Bitcoin is now firmly entrenched in the deepest phase of a bear market, with the potential for further significant declines, according to CK Zheng, founder of crypto investment firm ZX Squared Capital.
Zheng warns that Bitcoin could drop another 30% in 2026, citing the ongoing Iran war and the powerful four-year cycle as key catalysts. The world's largest cryptocurrency has already nearly halved since hitting a record high of over $126,000 in October last year, currently trading around $68,000.
The Four-Year Bitcoin Cycle
Crypto investors often reference the "four-year cycle" – a pattern where prices surge, crash, and then recover, centered around the quadrennial mining reward halving.
The halving, most recently implemented in April 2024, is a programmed event that halves Bitcoin's supply expansion rate every four years. Currently, 3.125 BTC are emitted as rewards for each block mined, down from the original 50 BTC at launch after four halving events.
Historically, Bitcoin's price tends to peak about 16–18 months after a halving, followed by a bear market that typically lasts about a year. With BTC topping out in October last year, roughly 18 months after the April 2024 halving, the cycle appears to be playing out once again.
Zheng emphasizes that this cycle is proving extremely difficult to break due to human psychology. "The 'Four-year crypto cycle' momentum is gaining strength and is extremely difficult to break due to individual investors' psychological behaviors," he explained.
Individual investors tend to behave predictably – buying during hype and selling during panic – which reinforces the boom-and-bust pattern that has defined crypto markets for over a decade. Because of this, Zheng notes that Bitcoin still trades more like a speculative asset than a safe haven like gold.
He also highlights that institutional adoption of Bitcoin remains slow and limited at this stage. Some firms that have purchased Bitcoin as a treasury asset may be forced to sell during this bear market, potentially creating a vicious cycle of selling pressure.
"The total size of crypto ETFs and Digital Asset Treasury companies is only around 10% of the whole crypto market. Some Digital Asset Treasury firms may be forced to sell cryptos to meet certain debt servicing requirements during this bear market, which may create a vicious cycle," Zheng cautioned.
For now, Zheng's outlook is clear: crypto's bear market may have further to run before the next cycle begins.
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