global liquidity regime – the external ocean in which Bitcoin’s cycle unfolds.
For investors and researchers, the synthesis is clear:
- The halving is the structural heartbeat of Bitcoin.
- Liquidity is the blood pressure of the global financial system.
When both align, Bitcoin experiences its most powerful expansions. When they diverge, the cycle can shorten, flatten, or stall.
In 2026, as liquidity expands again following major debt rollovers, both frameworks suggest favorable macro conditions – but only time will reveal whether the four-year rhythm remains as precise as the code that inspired it.
