K33 Analysis: The four-year cycle of Bitcoin's sharp declines is unlikely to recur, as institutional waves bring stability and opportunities

According to Gate Market Data, as of February 5, 2026, Bitcoin’s price has fallen back to around $70,334.3, down 7.49% from the previous trading day, with a market trading volume of $1.65 billion. The market seems to be once again caught in the familiar and unsettling “four-year cycle” shadow—a pattern that has historically accurately predicted significant corrections in the crypto market multiple times.

However, Vetle Lunde, Head of Research at K33, offers a different perspective in his latest report. He believes this time is different and unlikely to repeat the past cycles with peak-to-trough declines of up to 80%, mainly due to increased institutional adoption, regulatory product inflows, and a loose interest rate environment.

Market Panic

The Bitcoin market is currently in a sentiment-sensitive phase. Data shows that Bitcoin’s current price is $70,334.3, with a market cap maintaining at $1.56 trillion. This figure has dropped about 40% from last October’s all-time high of approximately $125,000, with an 11% decline just in the past week.

This downward trend has sparked concerns about the re-emergence of the “four-year cycle.” The so-called “four-year cycle” theory suggests that Bitcoin markets go through a complete cycle from euphoria to collapse roughly every four years. Historical bear markets in 2018 and 2022 exhibited similar price decline patterns, ultimately erasing over 80% of market value.

Cycle Debate

Disagreements over the four-year cycle theory are deepening among Bitcoin analysts, with differing assessments of the current market state.

Deutsche Bank’s Marion Laboure team, in a report on February 4, pointed out that Bitcoin is undergoing a painful transition from a purely speculative asset to an institutionalized asset, marking the end of the so-called “Little Hero Effect”—a phase where speculation driven solely by faith is retreating. This transition causes price pain but is a necessary step toward market maturity.

Technical analysts focus on specific price levels. Citigroup analyst Alex Saunders noted that Bitcoin has broken below the average entry price for US spot ETFs at $81,600 and is approaching the pre-U.S. election level of around $70,000. Key support zones are set near $74,000; if this level is breached, downside risks could intensify, with targets possibly at $69,000 or even $58,000 (near the 200-week moving average).

Historical Comparison

The current market situation differs structurally from past cycles, with increased institutional participation being one of the most significant changes.

Unlike previous declines, this time there has been no forced deleveraging event triggering systemic market crashes, such as with GBTC, Luna, or FTX. This structural stability is attributed to higher institutional adoption, continuous inflows into regulated products, and a loose interest rate environment.

Market bottom signals are also beginning to appear. On February 2, Bitcoin recorded over $8 billion in high-volume spot trading, while derivatives open interest and funding rates entered extreme negative zones. After about $1.8 billion in long liquidations in derivatives markets, open interest and funding rates both fell into extreme negative territory. These signals, combined with prices still above support levels, may indicate that the market is attempting to bottom out.

Institutional Wave

Institutional capital flows have become a key driver of Bitcoin prices. A Grayscale report shows that US spot Bitcoin ETFs attracted $1.7 billion in inflows during the first three days of January 2026. This shift has changed Bitcoin’s trading dynamics, making it more akin to macro assets rather than niche alternative investments. From a bull market perspective, steady ETF inflows can absorb sell pressure that previously could have destroyed Bitcoin during cycles.

However, this structural change also introduces new challenges. If ETF demand slows or institutional funds shift elsewhere, Bitcoin may no longer have the instinctive buy support from retail investors as before. The market structure has fundamentally changed, with Bitcoin maintaining about 59% dominance, even as small- and mid-cap assets fail to sustain previous gains.

Diverging Predictions

Major institutions have provided markedly different forecasts for Bitcoin’s future, reflecting varied assessments of multiple factors.

Standard Chartered has significantly revised its Bitcoin price target for the end of 2026 downward from $300,000 to $150,000, reflecting a reassessment of institutional inflow speeds.

Meanwhile, other institutions’ forecasts range from $75,000 to $225,000, highlighting extreme market uncertainty. Bernstein’s latest report states that the crypto market remains in a short-term bear cycle but expects a reversal within 2026, with Bitcoin bottoming near the previous cycle’s high of around $60,000. Tiger Research is more optimistic, setting a Q1 2026 target of $185,500 based on a baseline valuation of $145,000 and a +25% macro factor adjustment.

Rational Observation

Market sentiment indicators show the Crypto Fear & Greed Index has fallen to about 15 points, indicating “Extreme Fear,” close to the low of 10 points on November 10, 2025. Investor positioning data reveal that active Bitcoin supply increased to 37% in Q4 of last year, while long-dormant supply slightly decreased.

Long-term, Bitcoin is undergoing a difficult transition from “faith-driven” to “value-anchored.” Deutsche Bank notes that despite recent sharp declines, Bitcoin is still up about 370% from early 2023. The current correction mainly reflects the retracement of speculative gains over the past two years rather than a fundamental collapse.

In the face of a winter of market volatility, some worry about the recurrence of the four-year curse, while institutions like K33 believe this cycle is fundamentally different. According to K33’s analysis, although Bitcoin has broken below the $74,000 key support, which could accelerate downward movement, they do not expect a crash similar to 2018 or 2022. Instead, they see current prices as an attractive entry point for long-term investors.

Standard Chartered analyst Geoff Kendrick used a clever metaphor: “Investors should see this period as a ‘cold wind,’ not a ‘crypto winter.’” As the market gradually digests excessive speculation, true value investors may be seeking opportunities during this adjustment cycle.