Part 8/12:
Why Did the Pattern Break Post-2020?
The COVID pandemic triggered an unparalleled policy response: massive liquidity injections and zero interest rates. This unprecedented easing led to a bubble driven by liquidity rather than supply-side factors. When policymakers pivoted in 2022 to tighten monetary policy—raising rates rapidly and tightening balance sheets—the market crashed. Institutions and leverage imploded, leading to collapses like FTX, Celsius, and Terra.
This timing disrupted the previous pattern. The classic four-year cycle—driven by supply reductions and macro liquidity cycles—failed to manifest during this period. Instead, macro tightening caused severe downward pressure.