Recent analyses coming out of the cryptocurrency investment industry are quite interesting, and discussions about Bitcoin’s 4-year cycle in particular stand out. Based on what Cindy Zheng, the founder of ZX Squared Capital, recently said, the bear market we are going through could deepen more than we might think.

Right now, Bitcoin is trading at around $71,800, which is nearly a half drop from its all-time high of $126,000 recorded last October. Cindy Zheng’s analysis suggests there’s a possibility it could fall an additional 30% further this year.

The core of this analysis is Bitcoin’s 4-year cycle pattern. Mining rewards are halved every four years, and centered on that halving period, cycles have repeatedly played out in which the price first surges sharply and then crashes. The fact that a peak was reached about 18 months after the April 2024 halving also aligns exactly with this pattern. Historically, the market tops 16 to 18 months after the halving, and then a bear market continues for about another year.

What Zheng finds particularly interesting is how difficult it is to break this cycle. Ultimately, she attributes it to human psychology. Individual investors generally move in predictable ways: they buy during periods of overhype and sell when panic sets in. With this kind of behavior repeating for more than 10 years, the cycle of 4-year booms and busts has fallen into a self-reinforcing vicious loop.

Because of this, Cindy Zheng says Bitcoin is still treated not as a safe asset like gold, but as a speculative asset. That means institutional investors’ adoption is currently very limited. In fact, the size of companies that hold crypto ETFs and digital assets is only about 10% of the overall market.

One more problem could be that, during this bear market, some companies may have to sell off their holdings in order to repay certain debts. If that happens, the vicious cycle could be further intensified. Zheng’s conclusion is clear: it’s likely the bear market could continue deeper before the next cycle begins. In the short term, it looks like it will be a pretty challenging market.