My take on how the 4-year Bitcoin cycle changes in a post-ETF era. TLDR: The 3 years up, 4th year crash, halving-based cycle is breaking. We are in a post-ETF regime where price discovery is dominated by CME + ETFs, not offshore perps. Cycles persist, but they're longer, flatter on the way up, sharper but shallower on the way down, and more synchronized with macro liquidity and options positioning than with the halving. What changes in the post-ETF era: 1) Where the price is set - Pre-ETF: offshore perps + retail leverage -> parabolic blow-off tops, then -80% busts. - Post-ETF: CME futures + ETF creations/redemptions + dealer gamma do the heavy lifting. That caps "face-melting" tops and engineers weekend flushes (ETFs closed, dealers hedge via futures). * Authorized participants hedge creations/redemptions with CME futures intraday; dealers use options. * The Net effect: tops get "pinned" near large open-interest strikes, flushes happen on weekends when ETFs are closed and futures/perps can run stops. So "tops get pinned" because rallies often stall beneath the biggest call walls because systematic hedging injects sell pressure right at the breakout level. ETF plumbing shuts down on weekends, so the Monday effect is that when the stock market reopens, ETF flows and AP (Authorized participants) arbitrage come back online, often snapping price back toward fair value after the weekend move. * As ETF AUM grows, dealer gamma around key strikes/quarters caps blow-off tops (they sell into rips, buy dips). When Bitcoin sprints into a strike with large positive dealer gamma, the street's systematic selling into strength adds supply right where momentum needs air, pinning price under/around that level. Same in reverse on dips. * Basis trades (long ETF/spot, short futures) arbitrage dislocations -> fewer parabolas, more mean reversion. When futures trade richer than spot/ETF, funds buy spot (or create/buy ETF shares) and short the corresponding futures to lock in the basis; at expiry the two converge and they harvest the spread. ETFs amplify it: Authorized participants can create/redeem ETF shares against spot, so the long ETF/short futures leg is scalable and precise, making dislocation-arbitrage the standard and not an occasional trade. Net effect: Systematic two-sided hedging compresses basis and injects mean-reverting liquidity, so you get fewer parabolic blow-offs and tighter ranges around fair value. 2) Who holds and how (Post-ETF era) - More advisors/RIAs/401k money -> systematic DCA, less forced selling, but more correlation to real yields/tech. Flows are calendar-driven and benchmark-aware, not reflexive ape/fear. That raises the decision interval (weekly/monthly) and dampens realized volatility (the actual price fluctuations over a specific period). - Real yields, DXY going down is bullish and the inverse is also true. - On-exchange leverage migrates to options overlays and basis trades. Liquidations still happen, but they look like controlled air pockets rather than full implosions. 3) Policy containment - The likely arc (OP_RETURN illegal content scandal -> regulatory clarity -> licensed infrastructure) encourages ETF/custody flows and raises friction on self-custody. That dampens upside reflexivity (fewer "buy + withdraw" feedback loops). * "Upside reflexivity" = a positive-feedback loop where price up -> behavior that tightens supply further -> price up more. * In prior cycles, "buy -> self-custody" tightened exchange float and amplified upside reflexivity. * ETF units don't withdraw, they immobilize coins in custodians. Reflexivity weakens -> smaller upside overshoots. Because ETF buyers purchase shares (and the underlying coins are parked at a custodian while dealers/arbs sell rips and buy dips), the classic "buy -> withdraw -> thin book -> vertical squeeze" loop is muted - upsides overshoot less and mean-revert more. Example: In a self-custody bull market, $1B of demand might chew through an already-thin exchange ask, jump price +3–5%, trigger momentum, and the coins immediately get withdrawn, further thinning the book. In an ETF bull market, $1B hits ETF shares; APs short futures / buy spot gradually to create units, parking Bitcoin at the custodian (Coinbase Trust - yes very trustworthy, if it's named "Trust"). Dealers’ long-gamma hedging sells into the rip. The net result: smaller upside overshoot and faster reversion toward fair value. 4) Halving ≠ clock (in the Post-ETF era) - Halving remains a narrative catalyst but not the scheduler. - Macro liquidity (real rates, USD (DXY), credit spreads) and ETF flows matter more. What the new cycle probably looks like (Managed cyclicality): - 18-30 months of "orderly up", punctuated by policy/liquidity scares (-30% to -55%), followed by "clarity" squeezes. - Peaks are capped by options walls/ETF plumbing, crashes are bought by systematic flows. - Realized volatility declines, weekend wicks persist, Monday gaps normalize. - Draw-downs: Typical big draw-down -35% to -55% (not -80%). - Returns concentrate mostly in buying despair and fading "clarity". - If custody share stagnates while ETFs climb, expect contained tops. Implications of this scenario: - Add only on despair (-25 to -40% swift drops), not during "clarity" spikes. - Expect lower CAGR from Bitcoin than prior cycles. - Do not blindly extrapolate 2013/2017/2021 analogs because the market micro-structure is different now. So yes, cycles continue - but they're not the old halving-clock cycles. Expect a longer, ETF-managed uptrend, capped blow-offs, and engineered flushes keyed to macro and dealer positioning. Let's look at Pre-ETF vs Post-ETF leverage. You probably remember that in previous cycles, when retail plebs overextended with leverage, we got insane price action to the upside, which was then followed by cascade liquidations to the downside. 1) Pre-ETF (offshore perps): - 20-100x retail leverage, reflexive funding squeezes, cascading liquidations drive face-melting blow-off tops and then -70 to -85% busts. 2) Post-ETF (institutional structure): - Leverage migrates to basis (cash-and-carry), dealer options books, marginable-ETF units, and delta-one baskets (derivatives that provide exposure to an asset with a one-to-one price movement). - It's bigger notional, lower directional beta-less explosive upside, faster but shallower draw-downs (-30 to -55%) as hedges kick in. * Bigger notional because the market now runs on ETF AUM + options/futures carry rather than mostly spot on retail exchanges. That's deeper balance-sheet capital (APs, dealers, basis funds) constantly trading billions in notional via creations/redemptions, hedges, and arbs. * "Lower directional beta - less explosive upside" because a larger share of flows is hedged or volatility-sold (covered calls, collars, long-ETF/short-futures basis). Dealers frequently sit long gamma near popular strikes; they sell rips and buy dips, and APs stage creations over time. * "Faster but shallower draw-downs (-30 to -55%) as hedges kick in": 1) Shock hits (macro/headline/weekend): thin liquidity + leverage = quick air-pocket. 2) Hedges fire: basis desks buy back short futures as basis collapses; dealers' long-gamma hedging adds bids on the way down; collars monetize; rebalancers and AP/NAV arbs step in when discounts open. 3) These counter-flows cushion the fall before it snowballs into old-cycle −70% to −85% bear markets. Result: drops start quicker but bottom earlier because mechanical buyers show up by design. In older "buy -> withdraw" regimes, upside reflexivity was huge and downside liquidity thin; in the ETF regime, two-sided hedging and AP arbitrage replace that with mean-reverting flows - they won't stop a crash from starting, but they truncate it. With ETFs, most capital is hedged and arbitraged, so rallies are capped and selloffs snap faster but bottom sooner - think bigger money, smaller parabolas, quicker yet shallower (-30% to -55%) draw-downs as hedges and arbs do their job. Implication: Upside skew is sold, downside tails are managed (until policy shocks). So, is this a controlled volatility decline? Yes it is. - Immobilized float (custody) + option gamma walls + CME hedging = capped rallies and orderly ranges. - Policy "clarity" funnels users to ETFs/treasury companies, raising the market share of the limited volatility range machine. - You still get shocks (headlines, weekend stop-hunts), but the structure pulls price back into the pen. What I foresee: - MoE (Medium of Exchange) stagnation: Payment rails lose mind-share, stable-coins absorb transactions, Bitcoin cements as a supervised SoV (Store of Value) wrapper. - On-chain signals degrade: Lower UTXO velocity; exchange reserves matter less; ETF flow + CME Open interest matter more. - Culture shift: Self-custody cohort shrinks relative to paper holders; regulatory nudges make sovereign usage legally/operationally expensive. - "Buy puke / sell clarity" is going to become systematic. - Don't lever as the structure weaponizes leverage against late longs. In summary: As ETFs accumulate coins, realized volatility declines by design: slower hands, hedged creations/redemptions, and dealer gamma cap the highs and cushion the lows. The market shifts from halving-clock reflexivity to macro + plumbing. The old casino is dead, welcome to the Wallstreet-fuckery era of gold v2.0.