The global cryptocurrency market is currently grappling with a significant downturn as Bitcoin enters what many experts describe as a deep bear market phase. After reaching an unprecedented all-time high of over $126,000 in October 2025, the flagship digital asset has seen its value nearly sliced in half. As of early 2026, the price of Bitcoin is hovering around the $68,000 mark, leaving many investors wondering if the bottom is in or if more pain is on the horizon. According to CK Zheng, the founder of the prominent crypto investment firm ZX Squared Capital, the market may not have seen the worst of it yet. Zheng warns that Bitcoin could potentially plummet by another 30% over the course of 2026, driven by a combination of historical market cycles and escalating geopolitical tensions.
The Power of the Four-Year Bitcoin Cycle
One of the primary catalysts for this bearish outlook is the well-documented four-year Bitcoin cycle. This pattern is centered around the quadrennial “halving” event, which reduces the rate at which new Bitcoin is created. The most recent halving occurred in April 2024, slashing the block reward from 6.25 BTC to 3.125 BTC. Historically, Bitcoin prices tend to reach a cyclical peak approximately 16-18 months after a halving event. True to form, Bitcoin topped out in October 2025, exactly within that historical window. Following these peaks, the market typically enters a cooling-off period or a “crypto winter” that lasts roughly a year. Zheng argues that this cycle is gaining strength and remains incredibly difficult to break because it is fundamentally rooted in human psychology.
The repetitive nature of these cycles is reinforced by the predictable behaviors of individual investors. During periods of “hype” and rapid price appreciation, retail FOMO (fear of missing out) drives prices to unsustainable levels. Conversely, when the market turns, panic selling often accelerates the decline. This emotional rollercoaster creates the boom-and-bust volatility that has defined the crypto space for over a decade. Because of this persistent volatility, many analysts, including Zheng, argue that Bitcoin still behaves more like a speculative risk asset than a stable “safe haven” like gold. Until institutional stability outweighs retail emotionality, these four-year swings are expected to continue.
Geopolitical Instability and the Impact of the Iran War
Adding a layer of complexity to the 2026 market is the sudden outbreak of major geopolitical conflict. The onset of war involving Iran has sent shockwaves through global financial markets, and Bitcoin has not been immune to the fallout. While some crypto enthusiasts long for Bitcoin to act as “digital gold” during times of international crisis, the reality in early 2026 has been quite different. The uncertainty of the war has triggered a “risk-off” sentiment among global investors, leading many to liquidate speculative positions in favor of cash or traditional commodities.
Zheng specifically cited the conflict as a major reason for the projected 30% drop. War often leads to increased energy costs and supply chain disruptions, which can have an indirect but potent effect on Bitcoin mining and overall market liquidity. If the conflict persists or escalates further into 2026, the pressure on risk assets will likely intensify. For Bitcoin, which was already entering a naturally bearish phase of its cycle, the timing of the Iran war could act as a force multiplier, dragging the price down toward the $40,000 to $50,000 range before any meaningful recovery can begin.
Institutional Vulnerability and the Vicious Cycle of Forced Selling
Another concern highlighted by ZX Squared Capital is the slow pace of institutional adoption and the potential for “forced selling” from corporate treasuries. While the entry of Bitcoin ETFs and the rise of Digital Asset Treasury (DAT) companies were seen as bullish milestones in 2024 and 2025, they currently represent only about 10% of the total crypto market. This relatively small footprint means that the market is still highly sensitive to large-scale liquidations. Zheng warns that some firms that bought Bitcoin as a treasury reserve asset may face pressure to meet debt servicing requirements or cover losses in other parts of their business due to the economic strain of the bear market and the war.
If a few major “Digital Asset Treasury” firms are forced to dump their holdings to maintain liquidity, it could trigger a “vicious cycle.” Large sell orders in a thin market often lead to further price drops, which then trigger stop-loss orders and margin calls for other traders. This cascading effect can drive the price far lower than fundamental value would suggest. As we move deeper into 2026, the resilience of these institutional holders will be put to the ultimate test. For now, the outlook remains cautious, with the expectation that the market will need to fully wash out speculative excess before the next four-year bull cycle can take root.
