The ongoing decline in bitcoin is once again heightening concerns that the market may be returning to the familiar four-year cycle. However, the research and brokerage company K33 believes that a complete repeat of past bear markets should not be expected.
In a report published late Tuesday evening, head of research at K33 Vetle Lunde noted that bitcoin has fallen by about 40% from its October high. Just last week, the drop was about 11% amid rising global risk-off sentiment.
Although Lunde has long rejected the idea that bitcoin still strictly follows a four-year cycle, back in October he stated that “the four-year cycle is dead, long live the king.” Nevertheless, the current price dynamics, according to him, show “alarming similarities” to the deep sell-offs of 2018 and 2022. This time, price movement is increasingly influenced by market behavior rather than fundamental factors.
At the same time, the analyst emphasizes that the current situation is still different from previous cycles. Among the key factors, he highlights the growth of institutional participation, capital inflows into regulated products, and a softer interest rate environment, which reduces the likelihood of another crash scenario with declines of tens of percent.
BTC price dynamics. Source: The Block Data
Cycle Psychology Faces Bottom-Finding Signals
Lunde noted that the fear of repeating the cycle may eventually become self-fulfilling. While long-term holders are reducing positions and locking in earlier profits, and new capital is in no hurry to enter the market, selling pressure increases. As a result, behavior forms that closely resembles previous decline phases.
And this is happening despite the fact that, according to K33, the backdrop now looks more favorable. This refers to the growth of institutional interest and regulatory support, including multibillion-dollar inflows into exchange-traded products, expanded access for financial advisors, and the launch of crypto services by banks.
Nevertheless, Lunde insists that “this time is different.” He does not expect a drop of 80% from the peak to the bottom over 365 days, as in previous cycles. As arguments, he points to a softer interest rate environment and the absence of large-scale forced liquidation events. It was precisely such factors as GBTC, Luna, 3AC, BlockFi, Genesis and FTX that amplified losses during the 2022 credit crisis.
At the same time, signals are beginning to appear that are traditionally associated with the formation of a market bottom. According to Lunde, on February 2 bitcoin posted a trading session in the 90th percentile for spot volumes. Daily turnover exceeded $8 billion as the price returned to the lows of 2025.
See Also: Solana Holds Near $100, but Pressure Is Growing. Long-Term Investors Are Slowing Activity
In the derivatives market, open interest and funding rates moved into extremely negative territory after a wave of liquidations of long positions totaling about $1.8 billion. Previously, this combination has already coincided with market reversals.
According to Lunde, the simultaneous appearance of these signals, provided that bitcoin holds above key support levels, may indicate the formation of a local bottom.
At the same time, Lunde warns that these signals are far from unambiguous. Similar extreme values for volumes and derivatives have already appeared during false reversals and pauses within downward trends. Therefore, it is too early to talk about a formed and stable bottom. Historically, reversals have more often coincided with even more pronounced spikes in activity, when volumes reached the 95th percentile, he noted.
At the moment, Lunde highlights the area around $74,000 as a key support zone. Breaking this level, in his opinion, could accelerate the decline toward the November 2021 peak around $69,000 or, in a broader horizon, to the 200-week moving average near $58,000.
“Given that BTC returns over the past two years have remained virtually zero, we do not see urgent reasons for long-term holders to sell,” Lunde said.
