Investment Firm Predicts Bitcoin Could Plunge 30% Amid Bear Market
By John Nada·Mar 7, 2026·5 min read
Investment firm ZX Squared Capital warns Bitcoin could drop another 30% in 2026, citing cyclical patterns and slow institutional adoption as key factors.
Bitcoin is firmly entrenched in a deep bear market and may see a further 30% decline in 2026, according to CK Zheng, founder of ZX Squared Capital. The prediction comes as the cryptocurrency has nearly halved from its record high of over $126,000 in October last year, now trading around $68,000. Zheng attributes this potential drop to the ongoing four-year price cycle and external geopolitical factors, particularly the Iran war.
The four-year cycle, a well-documented phenomenon among crypto investors, suggests that Bitcoin's price tends to peak approximately 16–18 months after a halving event, followed by a sustained bear market lasting about a year. With the most recent halving occurring in April 2024, Bitcoin's peak in October aligns with the historical pattern, indicating that the current downturn may have further to run. Zheng noted that the psychological behavior of individual investors—buying during market hype and selling in panic—reinforces this cycle, making it difficult to deviate from established trends.
The current market environment is particularly challenging for Bitcoin investors. The cryptocurrency has faced significant selling pressure, with many investors experiencing losses. Data from Glassnode indicates that approximately 43% of Bitcoin's supply is now at a loss, which creates additional selling pressure during rallies. This situation is compounded by macroeconomic factors, such as the strengthening U.S. dollar, which has posted its steepest weekly gain in a year, further weighing on risk assets like Bitcoin.
Institutional adoption of Bitcoin remains sluggish, according to Zheng, which compounds the issue. He pointed out that only about 10% of the entire crypto market is comprised of crypto ETFs and Digital Asset Treasury companies. This limited institutional involvement is significant because it suggests that many potential investors remain on the sidelines, waiting for more favorable market conditions before committing capital.
Moreover, some firms that have added Bitcoin to their treasury may be compelled to sell in response to liquidity demands, potentially exacerbating the price decline. Zheng's outlook highlights that the current bear market could persist until the next cycle begins, raising questions about the longer-term stability of Bitcoin as a speculative asset rather than a safe haven like gold.
The four-year Bitcoin cycle is rooted in the mechanics of Bitcoin mining and its reward structure. The halving event, which occurs every four years, reduces the rewards miners receive for validating transactions on the Bitcoin network. This halving effectively decreases the rate at which new Bitcoin is introduced to the market, creating a supply shock that historically leads to price increases. However, this increase is often followed by significant corrections, as seen in previous cycles.
Zheng emphasizes that the psychological behaviors of individual investors play a crucial role in perpetuating the four-year cycle. Historically, investors tend to buy during periods of market optimism, driven by the fear of missing out (FOMO), and then panic-sell during downturns, which further extends the bear market. This predictable pattern of behavior contributes to the cyclical nature of Bitcoin's price movements.
As the current bear market progresses, some analysts are paying close attention to the broader economic landscape, particularly the geopolitical tensions in the Middle East, which Zheng identified as a significant external factor influencing Bitcoin's price. The ongoing Iran war has introduced a layer of uncertainty that could impact investor sentiment and market dynamics. The correlation between geopolitical events and Bitcoin's price movements is increasingly recognized, as investors often turn to cryptocurrencies during times of economic instability.
The sluggish pace of institutional adoption is another critical factor affecting Bitcoin's market performance. While there has been some progress, such as the introduction of Bitcoin futures and ETFs, the overall participation from institutional investors remains limited. Zheng's assertion that only 10% of the crypto market is composed of crypto ETFs and Digital Asset Treasury companies underscores the cautious approach many institutional players are taking. Many firms are still assessing the regulatory landscape and market volatility before committing significant resources to Bitcoin.
Additionally, the liquidity concerns that Zheng highlights are particularly relevant in the current market environment. Some firms that invested in Bitcoin as a treasury asset may now face financial pressures that require them to liquidate their holdings. This potential sell-off could create a vicious cycle, further driving down Bitcoin's price as more firms are forced to sell to meet liquidity needs. As the market grapples with these challenges, the outlook for Bitcoin remains uncertain.
Despite the challenges, some optimists in the cryptocurrency space argue that the long-term fundamentals for Bitcoin remain strong. They point to its scarcity, with only 21 million Bitcoins ever to be mined, and its growing acceptance as a form of digital gold. However, as Zheng points out, Bitcoin continues to trade more like a speculative asset than a safe haven. This distinction is crucial for investors to consider as they navigate the current market conditions.
Looking ahead, the potential for Bitcoin to decline another 30% raises significant questions about the future of the cryptocurrency market. If Zheng's predictions hold true, the implications for individual investors and institutional players alike could be profound. The current bear market could serve as a stark reminder of the volatility inherent in the cryptocurrency space and the importance of risk management strategies.
As Bitcoin approaches the next halving event in April 2024, many investors will be closely monitoring market trends and developments. The historical pattern suggests that the next bull run may not occur until after the halving, which could mean that the bear market has further to run before a potential recovery begins. Investors will need to remain vigilant and adaptable in the face of evolving market conditions.