Bernstein: Recent Bitcoin sell-offs are mainly due to investors' concerns about the four-year cycle peak

According to ChainCatcher, citing The Block, bitcoin (BTC) has dropped about 25% since reaching its all-time high of approximately $126,000. Bernstein analyst Gautam Chhugani stated in a client report on Monday that this decline reflects investors’ anxiety over the historical four-year cycle pattern—which saw peaks in 2013, 2017, and 2021. Many investors, anticipating a repeat in 2025, sold early during market weakness, thus creating a self-fulfilling prophecy to some extent.

However, they believe the current fundamentals are stronger, and data suggests this is more likely a “relatively shallow pullback” forming a new local bottom, rather than the 60% to 70% drops seen in previous cycles—thanks to significant absorption of supply from long-term holders. The analysis points out that over the past six months, investors who held BTC for at least a year sold about 340,000 BTC (around $3.8 billions), while approximately $3.4 billions in capital inflows into spot ETF and corporate treasuries have largely absorbed this selling pressure.

Looking ahead, the analysts believe the market is “not at a cycle peak,” but rather part of a multi-year trend defined by institutional participation and moderate cyclical pullbacks. They are watching whether bitcoin can establish a bottom around $80,000—a level that emerged after last year’s U.S. presidential election—and believe the current pullback may provide an attractive entry opportunity for digital assets and related stocks.