TL;DR
- Cycle Anxiety: Bitcoin’s 40% pullback is reviving fears of a return to past four‑year cycle patterns, with recent price action showing similarities to the 2018 and 2022 sell‑offs.
- Institutional Backdrop: K33’s Vetle Lunde argues this cycle is different due to institutional inflows, regulated products, and an easing rate environment, reducing the likelihood of an 80% drawdown.
- Support and Signals: Bottoming indicators such as high spot volume and extreme negative funding rates are flashing, but remain inconclusive.
Bitcoin’s latest pullback is stirring renewed anxiety across the market, with traders increasingly worried that price action is drifting back toward the familiar rhythm of past four‑year cycles. Yet research firm K33 argues that despite the sharp decline, the structural backdrop differs meaningfully from earlier bear markets, reducing the likelihood of another extreme collapse.
Rising Concerns as Bitcoin Extends Its Decline
K33 Head of Research Vetle Lunde noted that Bitcoin has now fallen roughly 40% from its October peak, including an 11% slide last week amid heightened global risk aversion. He acknowledged that recent behavior shows unsettling similarities to the deep sell‑offs of 2018 and 2022, where market psychology overwhelmed fundamentals. Although Lunde previously declared that the four‑year cycle was no longer a defining force, he said current price action is reviving echoes of those earlier downturns.
Despite the mounting fear, Lunde emphasized that today’s environment differs from prior cycles due to stronger institutional adoption, expanding regulated product inflows, and an easing rate backdrop. Billions of dollars have flowed into exchange‑traded products, advisor access continues to widen, and banks are rolling out crypto‑related services. Even so, he warned that fear of a cycle repeat can become self‑fulfilling as long‑term holders trim exposure and new capital hesitates to enter, creating selling pressure that mimics past declines.
Bottoming Signals Emerge but Remain Inconclusive
Several indicators commonly associated with market bottoms have begun to flash. On Feb. 2, Bitcoin logged a 90th‑percentile spot trading day with more than $8 billion in volume as prices revisited 2025 lows. Derivatives markets also saw open interest and funding rates plunge into extreme negative territory following roughly $1.8 billion in long liquidations. Lunde said this combination has aligned with reversals in the past, though he cautioned that similar extremes have appeared during false starts and mid‑trend pauses.
Lunde identified $74,000 as a critical support zone. A break below it could accelerate downside momentum toward the November 2021 peak near $69,000 or even the 200‑week moving average around $58,000. Still, he maintains that an 80% drawdown is unlikely, citing the absence of forced deleveraging events that fueled the 2022 collapse. With BTC nearing a flat two‑year return profile, he sees no urgency for long‑term holders to sell and views current prices as attractive for patient investors.
