Fidelity Digital Assets suggests that Bitcoin’s market dynamics have evolved to the point where the traditional four-year boom-bust cycle—along with the steep 80% declines that typically accompanied it—might no longer be the expected outcome.
In a research note dated February 24, titled “Is Bitcoin’s Four-Year Cycle Over?”, analyst Zack Wainwright emphasizes a critical observation: Bitcoin has transformed into a much larger asset class with a distinct buyer demographic. As of October 2025, Fidelity estimates Bitcoin’s market capitalization reached approximately $2.5 trillion, indicating improved liquidity and more consistent volatility compared to previous cycles.
Shifts in Bitcoin Demand
Fidelity’s argument regarding volatility relies on a year-on-year analysis of realized volatility, examining its patterns relative to cycle peaks. Historically, a consistent trend emerged: volatility would decrease leading up to major price surges, then expand as the market became overheated.
However, Fidelity claims that this compression is occurring sooner after the peak this time. The research notes 17 all-time lows in one-year realized volatility were recorded in January 2026—just months after Bitcoin set new all-time highs in October 2025, marking a significant deviation from earlier cycles. This shift is partly attributed to Bitcoin’s increased scale, with its market cap now around double that of the peak in 2021 and over 200 times that of 2013.
A key factor in this new demand landscape is the entities holding Bitcoin. Fidelity highlights a group of 49 public companies, each holding more than 1,000 BTC, with total holdings exceeding 1 million BTC, which is over 5% of the circulating supply. This group has consistently increased their holdings since Q1 2020, except for one quarter in 2022 when Tesla sold a significant portion of its assets.
On the exchange-traded fund (ETF) front, Fidelity mentions that U.S. spot Bitcoin ETFs launched in January 2024 collectively held nearly 1.3 million BTC as of January 30, 2026, accounting for roughly 6.4% of the circulating supply. The leading ETF in this category surpassed $75 billion in assets in less than two years, a pace much quicker than gold’s flagship ETF, GLD, which took almost seven years to reach the same benchmark.
Overall, Fidelity reports that public companies and ETFs collectively hold close to 12% of the circulating Bitcoin supply, with the most significant growth occurring after 2023—a shift in demand that could significantly impact potential drawdowns. The research underscores that Bitcoin’s cycle appears “notably stable,” with various indicators showing less extreme volatility compared to prior cycles.
