Bitcoin Cycle Bottoming and the Restructuring of the Financial System: Regulatory Maturity, Asset Tokenisation, and the New Decade for Digital Assets

Executive Summary

In October 2025, Bitcoin reached an all-time high of approximately $125,689 following the most recent halving cycle, before entering what has historically been a characteristic cyclical correction phase. As of June 2026, Bitcoin has declined to a low of approximately $59,100, representing a peak-to-trough drawdown of approximately 53% — materially below the 77% to 87% maximum drawdowns recorded across the preceding three bear markets. Based on historical cycle analysis, a further correction cannot be excluded.

However, as the global digital asset regulatory architecture transitions from an exploratory phase to an institutionalised phase, market uncertainty is declining significantly. Regulatory clarity is expected to continue driving institutional capital allocations into digital asset markets. At a macro level, the digital asset market is undergoing a historic structural transformation — from speculation-driven to institution-driven and application-driven — a process that may ultimately reshape the operating architecture of the global financial system.

This report provides a systematic analysis of Bitcoin's four-year halving cycle theory, the evolution of global digital asset regulatory frameworks, and the development trajectory of Real World Asset (RWA) tokenisation, drawing on historical data to assess the current state and structural outlook of digital currency markets.

I. Bitcoin's Four-Year Cycle Theory and Analysis of the Current Market Correction

Since Bitcoin's inception in 2009, one of the most representative long-term structural regularities in Bitcoin markets has been the four-year cycle formed around the block reward halving (Halving) mechanism. Under the Bitcoin protocol, a halving event occurs approximately every 210,000 blocks, causing the rate of new Bitcoin issuance to decline periodically, thereby creating a supply contraction mechanism. Historical evidence suggests that a new bull market peak typically emerges within 12 to 18 months following each halving, after which the market enters a bear market correction phase lasting approximately 12 months.

Each cycle is structured around Bitcoin's halving mechanism: the halving reduces new supply, which — in conjunction with demand dynamics — generates a bull market, followed by overheating market sentiment, valuation expansion, and leverage accumulation, ultimately culminating in a bear market correction. From 2013 and 2017 through to 2021, Bitcoin has consistently followed this pattern, establishing the 'four-year cycle theory' as an important analytical framework for observing digital asset markets.

In April 2024, Bitcoin completed its fourth halving. Following the historical cycle pattern, the period approximately 12 to 18 months post-halving typically corresponds to the formation of a cycle peak. In October 2025, Bitcoin's price reached a high of $126,272, representing a significant appreciation from pre-halving levels and marking the entry into the staged peak zone of the current bull cycle. The market subsequently entered a cyclical correction phase; as of June 2026, Bitcoin has declined to a low of approximately $59,100, representing a peak-to-trough drawdown of approximately 53%.

In absolute terms, a 53% drawdown would already represent a substantial correction for traditional asset classes. However, viewed within Bitcoin's historical cycle context, this decline is materially below the magnitude of previous bear markets. During the 2014 bear market, Bitcoin fell from $1,163 to $152, a maximum decline of 87%. The 2018 bear market saw a decline from $19,891 to $3,122, a drawdown of approximately 84%. The 2022 bear market saw Bitcoin fall from $69,000 to $15,476, a decline of approximately 77%. Historical data thus reveals a clear secular trend of progressively narrowing drawdown amplitudes across successive bear markets.

Bitcoin markets are gradually transitioning from a phase primarily driven by sentiment and speculation, toward a mature market structure whose core drivers are asset allocation flows and macroeconomic capital movements.

The core explanation for this 'drawdown narrowing' is not simply a difference in cycle strength, but rather a systemic migration in market participation structure — that is, Bitcoin is progressively transitioning from a 'retail-dominated market' toward an 'institution-dominated market'. In early cycles, price movements were primarily driven by retail capital flows, leveraged trading, and sentiment dynamics, making extreme oscillations and high-magnitude collapses more probable. Over the past several years, however, market structure has changed materially.

• The launch of spot Bitcoin ETFs has enabled pension funds, insurance capital, registered financial advisers, and family offices to gain exposure through compliant channels, allowing long-duration capital to enter markets systematically
• An increasing number of publicly listed companies have added Bitcoin to their balance sheets as a long-term reserve asset, significantly raising the proportion of 'passively held capital' in the market — capital characterised by low turnover and stronger long-term allocation conviction, creating a natural buffer during market downturns
• Institutional investors operate under more rigorous risk management frameworks and exercise greater restraint in the use of leverage, further reducing the price collapse effect triggered by extreme liquidity contractions

Consequently, a key structural characteristic of Bitcoin markets is gradually taking shape: declining volatility and converging cyclical drawdown amplitudes. This development does not imply the disappearance of cyclicality; rather, it signifies that the market is progressively transitioning from a phase primarily driven by emotion and speculation, toward a mature market structure whose core drivers are asset allocation and macroeconomic capital flows.

II. Estimating the Bottom Price Range for the Current Bitcoin Cycle

Based on historical cycle analysis, further downside adjustment in the current cycle cannot be excluded. Applying a 60% drawdown scenario from the $126,272 peak implies a price of approximately $50,500. A 65% drawdown scenario implies approximately $44,000. Even under the more pessimistic 70% drawdown scenario, the implied price is approximately $37,800.

Taking into account both the secular narrowing of bear market drawdowns across the preceding three cycles and the materially elevated institutional participation in the current cycle, the cycle trough may establish at least within the $45,000 to $55,000 range. This zone not only corresponds to the outputs of historical drawdown model projections, but also approximates the long-term cost basis of a significant cohort of institutional investors, thereby conferring meaningful structural support. That said, the possibility of a more severe correction in Bitcoin cannot be excluded.

Major Global Corporate Bitcoin Treasury Holdings — Cost Basis (as of June 2026)

The table above illustrates that Strategy (formerly MicroStrategy), as the world's largest corporate Bitcoin treasury, holds in excess of 845,000 BTC at an average cost basis of approximately $75,000 to $76,000 per BTC. The all-in mining costs of mining companies Marathon Digital Holdings and Riot Platforms fall within the $40,000 to $65,000 range, which itself provides a degree of market support logic for price levels above $50,000. Japan's Metaplanet, having entered the market at scale at a later stage, carries an average cost basis of approximately $90,000 to $100,000 per BTC and is currently positioned in an unrealised loss zone.

III. The Institutionalisation of the Digital Asset Regulatory Architecture

For digital asset markets, the most consequential development at present is not price volatility per se, but the ongoing maturation of the regulatory framework. Over the past decade, the greatest obstacle constraining the development of digital assets has not been technology, but regulatory uncertainty. In the absence of a well-defined regulatory architecture, market participants have been unable to clearly establish whether digital assets constitute currency, commodity, security, or some other novel asset class — and this legal ambiguity has meaningfully curtailed the appetite of large institutional capital to enter the market. Since 2024, the world's major economies have begun accelerating the construction of digital asset regulatory frameworks.

United States: ETF Institutionalisation + Stablecoin and Market Structure Legislation

The US institutionalisation process since 2024 has centred primarily on market access and asset classification — constructing an institutional on-ramp for digital assets and establishing them as a configurable, standard macro asset class.

• 10 January 2024: The US Securities and Exchange Commission (SEC) formally approved the first cohort of spot Bitcoin ETFs (including products from BlackRock and Fidelity), marking Bitcoin's formal entry into mainstream asset allocation frameworks
• 2024–2025: The US Congress continued advancing the Clarity for Digital Tokens Act (in draft) and the Stablecoin Regulation Framework (in draft)
• 2024–2025 ongoing: The Digital Asset Market Structure Bill entered congressional deliberation
• Regulatory logic evolution: The SEC and CFTC are progressively developing a division of regulatory responsibility; Bitcoin is increasingly treated within a commodity-type regulatory framework, while Ethereum has progressively moved toward treatment as a non-security commodity and infrastructure asset in regulatory practice

Europe: MiCA Enters Full Force

The European Union is the first major economy to have completed systematic digital asset legislation. The full implementation of MiCA significantly reduces regulatory fragmentation risk and provides a legal foundation for the cross-border issuance of RWA assets.

• April 2023: The European Union formally adopted the Markets in Crypto-Assets Regulation (MiCA)
• 30 June 2024: MiCA provisions relating to stablecoins formally entered into force
• 30 December 2024: MiCA became fully applicable to Crypto-Asset Service Providers (CASPs)

Japan: Payment Services Act Amendment + Stablecoin Legalisation

Japan has adopted a gradualist legislative approach to digital asset regulation and is among the first major economies globally to define a clear 'statutory issuance pathway' for stablecoins, while providing a highly compliant environment for institutional-grade digital asset pilots.

• June 2023: Japan enacted the Payment Services Act Amendment
• Implementation from June 2024: Banks, trust companies, and registered institutions were formally permitted to issue stablecoins
• The Financial Services Agency (FSA) has continued to strengthen exchange licensing frameworks and asset custody regulatory rules

Australia: Digital Asset Platform Regulatory Framework Legislation

Australia has adopted an 'embedded regulation' approach, integrating digital assets within the existing financial regulatory framework, and strengthening the capacity of pension funds and long-duration capital to participate.

• March 2024: The Australian Treasury published the Digital Asset Platform Consultation Paper
• 2024–2025: Progress toward incorporating digital asset platforms within the Corporations Act regulatory framework
• ASIC has strengthened platform licensing and custody regulatory rules

Global Regulation Entering Institutional Convergence Phase

The overall evolution since 2024 can be summarised across three structural dimensions:

• Accelerated legislation: Landmark events including MiCA (passed 2023, implemented 2024), US spot Bitcoin ETF institutionalisation (10 January 2024), and Japan stablecoin legalisation (June 2024) have formally embedded digital assets within legal frameworks
• Clarified asset classification: Bitcoin is progressively being institutionally classified as a commodity/reserve asset; Ethereum is progressively transitioning in practice toward a non-security commodity and infrastructure asset
• Institutional capital channels fully opened: ETFs, custody infrastructure, and banking system access have enabled digital assets to migrate from a 'fringe market' toward a 'configurable mainstream asset class'

Taken in aggregate, the global digital asset regulatory landscape is transitioning from a phase of fragmented experimentation into an institutional convergence phase, providing foundational legal and financial infrastructure support for the scaled development of RWA and on-chain finance.

IV. Asset Tokenisation (RWA): The Next Phase of Digital Financial Development

As the regulatory framework progressively matures, Real World Asset (RWA) tokenisation is emerging as the most important development direction for the digital asset industry in the next phase. Where market attention has historically centred primarily on crypto-native assets, the core theme for the coming decade may shift toward the on-chain migration of real-world assets.

Asset tokenisation refers to the use of blockchain technology to convert real-world assets — including real estate, equities, bonds, private fund interests, and infrastructure project income rights — into on-chain digital certificates that can circulate and trade globally. In essence, RWA does not create new assets; rather, it reconstructs the issuance, trading, settlement, and custody mechanisms for existing assets. The analogy is instructive: just as the internet transformed the distribution of information, blockchain may transform the flow of capital and ownership. Through tokenisation, traditional assets can achieve higher liquidity, lower transaction costs, and broader investor access. RWA is therefore widely regarded as an important bridge connecting the traditional financial system with the digital financial system.

At present, the world's major financial institutions have already begun positioning in this space. Tokenised US Treasury product volumes continue to grow, several international banks have launched on-chain settlement pilots, and global asset managers are exploring the tokenised issuance of fund interests, private equity, and real estate assets.

Asset tokenisation will become one of the most important structural variables in the global financial system over the next decade. Its growth logic does not depend on any single technological innovation, but rather is driven by the convergence of financial infrastructure upgrades, improvements in the regulatory framework, and the optimisation of efficiency across global capital markets.

Institutional RWA Market Size Projections

According to Citi Research, the global asset tokenisation market could reach approximately $8.2 trillion by 2030. This projection is based on assumptions regarding the progressively increasing proportion of global financial assets migrating on-chain, particularly an acceleration of penetration rates in bonds, funds, and structured financial products.

The long-term model published by Ripple forecasts that the tokenisation of real-world assets will grow from approximately $0.6 trillion in 2025 to approximately $18.9 trillion by 2033, implying a compound annual growth rate (CAGR) of approximately 53% over the period. The core assumption of this model is the progressive adoption of payment infrastructure and on-chain clearing systems, endowing tokenised assets with stronger practical circulatory capability, rather than remaining solely at the issuance level.

Binance Research holds that the tokenised real-world asset (RWA) market is at an early inflection point and may enter an exponential growth cycle within the coming years. Its forecast range indicates that global tokenised asset volumes could reach $1.6 trillion to $4.8 trillion by 2030 under base-case assumptions. Under a more aggressive scenario — in which tokenised assets achieve large-scale application within payment and clearing systems — market volumes could potentially exceed $28.8 trillion.

From the perspective of industry infrastructure and regulatory evolution, as the Monetary Authority of Singapore (MAS) and other institutions advance the standardisation of asset tokenisation frameworks, industry expectations broadly anticipate that 2026 may represent a critical inflection point for RWA development. Under the combined effect of unified regulatory frameworks and increasing financial institution participation, tokenised assets are expected to progress from a 'pilot application phase' into a 'scaled expansion phase', occupying an increasingly important position across global capital markets.

From a macro-financial structural perspective, the essence of RWA is not merely asset on-chaining — it represents a fundamental reconstruction of the operating mechanisms of capital markets. On one hand, the asset issuance model will progressively transition from centralised financial intermediaries toward automated issuance systems driven by on-chain smart contracts. On the other hand, asset trading and settlement will transition from multi-tier clearing structures toward near-real-time settlement systems, significantly reducing systemic risk and credit friction costs.

In the course of this transition, the role of digital asset markets will also undergo a structural change. Core crypto assets such as Bitcoin and Ethereum will no longer exist merely as standalone asset classes, but will progressively become embedded within the global asset tokenisation architecture. Bitcoin will increasingly serve a macro reserve asset and value-anchoring function, while Ethereum and related smart contract networks are more likely to become the underlying infrastructure and settlement layer for RWA operations.

In aggregate, asset tokenisation is driving the digital asset industry's transformation from a 'crypto-native asset market' toward 'global financial digitalisation infrastructure.' Its long-term impact may substantially exceed the oscillation of any single crypto cycle, and more closely resembles a gradual structural reconstruction of the underlying architecture of the financial system.

V. How RWA Reshapes the Value Logic of Bitcoin and Ethereum

The implications of this trend differ meaningfully for Bitcoin and Ethereum. For Bitcoin, the development of RWA will enhance the legitimacy and market acceptance of the broader digital asset industry, thereby indirectly reinforcing its store-of-value attributes. For Ethereum, the development of RWA implies that an increasing volume of assets will be issued, traded, and settled on-chain, directly expanding network utilisation demand and value capture capacity. Accordingly, viewed through a long-term lens, Bitcoin has the potential to become the reserve asset of the digital era, while Ethereum may evolve into the infrastructure platform of the digital financial era.

RWA's Reshaping of Bitcoin's Value Logic: Redefining Bitcoin from Risk Asset to Global Reserve Asset

Within the traditional crypto market framework, Bitcoin's price has been primarily driven by three factors: market liquidity cycles, halving supply shocks, and risk appetite shifts. In the context of continuous RWA expansion and institutional capital growth, however, this logic is being fundamentally reconstructed.

First, the development of RWA has materially strengthened the connectivity between digital asset markets and traditional financial markets. As tokenised government bonds, money market funds, and structured financial products progressively migrate on-chain, the blockchain system is gradually becoming a supplementary system for global asset pricing and settlement. This process enhances the institutional credibility of the entire digital asset market, enabling Bitcoin to progressively transition from a 'crypto-native risk asset' toward a 'cross-market value-anchoring asset.'

Within this structure, Bitcoin does not directly participate in the cash flow generation of RWA, nor does it perform a credit expansion function. Nevertheless, its role in the asset system becomes more clearly defined: it serves as the 'non-sovereign value reserve asset' of the entire digital asset architecture. This positioning is analogous to the re-pricing process gold underwent following the collapse of the Bretton Woods system, as its value derivation gradually shifted from industrial utility and short-term speculative demand toward demand for hedging against monetary system uncertainty.

Second, the institutional capital expansion brought about by RWA will further reinforce Bitcoin's long-term holding attributes. As the scale of tokenised assets expands, a large number of traditional financial institutions, in constructing on-chain asset portfolios, will require a high-liquidity, low-credit-risk, cross-cycle-stable underlying asset as a risk hedging instrument. Within this framework, Bitcoin progressively assumes a role analogous to a 'Digital Benchmark Asset', where its price volatility persists but marginal pricing power is increasingly derived from macroeconomic liquidity and global risk appetite, rather than from internal capital rotation within crypto markets.

Therefore, viewed from the evolutionary path of value logic, RWA will not meaningfully enhance Bitcoin's 'utilisation demand', but will materially increase its 'reserve demand', thereby driving its asset attributes further toward those of a macro-financial asset.

RWA's Reshaping of Ethereum's Value Logic: From a Public Chain Asset Toward Global Financial Infrastructure

If RWA's impact on Bitcoin can be characterised as 'functional convergence and reinforcement', then its impact on Ethereum is best characterised as 'functional expansion and amplification.' Ethereum's central position within the RWA architecture derives from the 'programmable financial infrastructure' constructed through its smart contract capabilities. As real-world assets progressively migrate on-chain, the processes of asset issuance, transfer, fractionalisation, collateralisation, and liquidation will increasingly depend on smart contract systems — and Ethereum and its extended networks represent one of the most mature execution layers currently available.

In the course of continuous RWA expansion, Ethereum's value capture mechanism is undergoing a fundamental change: its value is no longer primarily dependent upon crypto-native applications such as DeFi and NFTs, but is instead progressively binding to the global asset circulation scale. This implies that Ethereum's network value will transition from a 'transaction-activity-driven model' toward an 'asset-stock-driven model.'

Specifically, as the scale of tokenised government bonds, tokenised money market funds, and on-chain private assets expands, the total value of financial assets operating on the Ethereum network (TVA — Total Value of Assets) will become the core variable of its long-term value. Under this logic, Ethereum is more closely analogous to a 'global settlement layer asset' than a pure technology platform asset.

Simultaneously, the development of RWA will also drive the Ethereum ecosystem's progression from an 'open financial experimentation system' toward an 'institutional financial execution system.' As regulatory frameworks become more clearly defined, large financial institutions are increasingly inclined to select networks with stronger neutrality and greater ecosystem maturity as the underlying infrastructure for asset issuance and settlement — a dynamic that will further strengthen Ethereum's network effects within the on-chain financial system.

Therefore, viewed from a long-term structural perspective, Ethereum's value logic is transitioning from 'application-layer-driven' toward 'financial infrastructure-driven', and its valuation framework will progressively migrate from a technology growth-type asset toward a financial network-type asset.

Risk Factors

• Cycle risk: Historical patterns do not guarantee future repetition; Bitcoin may still experience declines exceeding historical drawdown magnitudes. Scenarios of 70% or greater corrections should not be excluded
• Regulatory risk: The global regulatory institutionalisation process carries uncertainty; the legislative timeline in major economies may experience reversals or delays, particularly in the US Congress
• Liquidity risk: Should the macro liquidity environment tighten sharply, institutional capital may periodically exit digital asset markets, exacerbating price volatility
• Technology risk: Large-scale RWA application is dependent on the security and scalability of blockchain infrastructure; smart contract vulnerabilities and on-chain system risks warrant ongoing attention
• Market structure risk: Increased institutionalisation does not equate to the elimination of volatility; concentrated holding risks (e.g. large-scale liquidation by treasury companies) may still trigger liquidity shocks
• Competitive risk: Ethereum faces competition from other Layer 1 and Layer 2 networks in the RWA infrastructure space; market share fragmentation remains a credible scenario

What We Are Watching

• Whether Bitcoin forms durable support within the $45,000–$55,000 range
• Legislative progress of the US Digital Asset Market Structure Bill and the final delineation of SEC/CFTC regulatory responsibilities
• Evolution of institutional capital inflow volumes into EU markets following MiCA implementation
• Quarterly RWA tokenised asset volume (TVA) growth data, particularly progress in government bond and fund interest tokenisation
• Changes in Bitcoin holdings by Strategy and other major treasury companies
• Publication timeline for the Monetary Authority of Singapore (MAS) asset tokenisation standards framework
• Growth trajectory of total on-chain financial asset value (TVA) on the Ethereum network

Conclusion

Taking Bitcoin's cyclical dynamics, the construction of the regulatory framework, and the development trajectory of asset tokenisation together, digital asset markets are entering a new phase of development. The primary factors that drove market appreciation in the past were liquidity and market sentiment; the core forces that will drive industry growth in the future will derive from institutional framework development, institutional capital participation, and genuine financial demand. The digital asset industry is progressively evolving from a 'speculative market' into a 'financial market', and from 'technology experimentation' toward 'infrastructure construction.'

Looking back from the vantage point of mid-2026, current markets may well be positioned at the starting point of a new cycle of industry advancement. Should regulatory frameworks continue to mature, institutional capital continue to flow in, and asset tokenisation expand rapidly in the years ahead, what the digital asset market will experience will not merely be another bull-bear cycle, but a long-term transformation in the digital reconstruction of the global financial architecture. At that point, what Bitcoin and Ethereum represent may no longer be limited to cryptocurrencies themselves, but rather constitute important components of the next generation of global financial infrastructure.