Why did Bitcoin fall today? Analysts: The "peak" of the Bitcoin Halving cycle has been reached.

Bitcoin is under pressure, falling to around $92,000, over 26% down from the historical high in October. Why is Bitcoin dropping today? This wave of selling coincides with the historical peak 400-600 days after the Bitcoin Halving, which last occurred in April 2024. Bernstein analysts believe this is a “self-fulfilling prophecy,” but emphasize that this time there will not be a historic decline of 60-70%, but rather a short-term consolidation.

Why did Bitcoin fall today? 19 billion liquidation triggered a chain reaction

The direct reason for Bitcoin's drop today can be traced back to last month's massive liquidation event. On October 10, the cryptocurrency market experienced $19 billion in leveraged positions being liquidated, marking the largest liquidation event of the year. This liquidation was triggered by Trump's announcement of a 100% tariff on Chinese imports, which sparked a sell-off of global risk assets, with Bitcoin being the most severely affected asset due to its 24/7 trading nature and high leverage.

The chain reaction of liquidations is an important driver of the sharp decline in Bitcoin prices. When prices start to fall, the highly leveraged long positions are the first to be liquidated, and these forced sells further depress prices, triggering the next batch of liquidations. This positive feedback loop is particularly severe in the cryptocurrency market, as many exchanges allow leverage of up to 100 times, meaning that a mere 1% drop in price is enough to liquidate positions with 100 times leverage.

Since the self-liquidation event, the price of Bitcoin has continued to be under pressure. On October 6, the price of Bitcoin broke through the historical high of $126,000 per coin, but then fell to $92,000 within a month, a drop of more than 26%. Such a drop is not uncommon in Bitcoin's history, but considering the addition of institutional ETFs and improvements in market structure, the nature of this pullback has sparked widespread discussion.

The profit-taking by long-term holders is also an important factor for Bitcoin's decline today. These investors chose to cash out when the price of Bitcoin broke through historical highs, believing that the current price has fully reflected future expectations and is a good opportunity to exit. According to on-chain data, the supply of long-term holders (those holding BTC for more than 155 days) has significantly decreased over the past month, indicating that a large amount of chips have changed hands at high levels.

Bitcoin Halving Cycle and Self-Fulfilling Prophecy

(Source: Gate)

The Bitcoin Halving cycle is the key framework for understanding the current fall. Bitcoin Halving is a built-in mechanism in the Bitcoin protocol that halves the amount of newly issued Bitcoins every 4 years (or every 210,000 blocks). This design ensures that the total supply of Bitcoin will never exceed 21 million coins, creating a deflationary effect. The last Bitcoin Halving occurred in April 2024, reducing the reward per block from 6.25 BTC to 3.125 BTC.

Historical data shows that the price of Bitcoin typically reaches a peak within 400 to 600 days after a Bitcoin Halving. This pattern has been validated in the last three Halving cycles. After the 2012 Halving, Bitcoin peaked in November 2013. After the 2016 Halving, Bitcoin peaked in December 2017. After the 2020 Halving, Bitcoin peaked in November 2021. Each peak occurs approximately 18 to 20 months after the Halving event, which is about 540 to 600 days.

“This self-fulfilling prophecy led to a market dumping of Bitcoin in Q4 2025,” wrote Bernstein analysts led by Gautam Chhugani. “However, we believe that the following evidence suggests that the price of Bitcoin will enter a short-term consolidation phase and form a new local bottom, rather than experiencing historical falls of 60-70% as in previous cycles.”

Bitcoin Halving Cycle's Four-Phase Model

Stage One (Before and After Halving): Market expectations drive price increases, and the occurrence of Halving is often accompanied by a short-term correction of “good news priced in.”

Second Stage (6-12 months after Halving): The effect of reduced supply gradually becomes apparent, and prices begin to rise steadily.

Stage Three (12-20 Months After Halving): Bubble formation, prices accelerate upward and reach the cycle peak.

Fourth Stage (Post-Peak): Bubble bursts, prices adjust by 60-80%, entering bear market.

Bitcoin is currently in the late stage of the third phase or the early stage of the fourth phase. The Bitcoin Halving in April 2024 is about 19 months away, right within the historical peak window. The widespread awareness of this cyclical pattern among market participants has turned it into a “self-fulfilling prophecy.” When investors anticipate that the price will peak at a certain point in time, they tend to take profits around that time, and this collective behavior in itself causes the price to reach its peak.

This time is different? Institutional ETFs changing market structure

However, Bernstein analysts emphasize that this market environment has structural differences compared to previous cycles. The adoption rate of ETFs by institutional investors has significantly increased, reflecting that Bitcoin is “of higher quality and has more stable holdings.” Since the launch of the US spot Bitcoin ETF in January 2024, it has accumulated over $60 billion in assets under management, with BlackRock's IBIT and Fidelity's FBTC being the two largest products.

These institutional-grade products provide a more stable demand foundation for Bitcoin. ETF investors are typically long-term allocation institutions rather than short-term speculators. They purchase Bitcoin ETFs based on strategic asset allocation decisions and do not trade frequently due to short-term price fluctuations. This “diamond hands” institutional buying has, to some extent, mitigated the impact of retail panic dumping.

The Trump administration's support for Bitcoin and the passage of the “Clarity Act” by Congress are also positive driving factors. Trump promised to establish a national Bitcoin reserve during his campaign and appointed cryptocurrency-friendly regulators. The “Clarity Act” provides a clear regulatory framework for cryptocurrencies, eliminating the legal uncertainty that has long plagued the industry. These policy changes offer institutional support for Bitcoin's long-term prospects.

MicroStrategy (MSTR) continues to provide a certain level of support by purchasing this cryptocurrency. The company revealed on Monday that it bought an additional 8,178 tokens at an average price of $102,171 each, totaling $835 million. MicroStrategy has become the publicly traded company with the largest Bitcoin holdings globally, and its ongoing buying strategy provides stable demand for the market.

Key defense line of 93000 dollars and future direction

At the same time, 10X Research pointed out that around October 10, the demand from new buyers has stagnated, and the recent more hawkish remarks from the Federal Reserve “have changed the macro balance, making the market increasingly fragile.” Federal Reserve Chairman Powell stated that considering the strong economic performance, the Federal Reserve is in no hurry to cut interest rates, which undermines the market's expectations for loose monetary policy.

“This is exactly why the four-year cycle deserves serious consideration,” the report from 10X Research states. “This cycle aligns with a series of independent indicators and conditions, all pointing to the same conclusion: now is a time to be particularly cautious.” The company notes that $93,000 is a critical level and mentions that “falling below this level could trigger accelerated liquidation cascades.”

Chhugani stated: “We feel that the current market environment is not a cyclical peak, but rather a reflection of the structural trends of institutional participation in Bitcoin and cryptocurrency capital markets over the years, with occasional adjustments. We are observing whether Bitcoin can fall to the low of around $80,000 that occurred shortly after Trump was elected. We believe that the current market weakness may provide an attractive entry opportunity for new investors.”