Bitcoin could fall another 30%
The bitcoin price is convincingly in deep bearish territory right now. We expect a further 30% decline in the price through 2026 due to the outbreak of war in Iran, wrote Zheng, founder of crypto investment firm ZX Squared Capital, in an email to CoinDesk, citing the “four-year cycle” as one of the key catalysts.
The world’s largest cryptocurrency has already nearly halved since hitting a record high of over $126,000 last October. At the time of writing, it was trading at around $68,000.
Bitcoin’s four-year cycle
Cryptocurrency investors often talk about the “four-year cycle,” a pattern in which prices rise sharply, fall, and then recover, due to the halving of the reward for mining every four years.
Halving, most recently in April 2024, is a programmed event that halves the rate of bitcoin supply growth every 4 years. To date, 3.125 BTC has been issued for the reward for each block mined on the Bitcoin network, down significantly from the original 50 BTC at launch after the four halving events that have taken place to date.
Historically, the bitcoin price typically peaks about 16-18 months after a halving, followed by a bear market lasting about a year.
BTC hitting its peak last October, about 18 months after the April 2024 halving, means the cycle is repeating itself. Hence, the bear market could deepen in the near future.
Psychological factor
Zheng stated that this cycle is proving to be very difficult to overcome. According to him, the reason is simple: human psychology.
“The driving force behind the ‘four-year cryptocurrency cycle’ is gaining momentum and is extremely difficult to interrupt due to the psychological behavior of individual investors,” Zheng said.
Individual investors tend to behave predictably – buying during hype and selling during panic. This behavior reinforces the four-year cycle of ups and downs that has defined cryptocurrency markets for more than a decade.
For this reason, Zheng noted that bitcoin still trades more like a speculative asset than a safe haven like gold.
He added that institutional adoption of bitcoin at this stage remains very slow and limited in scope, and warned that some companies that have purchased bitcoin as a treasury asset may be forced to sell it, leading to a deeper decline in price.
“The total amount of crypto-ETFs and companies with digital assets in reserves is only about 10% of the entire crypto market. Some companies with digital assets in reserves may be forced to sell cryptocurrencies to meet certain debt service requirements in this bear market, which could create a vicious cycle,” Zheng said.
For now, Zheng’s prediction is clear: the cryptocurrency bear market may continue before the next cycle begins.
