Hodor or profit taker? Bitcoin bear market cycle begins at $126,000

No one has a crystal ball, but if Bitcoin continues to behave according to past cycles, it's probably already peaked.

Bitcoin hit an all-time high on October 6, but was unable to extend its gains as the post-halving clock approached the peak zone seen in previous cycles.

The 2024 halving will occur on April 20th, with previous peaks reached approximately 526 days after the 2016 halving and 546 days after the 2020 halving.

At this pace, the current cycle peaks from approximately mid-October to late November.

The stock's price around $126,200 on October 6th has not been recovered, and spot trading has moved between $105,000 and $114,000, with major support near $108,000.

The timing case now intersects with clear macro shocks.

Since hitting record highs, the White House has announced new tariffs on Chinese imports, including imposing tariffs of up to 100% on some products. The headline sent shockwaves through cryptocurrencies, as futures contracts deleveraged around $19 billion in liquidations within 24 hours.

Derivative positioning has changed as well, with increased demand for downside protection following a wipeout. Funding stress on the traditional side flickered as Reuters reported an unusual spike in the use of the Federal Reserve's standing repo facility, a sign that short-term dollar funding is tightening in the same window.

Flowtape will remain as the interim arbitrator. The US Spot Bitcoin Exchange Traded Fund has been acting as a marginal buyer in this cycle. Farside Investors integrates and publishes daily creations and redemptions, which makes it easy to read whether cash is entering or exiting the wrapper.

Context for weekly capital flows is provided by CoinShares, which tracks a broader range of digital asset products. Broad net inflows over multiple sessions would leave the door open for late-cycle marginal highs.

The unstable negative development will strengthen the view that October 6th marked the top of the cycle.

A scenario framework helps translate these inputs into prices and times.

Bitcoin's historic bear market lasted about 12 to 18 months, with a peak-to-trough drop of about 57% in 2018 and 76% in 2014, a pattern demonstrated by NYDIG.

Since the current market structure includes spot ETFs and deeper derivatives markets, a lighter range of 35-55% is a reasonable benchmark for downside risk management. Applying it to $126,272 produces a trough zone of approximately $82,000 to $57,000.

That schedule would roughly match the pace of the halving referenced above, with prices hitting a low somewhere in late 2026 to early 2027.

If the timing, macros, and flow are all leaning in the same direction, the probability that the top is already there is high. The halved clock is delayed within normal limits.

The tariff shock created uncertainty in the real economy and a visible risk premium in derivatives. Tight dollar liquidity has led to a surge in the use of repo facilities.

Bitcoin price has failed to sustain above its early October high and is currently trading below its initial support. The burden of proof is on demand, but ETF tapes are the cleanest everyday instrument.

While some argue that the traditional Bitcoin cycle ended with the launch of ETFs, new demand has never ended past cycle patterns. Are we really going to do it now?

To date, each Bitcoin cycle has seen diminishing returns. If $126,000 is indeed the peak of this cycle, you would have made an 82% profit.

The first decline (cycle 1→2) reduced returns by up to 57%.

The next drop (cycle 2→3) showed a further decrease of approximately 84%.

If this rate of decay had continued proportionately (approximately 70-80% decrease per cycle), the expected return would have been approximately 50-70% instead of 82%.

Therefore, the potential 82% gain already shows a small decay compared to the exponential decay pattern implied in previous cycles.

The relative returns for this cycle are above trend, which may suggest that even though this is a top, the cycle is maturing but still resilient.

Although historical returns show a clear decay curve, the potential 82% rise in this cycle slightly breaks the expected downward slope, suggesting either the onset of a more gradual decay phase or structural changes (e.g., ETF demand, institutional capital) that moderate the long-term trend of diminishing returns.

In the opposite case, a specific sequence is required.

Five to 10 consecutive days of widespread net additions across the ETF complex would indicate sustained demand for cash.

Options skew needs to pivot towards more than a temporary pullback, a change that third-party dashboards such as Laevitas are showing.

The spot should then clear and sustain above $126,272 with increasing volume.

This path could see a slight new high in the $135,000 to $155,000 area before circulation resumes, a pattern that was repeated in our past cycle commentary.

If this situation does not develop by the end of the traditional 518-580 day period, time itself will become a headwind.

Miner adds another forward queue. After the halving, revenue per unit of hash has been compressed, and the spring surge has eased fee shares, tightening cash flow for older fleets. Economic conditions and fleet turnover dynamics are followed by the hashrate index.

If prices decline while energy costs remain strong, miners may periodically sell to cover operating costs and service obligations. This supply tends to suffer from thin orders after shocks. On-chain rating bands such as MVRV and MVRV-Z can help frame late-cycle risk, but should not be used alone as the absolute thresholds vary from cycle to cycle.

Macro has its own scoreboard.

The dollar's performance interacts with risk appetite, and the Reuters Currency Wrap provides an update on its relative strength. Interest rate expectations are tracked by CME FedWatch and can help interpret whether tariff shocks and subsequent inflationary pressures are changing the direction of policy.

If easing expectations decline while repo facilities continue to rise, liquidity in speculative assets may continue to be constrained.

Readers can track the framework using the table below.

Leverage profile requires patience. Instead of chasing upside, traders added downside hedges after the tariff shock. This is consistent with the market focusing more on capital preservation than momentum.

If ETF inflows don't resume soon, dealers can hedge against the flows from put purchases, limiting the market's rally. The tape requires daily attention as the structure can change rapidly once inflow resumes.

None of this discounts the structural bid for Bitcoin created by the ETF wrapper or the long-term effects of fixed supply. This maps out a late-cycle setup that is currently driving macro pressure. The halving timer is nearing the end of its historical period.

The high price on October 6th is the top price. The distribution case remains easier to read until the flow changes the balance.