Bitcoin may drop another 30% as the four-year cycle strengthens, according to an investment firm

Bitcoin May Drop Another 30% as Bear Market Deepens, Investment Firm Warns

Bitcoin has entered what some analysts describe as the most severe stage of its current bear market, and further losses may lie ahead, according to CK Zheng, founder of crypto investment firm ZX Squared Capital.

Zheng believes the largest cryptocurrency could fall an additional 30% in 2026, pointing to the ongoing conflict involving Iran and the persistent influence of bitcoin’s historical four-year market cycle.

“Bitcoin’s price is clearly in deep bear market territory,” Zheng said in an email to CoinDesk. “We expect another 30% decline during 2026 as the Iran war unfolds.”

Bitcoin has already dropped significantly from its peak. After reaching an all-time high above $126,000 in October last year, the asset has lost nearly half of its value. At the time of writing, bitcoin was trading at roughly $68,000, according to CoinDesk data.

The Role of Bitcoin’s Four-Year Cycle

Many crypto investors closely watch the so-called four-year cycle, a recurring pattern where bitcoin prices surge, eventually peak, and then enter a prolonged downturn. The cycle is closely tied to the bitcoin halving — a scheduled event that cuts the reward for mining new blocks in half roughly every four years.

The most recent halving occurred in April 2024, reducing the block reward to 3.125 BTC. When bitcoin first launched, miners received 50 BTC per block, but the reward has steadily declined through four halving events.

Historically, bitcoin tends to reach its peak roughly 16 to 18 months after a halving takes place. That peak is usually followed by a bear market lasting about a year before the next recovery phase begins.

Because bitcoin reached its latest high in October — around 18 months after the April 2024 halving — the pattern appears to be repeating once again. If the historical cycle continues, the downturn could deepen before the next recovery begins.

Investor Behavior Reinforces the Cycle

Zheng argues that the four-year cycle persists largely because of investor psychology.

“The four-year crypto cycle is becoming stronger and extremely difficult to break because of the behavioral patterns of individual investors,” he said.

Retail investors often buy into markets during periods of excitement and rising prices, then sell when panic sets in during downturns. This behavior amplifies the boom-and-bust rhythm that has characterized crypto markets for more than a decade.

As a result, Zheng believes bitcoin still trades primarily as a speculative asset rather than as a traditional safe-haven asset like gold.

Institutional Adoption Still Limited

While institutional participation in the crypto market has grown in recent years, Zheng said it remains relatively small compared with the broader market.

He estimates that the combined size of crypto ETFs and companies holding bitcoin on their balance sheets represents only about 10% of the overall crypto market.

Zheng also warned that some companies that purchased bitcoin as a treasury asset could face pressure to sell if market conditions worsen. Firms carrying debt obligations might be forced to liquidate crypto holdings to meet repayments, which could accelerate downward price pressure.

“The total size of crypto ETFs and digital asset treasury companies is only around 10% of the entire crypto market,” Zheng said. “Some of these firms may have to sell crypto assets to meet debt servicing requirements during this bear market, potentially creating a negative feedback loop in prices.”