Bitcoin Could Crash Another 30% as Cycle Psychology Takes Hold

Your Bitcoin holdings might be about to get a lot smaller. CK Zheng, founder of crypto investment firm ZX Squared Capital, is warning that Bitcoin could crash another 30% this year, and his reasoning cuts straight to the heart of crypto's biggest weakness: human nature.

The Numbers Don't Lie

Bitcoin has already been brutalized. From its record high of over $126,000 in October, it's now trading around $68,000 – nearly a 50% haircut. But according to Zheng, that's just the warm-up act.

"Bitcoin's price is convincingly in deep bear market territory now," Zheng told CoinDesk. "We expect a further 30% price drop during 2026 as the Iran war started."

If he's right, Bitcoin could sink to around $47,000 – a level that would wipe out gains stretching back to early 2021.

The Four-Year Curse

Zheng's prediction hinges on crypto's most talked-about pattern: the four-year cycle. It's built around Bitcoin's halving events, where mining rewards get cut in half every four years. The latest halving happened in April 2024, reducing rewards from 6.25 to 3.125 BTC per block.

Historically, Bitcoin peaks about 16-18 months after each halving, then crashes for roughly a year. October's peak came exactly 18 months post-halving – right on schedule. If the pattern holds, we're now in the brutal descent phase.

Psychology Trumps Technology

Here's what makes this cycle so stubborn: it's not really about the technology anymore. It's about predictable human behavior.

"The 'Four-year crypto cycle' momentum is gaining strength and is extremely difficult to break due to individual investors' psychological behaviors," Zheng explained.

Retail investors buy the hype and sell the panic, over and over again. This behavior doesn't just follow the cycle – it reinforces it, creating a self-fulfilling prophecy that's lasted more than a decade.

The Institution Illusion

For years, the crypto community has pinned its hopes on institutional adoption. BlackRock ETFs, corporate treasuries buying Bitcoin, Wall Street finally "getting it" – surely that would break the cycle?

Not so fast. Zheng points out that crypto ETFs and digital asset treasury companies represent only about 10% of the entire crypto market. That's not nearly enough institutional weight to override retail psychology.

Worse, some of those corporate Bitcoin holders might become forced sellers. "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 warned.