Bitcoin’s price has dropped by nearly 50% from its October all-time high, raising concerns about the re-emergence of the four-year market cycle. However, K33 Research believes that the current market structure reduces the likelihood of an 80% drop (as seen in the previous cycle).
Lunde had previously stated in October that "the four-year cycle is over," but recent price movements have reminded investors of the sell-off periods in 2018 and 2022. This time, however, investor behavior—rather than market fundamentals—is having a stronger influence on the price. The current conditions differ from previous cycles due to factors such as institutional investments, increased funds in regulated products, and accommodative interest rates.
Fears of the four-year cycle reoccurring may prompt long-term holders to reduce their positions, while new investors might hesitate to enter. This could increase selling pressure, although the market now has stronger support, including billions of dollars in ETF investments, greater access to advisors, and crypto services offered by banks.
Some bottom-level indicators have also started to emerge. In the derivatives market, open interest and funding rates have dropped to negative levels, linked to roughly $1.8 billion in long liquidations. This situation aligns with previous bear market trends and price reversals.
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