Traders Warn Bitcoin Price Could Fall to $40,000 — Even as Strategy Adds Another $100M

Key Takeaways

• Some traders warn Bitcoin could drop to $40,000 early next year.

• Despite volatility, Strategy added $108.8 million worth of Bitcoin.

• Several industry leaders said that traditional boom-and-bust cycles.

Bitcoin’s price continued to slide on Tuesday as traders warned of a potential sharp correction early next year, even as major corporate holder Strategy moved forward with another nine-figure purchase.

Bitcoin was trading at $87,403 at the time of reporting, down nearly 3% over the past 24 hours, as investors weighed warnings of a possible “mega crash” toward the $40,000 level.

Fears of a deeper pullback intensified after a widely shared post on X compared Bitcoin’s current chart structure to the 2021 market peak.

“Bitcoin is now showing the same setup we saw in 2021,” one trader wrote, alongside technical charts that circulated broadly among market participants.

The comments reflect a persistent belief among some traders that Bitcoin continues to follow a four-year boom-and-bust cycle linked to halving events.

Historically, these halvings have preceded major price peaks followed by steep drawdowns.

“History might be repeating itself again,” another X user replied.

Others, however, argue that the four-year cycle may no longer apply, citing increased institutional involvement in the market.

“The situation is completely different now,” one X user wrote.

Several prominent industry figures have also pushed back against the idea that Bitcoin is headed for a cycle-driven crash.

Speaking at Binance Blockchain Week, Fundstrat’s Tom Lee said Bitcoin’s four-year cycle is no longer a reliable framework for understanding the market.

“We’re going to shatter the Bitcoin four-year cycle,” Lee said.

He pointed to recent price action as evidence, noting that Bitcoin rose 36% earlier in the year before reversing sharply.

“Crypto was up 36% until Oct. 10, and then it’s gone straight down,” Lee said.

According to Lee, the decline has been driven less by halving dynamics and more by structural factors, particularly market deleveraging.

He compared the current environment to the period following the collapse of crypto exchange FTX.

Ark Invest CEO Cathie Wood has also argued that the four-year cycle is being disrupted.

“We think that the move by institutions into this new asset class is going to prevent much more of a decline,” she said.

Former Binance CEO Changpeng “CZ” Zhao echoed the view at Bitcoin MENA, saying external forces may now be “strong enough to offset the four-year cycle.”

Despite the sell-off and warnings of a major correction, Strategy disclosed another significant Bitcoin purchase on Monday.

The company, led by Michael Saylor, said it acquired 1,229 Bitcoin for approximately $108.8 million at an average price of $88,568 per coin.

As of Dec. 28, 2025, Strategy holds 672,497 Bitcoins, acquired for roughly $50.44 billion at an average price of $74,997 per bitcoin.

The move signals continued confidence in Bitcoin’s long-term value, even as near-term volatility increases and bearish sentiment weighs on the market.

Analysts say technical indicators suggest Bitcoin may still have upside potential, even as downside risks remain.

Victor Olanweraju, a crypto analyst at CCN, said the Pi Cycle Top indicator — a tool used to identify long-term market peaks — does not currently signal an imminent top.

At the time of analysis, the indicator’s 350-day moving average stood near $204,975, while the 111-day moving average was around $104,350.

The wide gap between the two lines suggests Bitcoin is not yet approaching conditions that have historically coincided with major cycle peaks.

“While the Pi Cycle Top is not a timing tool and does not predict exact price levels, the current separation implies that Bitcoin’s longer-term upside potential may not yet be fully exhausted,” Olanweraju said.

However, he cautioned that if selling pressure intensifies, Bitcoin could struggle to break above the $104,000 level, leaving prices vulnerable to further consolidation or declines.

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