Bitcoin Price Crash: Is the 4-Year Cycle Back?

Bitcoin’s Bumpy Ride: Is the Bear Market Here to Stay?

Vienna – Long-term Bitcoin holders are accustomed to downturns. However, watching the Bitcoin price fall this week, briefly touching $60,000, felt eerily similar to 2022, when the collapse of FTX sent prices plummeting below $16,000. Many had hoped the relatively subdued bull market of the previous year would be followed by a mild bear market. The idea that Bitcoin had matured into a ‘normal’ asset class, with less volatility, hasn’t materialized.

The Four-Year Cycle Returns

Bitcoin’s price, after hitting a record high of $126,000 in October, experienced its worst crash in three and a half years, falling to less than half that value before a partial recovery. This raises a critical question: is Bitcoin re-entering the cyclical bear market that historically occurs every four years? And if so, has the bottom already been reached, given the recent rebound?

The theory that the four-year cycle was broken – that Bitcoin would only rise from now on, with minor corrections – has proven incorrect. Friday’s events weren’t a small correction; they were a crash. This timing aligns perfectly with the four-year pattern. Approximately 18 months after the halving (the quadrennial reduction in the rate of new Bitcoin creation), the peak occurred, followed by a decline. This pattern was observed in 2014, 2018, and 2022, although the underlying causes remain unclear.

In the past, it took about a year to reach the bottom of these bear markets. If history repeats itself, investors should prepare for several more months of significant fluctuations and falling prices before the next bull market begins. The quick recovery on Friday doesn’t signal the end of the downturn; similar rebounds occurred during previous bear markets after steep declines.

Timing the Bottom: A Fool’s Errand?

Pinpointing the exact bottom is incredibly difficult. Bear markets are characterized by rapid price swings, and false rallies are common. A more prudent approach is regular investment, rather than attempting to time the market. While the price is likely closer to a low than a high, further declines are still possible.

Why the Correction?

Many investors are questioning the severity of the correction, given that the recent price increase wasn’t as dramatic as in previous cycles. Between 2013 and 2017, the price increased nearly twentyfold before the bear market began, whereas between 2021 and 2025, it didn’t even double. Enthusiasm was limited, with many investors disappointed by the partial fulfillment of crypto-friendly promises from the US government. Recently, Finance Minister Scott Bessent clarified that the government wouldn’t purchase Bitcoin or encourage banks to do so.

However, the last cycle saw a surge in new investors entering the market through ETFs, lowering the barrier to entry for Bitcoin investment. These investors were the first to sell, with billions withdrawn from Bitcoin ETFs in recent days. Some investors holding leveraged positions were also forced to liquidate. Bitcoin’s strong correlation with technology stocks, and the recent cooling of the AI hype, contributed to the sell-off. Concerns about a restrictive monetary policy following the nomination of Kevin Warsh as the future Fed Chair also weighed on the market.

How Low Could It Go?

Previous bear markets saw declines of 70 to 80 percent, suggesting further downside potential. However, a short-term bottom and a subsequent rebound are also possible, especially given the recent “extreme fear” in the market – often a sign that selling pressure is exhausted.

New Investors, New Dynamics

Many new investors, hoping for quick profits, are experiencing their first bear market. If they lose faith in Bitcoin as a store of value, the recovery could be prolonged. Bitcoin’s scarcity and resistance to arbitrary inflation, unlike traditional currencies, doesn’t guarantee price stability.

Like gold, which has served as a store of value for millennia, Bitcoin is limited in supply. However, Bitcoin is better suited for transactions over long distances or for small amounts. The question remains: can something so volatile truly be a store of value? The answer is nuanced: not in the short term, but potentially in the long term. Gold also experiences significant fluctuations, with decades-long periods of stagnation. The crash of 1980 wasn’t surpassed for 27 years.

As an inflation hedge, gold is only effective over the long term. It’s unwise to invest money needed for immediate expenses, like rent, in either gold or Bitcoin. While gold has historically protected against inflation and diversified stock portfolios, Bitcoin is a younger, more volatile asset that has delivered higher returns over the past decade. However, it has also experienced a more severe crash. Given its similar monetary properties (scarcity, divisibility, portability), it may eventually behave like gold. Until then, expect further volatility.

The Network Endures

Those who bought Bitcoin hoping for quick gains, or used leverage, experienced the most significant pain during the recent crash. Bitcoin has been declared “dead” 461 times, according to the Bitcoin Obituaries Tracker. Despite the ETF outflows, companies like Fidelity and Blackrock have invested billions in Bitcoin infrastructure and aren’t likely to retreat simply because of a finance minister’s misstep. The Bitcoin network continues to operate without failures or censorship, remaining the only fully decentralized monetary system. A new block is created every ten minutes.

Frequently Asked Questions (FAQ)

Is Bitcoin in a bear market? Yes, recent price declines and historical patterns suggest Bitcoin is currently in a bear market.
How long will this bear market last? Historically, Bitcoin bear markets have lasted around a year, but this can vary.
Should I sell my Bitcoin? That depends on your investment strategy and risk tolerance. Consider dollar-cost averaging instead of trying to time the market.
Is Bitcoin still a good investment? Bitcoin remains a potentially valuable long-term investment, but it is highly volatile and carries significant risk.

Pro Tip: Diversification is key. Don’t put all your eggs in one basket, especially with a volatile asset like Bitcoin.

Did you know? Bitcoin has been declared “dead” over 460 times, yet it continues to operate and evolve.

What are your thoughts on the current Bitcoin market? Share your insights in the comments below! Explore our other articles on cryptocurrency investing and blockchain technology to stay informed.