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While cobalt-based catalysts have been used in industrial Fischer-Tropsch synthesis for decades, little is known about how the dynamics of the Co-Co₂C phase transformation drive their performance. Here we report on the occurrence of hysteresis effects in the Fischer-Tropsch reaction over potassium promoted Co/MnO_xcatalyst. Both the reaction rate and the selectivity to chain-lengthened paraffins and terminally functionalized products (aldehydes, alcohols, olefins) show bistability when varying the hydrogen/carbon monoxide partial pressures back and forth from overall reducing to carbidizing conditions. While the carbon monoxide conversion and the selectivity to functionalized products follow clockwise hysteresis, the selectivity to paraffins shows counter-clockwise behavior. In situ X-ray diffraction demonstrates the activity/selectivity bistability to be driven by a Co-Co₂C phase transformation. The conclusions are supported by High Resolution Transmission Electron Microscopy which identifies the Co-Co₂C transformation, Mn₅O₈layered topologies at low H₂/CO partial pressure ratios, and MnO at high such ratios.