Bitcoin has dropped approximately 40% from its October 2025 peak, with a sharp 11% weekly decline amid renewed global risk aversion. The selloff has revived fears of the classic four-year cycle pattern, reminiscent of the deep bear markets in 2018 and 2022. However, K33 Research's latest report argues that the current environment has fundamentally changed, making a deep bear market unlikely.
Four-Year Cycle Fears Surface
The four-year cycle theory, tied to Bitcoin's halving events, has long served as a market rhythm. Recent price retracements coupled with long-term holder selling and cautious new capital inflows have created a self-fulfilling cycle reminiscent of past downturns. Vetle Lunde, Head of Research at K33, noted in a February report that market sentiment is driving price action, not fundamentals, sparking cycle anxiety among investors.
Key Structural Differences: This Time Is Different
Despite surface similarities, Lunde highlighted significant structural changes. Institutional adoption is at an all-time high, with billions flowing into Bitcoin ETPs, expanded advisor channels, and banks launching crypto services. Additionally, the interest rate environment is looser, lacking the forced deleveraging events seen during the 2022 credit crisis. Lunde had declared the four-year cycle dead as early as October 2025, arguing that institutionalization and regulatory tailwinds have ushered Bitcoin into a new structural phase. He explicitly ruled out an 80% correction, citing the absence of systemic risks that amplify losses.
Bottom Signals Emerge, But Caution Warranted
The report points to several classic bottom indicators flashing positive. On February 2, spot trading volume surged above $8 billion, while derivatives open interest and funding rates entered deeply negative territory alongside approximately $1.8 billion in long liquidations. Such combinations have historically preceded price reversals. Lunde suggests that with Bitcoin holding support, these signals imply a bottom may be forming. However, he cautioned that similar extremes have also occurred during false breakouts or mid-cycle consolidations; true reversals historically require even more extreme volume. Key support lies near $74,000; a breakdown could accelerate a fall to the November 2021 high of $69,000 or further to the 200-week moving average near $58,000. Lunde concluded that with Bitcoin's returns nearly flat over the past two years, long-term holders face no urgent selling pressure. If support holds, current levels present an attractive entry point for long-term investors.