A new report from Kaiko Research asserts that Bitcoin's (BTC) recent sharp price correction reinforces, rather than undermines, the asset's long-standing four-year halving cycle. Bitcoin fell from its cycle peak near $126,000 to the $60,000–$70,000 range in early February 2026, marking a drawdown of roughly 52%.
Kaiko's analysis argues this decline is fully consistent with previous post-halving bear markets, which have historically delivered 50-80% drawdowns following cycle peaks. The report notes the 2024 halving occurred in April, with Bitcoin topping out roughly 12–18 months later, aligning closely with prior cycles. The current price action suggests Bitcoin has transitioned out of the euphoric post-halving phase and into an expected corrective period that typically lasts six to 12 months.
The firm acknowledges that structural changes distinguish the 2024-2025 cycle, including spot Bitcoin ETF adoption, greater regulatory clarity, and a more mature DeFi ecosystem. However, these developments have not prevented the expected post-peak retracement but have changed how volatility manifests. For instance, spot Bitcoin ETFs recorded more than $2.1 billion in outflows during the recent sell-off, demonstrating that institutional access increases liquidity in both directions.
Concurrently, on-chain data suggests a potential bottom may be forming. The percentage of Bitcoin's supply in profit has fallen to around 50%, a threshold last seen during the 2022 bear market that has historically coincided with market bottoms. This compression weakens selling incentives as holders become less willing to realize losses.
Kaiko's report highlights key market signals: stablecoin dominance stands at 10.3%, funding rates have fallen close to zero, and futures open interest has dropped by about 55%, indicating significant deleveraging. The firm cautions, however, that it remains unclear whether current conditions represent early, mid, or late-stage capitulation within the cycle framework.
Despite arguments from some experts, like Arthur Hayes, that the four-year cycle is over and global liquidity is now the dominant price driver, Kaiko maintains the historical pattern is intact. "Bitcoin is doing exactly what it has done in every previous cycle, but it seems many market participants convinced themselves this time would be different," the report concluded.
