Strategy: Bitcoin holdings unrealized losses exceed $5 billion, the four-year cycle theory faces a severe test

The gap between Strategy’s Bitcoin holdings cost basis and the current market price is rapidly widening. According to the latest estimates, its unrealized losses have further deepened from last year’s Q4 figures, once exceeding the $5 billion mark.

Since Bitcoin’s peak above $126,000 in October 2025, the price has fallen over 35%. This deep correction is challenging the market’s belief in the traditional “four-year halving cycle.”

Market Volatility

The Bitcoin market is undergoing a severe test, with continuous price declines prompting a reassessment of traditional cycle theories. According to data from the Gate platform, as of February 5, 2026, Bitcoin’s price has dropped to around $69,000.

This price level has dealt a serious blow to publicly traded companies holding large amounts of Bitcoin. Data shows that as of January 25, Strategy held a total of 712,647 BTC, with an average holding cost of approximately $76,037.

Between January 20 and 25, Strategy increased its holdings by about 2,932 BTC at an average price of around $90,000. Currently, Bitcoin’s price has fallen nearly 10% below its average cost basis.

Cycle Confusion

The “four-year cycle” theory for Bitcoin is facing unprecedented challenges. Since the 2024 halving event, the market has not experienced the expected sustained bull run.

Historical data shows that after the halving in 2013, 2017, and 2021, Bitcoin achieved annual gains of 5,500%, 1,300%, and 60%, respectively. However, in 2025, Bitcoin’s annual close declined by about 6%.

This abnormal performance marks the first fundamental crack in the traditional cycle model. Analysts believe that weakening cycle effects are an inevitable result of structural changes in the Bitcoin market.

In the past, the Bitcoin market was mainly driven by retail investors and early adopters, with halving events reducing supply and directly impacting supply-demand balance. Now, institutional investors holding large amounts of Bitcoin through ETFs and other tools have altered the market’s response mechanisms.

Structural Shift

Changes in market structure are a key reason for the failure of traditional cycle models. The emergence of institutional tools like US spot Bitcoin ETFs has locked large amounts of Bitcoin into long-term investment portfolios.

This weakens the direct impact of halving events on circulating supply. Meanwhile, Bitcoin’s market capitalization has surpassed $1.5 trillion, and the absolute reduction in supply per halving is becoming less significant relative to the overall market.

Macroeconomic factors have become the primary drivers of Bitcoin prices. As a global macro asset worth trillions of dollars, Bitcoin’s price movements are increasingly correlated with Federal Reserve policies and global dollar liquidity.

The sharp decline in early February is widely believed to be directly related to macro risks such as escalating tensions in the Middle East and a strengthening dollar. Data shows that on February 1 alone, over $2.5 billion in long positions were liquidated across the network.

Market Divergence

The current market shows clear signs of divergence. On one hand, large holders like Strategy are facing severe tests; on the other hand, behaviors among different market participants vary significantly.

On-chain data indicates that smaller addresses holding fewer than 10 BTC continue to sell, while “whale” addresses holding over 1,000 BTC are quietly accumulating.

Whale holdings have rebounded to levels seen at the end of 2024, indicating that long-term holders are absorbing the panic sell-offs in the market.

Market observations from the Gate platform show that despite overall downward pressure, some niche sectors remain active. For example, projects focused on precious metals contracts, such as Hyperliquid (HYPE), continue to see strong capital inflows recently.

Future Outlook

The Bitcoin market may be transitioning from cyclical fluctuations to a more mature market structure. Declaring the “end” of the four-year cycle might be premature, but it is more accurate to say that it is “evolving.”

Future markets are likely to feature three main characteristics: extended cycle durations, systematically reduced volatility, and increased influence of macro factors.

As market capitalization grows and institutional participation deepens, Bitcoin’s volatility may gradually decrease, with sharp rises and falls narrowing, and cycle durations lengthening.

Investors should devote more effort to analyzing global macroeconomics and monetary policies rather than solely focusing on halving countdowns. Key indicators will include Federal Reserve interest rate policies, fiscal deficit levels, and other macroeconomic variables.

Even during overall market consolidation or downturns, new protocols and applications will continue to generate independent trends in niche sectors. Participants should pay more attention to structural opportunities rather than relying solely on cyclical predictions.

Summary

Market attention is now focused on Bitcoin’s next key support level. $77,000 is not only Strategy’s average cost basis but also a potential test of market confidence.

If Bitcoin falls below this level and continues downward, more leveraged positions could face liquidation risks, intensifying market volatility. Meanwhile, the ongoing accumulation by whale addresses contrasts sharply with retail investors’ selling.

The narrative of the four-year halving cycle is being reevaluated; traditional models can no longer fully explain current market behavior. As Bitcoin’s connection with the global macroeconomy deepens, price volatility will become more complex and multifaceted.

This market correction may not signify the end of the cycle but rather the beginning of a new chapter—a maturing digital asset market driven by institutional capital, macroeconomic factors, and continuous innovation.