Bitcoin Is Down 45% From Its All-Time High -- Here's What History Says Happens Next

The first thing that you need to know about Bitcoin (CRYPTO: BTC) is that it's highly cyclical. The world's top cryptocurrency typically follows a four-year cycle of boom-or-bust, with three very good years followed by one very bad year. That means that Bitcoin's long march upward to its current price of $67,000 has never been straight up.

Bitcoin may be down 45% from its all-time high of $126,000 in October, but there's nothing particularly out of the ordinary about this. Previous drawdowns have been even more extreme. If history is any guide, Bitcoin will soon recover and continue its inexorable march upward.

The historical evidence

Understandably, investors new to crypto who bought Bitcoin at its peak last year might think that the crypto market has pulled a fast one on them. After all, Bitcoin doubled in value in both 2023 and 2024, and 2025 was looking like another year of triple-digit returns for Bitcoin. So Bitcoin losing nearly half of its value in the span of mere months certainly comes as a nasty surprise.

Image source: Getty Images.

But let's consider the historical evidence. During its previous four-year cycle, Bitcoin hit a (then) all-time high of $69,000 in November 2021. From there, however, Bitcoin absolutely cratered in value. In 2022, it fell as low as $16,000, and many investors decided to abandon Bitcoin entirely. That coincided with the onset of a crypto winter, and getting out of Bitcoin looked like a wise decision at the time.

But you can guess what happened next. Bitcoin roared back to life in 2023. Then, in April 2024, the next Bitcoin halving event took place, and the Bitcoin four-year cycle renewed itself yet again. As one would have expected, Bitcoin eventually hit a new all-time high. By the end of 2024, it was trading around the $100,000 level, and just about everyone wanted a piece of it for their portfolio heading into 2025.

The same pattern is likely to repeat this time around as well. I'm fully expecting Bitcoin to drop even further. The pain has to be so great and so pervasive that the short-term, uncommitted money gives up on Bitcoin. That will pave the way for a recovery sometime later this year or early 2027. At that point, Bitcoin will be ready to go on another one of its historic runs.

If Bitcoin repeats the same pattern as it did last time around (falling from $69,000 to $16,000), it could decline as much as 77% from its high of $126,000. So buckle your seat belts, because a price of $30,000 might be far more likely than many people are willing to predict.

Buy and hold Bitcoin for the long haul

With Bitcoin, it's important to keep an eye on the long term. Short-term Bitcoin investors generally don't make money, because they typically buy high and sell low. However, long-term Bitcoin investors often do, because they buy low and sell high. History is not guaranteed to repeat, but I like the odds.

That being said, Bitcoin should not comprise a large percentage of your portfolio. Even an allocation of 5% may be too much, given how dramatic Bitcoin's past price swings have been. Instead, an allocation closer to 1%-2% may be more appropriate. Bitcoin should be a small part of a larger, more diversified portfolio filled with high-quality stocks and index funds.

As long as you are comfortable with plenty of volatility ahead, investing in Bitcoin at a beaten-down price of $67,000 could be a great move.

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.