Why Bitcoin Dropped: Understanding the Four-Year Cycle and Current Market Pressures

Bitcoin has experienced a significant decline from its record highs, currently trading around $70.76K after reaching an all-time high of $126.08K in October 2024. But the reasons behind why bitcoin dropped extend far beyond immediate market news. According to CK Zheng, founder of crypto investment firm ZX Squared Capital, the world’s largest cryptocurrency is caught in the grip of a predictable pattern that has defined digital assets for over a decade.

The core reason why bitcoin dropped recently relates to a phenomenon known as the four-year cycle—a recurring pattern that has shaped cryptocurrency markets since Bitcoin’s inception. Understanding this mechanism provides clarity on both the current downturn and future price movements.

The Four-Year Cycle: Bitcoin’s Inevitable Pattern

Bitcoin operates on a roughly four-year boom-and-bust rhythm centered around a programmed event called the mining reward halving. This halving automatically reduces Bitcoin’s supply expansion rate every four years, with the most recent occurring in April 2024. Since Bitcoin’s launch, the network has undergone four such halving events, progressively reducing mining rewards from the original 50 BTC to the current 3.125 BTC per block.

Historically, Bitcoin’s price follows a predictable trajectory within this cycle: it typically peaks approximately 16 to 18 months after a halving event, followed by an extended bear market lasting roughly one year. The October 2024 peak—occurring roughly 18 months after April’s halving—demonstrates this pattern holding true once again. This explains why Bitcoin dropped significantly from its record high, and why further declines may continue through the current market phase.

The Psychology Driving Why Bitcoin Dropped

The persistence of Bitcoin’s four-year cycle reveals something fundamental about market dynamics: human behavior. Individual investors tend to operate in predictable patterns—buying aggressively during periods of euphoria and panic-selling during downturns. This psychological rhythm reinforces the boom-and-bust pattern, making it remarkably difficult to break.

According to Zheng, the cycle has proven nearly impossible to disrupt because it’s hardwired into investor behavior. As retail participants experience recurring gains and losses, they internalize expectations about the four-year pattern and act accordingly, perpetuating the very cycle they hope to escape. This explains why why bitcoin dropped isn’t just a matter of external events, but rather a systemic feature of how cryptocurrency markets operate.

Crucially, this behavioral pattern means Bitcoin continues to trade as a highly speculative asset rather than a stable store of value like gold. Institutional adoption remains limited—cryptocurrency ETFs and Digital Asset Treasury companies represent only about 10% of the total crypto market. This limited institutional presence means the market remains dominated by retail psychology rather than fundamental valuation, sustaining the cyclical volatility.

Market Vulnerabilities and Cascading Risks

The current bear market phase exposes additional vulnerabilities. Some companies that accumulated Bitcoin as a treasury asset face potential forced liquidations to meet debt servicing requirements. Such forced selling could trigger a vicious cycle of declining prices and additional liquidations, potentially driving Bitcoin significantly lower.

Zheng’s forecast of an additional 30% decline in 2026 reflects these compounding risks. While Bitcoin has already fallen by approximately 44% from its October 2024 peak, the current market phase may have further downside potential. This explains not just why Bitcoin dropped initially, but why the decline may persist—market structure itself contains the seeds of deeper losses.

Current Market Status and the Path Forward

As of March 2026, Bitcoin trades at $70.76K with a 24-hour gain of 3.50%, suggesting some stabilization from the deepest bear market lows. Yet this recent resilience doesn’t fundamentally alter the macro cycle. Instead, it represents minor pullbacks within a larger downtrend—a common occurrence during extended bear markets.

The timing of why bitcoin dropped aligns perfectly with historical precedent. We’re approximately 18 months past the April 2024 halving, placing us squarely within the expected bear market window. Based on historical patterns, this phase could persist for several more months before the cycle begins transitioning toward recovery.

Understanding why Bitcoin dropped requires recognizing that these cycles aren’t aberrations—they’re core features of how Bitcoin markets function. Until institutional adoption reaches levels where fundamental valuations guide pricing rather than retail sentiment, the four-year pattern will likely persist. For investors navigating this downturn, the key takeaway is that today’s decline isn’t unusual or unexpected; it’s part of Bitcoin’s predictable rhythm.