Bitcoin’s Cycle Is Breaking the Pattern – Raising New Questions

Bitcoin is once again defying expectations. Recent volatility has revived familiar “cycle top” narratives, and a new analysis from Tom Lee suggests this market is behaving in ways that sharply diverge from every prior four-year Bitcoin cycle.

The market’s yet to show the exhaustion signals historically associated with major tops. However, multiple structural indicators are flashing a very different message.

From on-chain activity to macro alignment, the current setup appears less like a late-stage peak and more like a cycle still in transition.

On-Chain Activity Is Rising

One of the most notable deviations from past cycles is what’s happening on-chain. Historically, Bitcoin and Ethereum cycle tops have coincided with declining network usage, falling active addresses, and weakening total value locked across major chains.

However, this time the opposite is happening. Indeed, Ethereum addresses, transaction activity, and on-chain usage continue to trend higher, even after sharp price drawdowns.

That divergence matters because prior cycle peaks were marked by speculative excess paired with deteriorating network fundamentals.

Moreover, instead of users leaving, on-chain participation remains strong. This suggests that recent price weakness may be driven by market structure and leverage dynamics.

The Leverage Reset Already Happened

According to Lee, the October 10 selloff flushed more leverage from the system than the November 2022 collapse. Therefore, it pulled forward the pain that typically unfolds later in a cycle.

That matters because prolonged cycle tops are usually preceded by extended periods of excessive leverage that unwind gradually.

On the other hand, this cycle has already experienced a violent leverage reset, clearing speculative positioning early.

Furthermore, with funding rates cooling and open interest declining, the market now looks structurally cleaner.

That might reduce the probability that current volatility represents a classic distribution phase and increases the odds that recent drawdowns were mechanical in nature.

Macro Signals Don’t Confirm a Peak

Finally, macro conditions are failing to confirm a traditional Bitcoin top. Historically, Bitcoin has never peaked without the ISM index rolling over from elevated levels.

Today, ISM has remained below 50 for roughly three years, signaling ongoing economic contraction and not overheating.

Moreover, gold continues to lead the metals narrative, suggesting capital preservation instead of speculative excess to higher-risk metals like Copper.

While volatility remains elevated, the broader data doesn’t yet support the idea that Bitcoin has entered a terminal phase of its market cycle.

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