Bitcoin Limits Latest Bear-Market Drop to 55%

Bitcoin fell roughly 55% from its October 2025 peak in its latest bear cycle, a markedly smaller drawdown than the 70% to 80%-plus declines seen in earlier downturns. The 2021 cycle saw Bitcoin drop more than 75% from nearly $69,000 to below $16,000, while earlier crashes were even deeper. The milder decline is reviving a broader question: are Bitcoin's boom-and-bust cycles becoming less extreme?

Why it matters

Bitwise's Ryan Rasmussen argues that spot Bitcoin ETFs, which launched in January 2024, have widened access to financial advisers and other professional investors. A portfolio with a 2% Bitcoin allocation can absorb a 50% asset decline with a far smaller overall hit than a crypto-focused investor holding 20% or more. Rebalancing can also create buyers after sharp falls and sellers after large rallies.

Risk Dimensions' Mark Connors expects greater institutional participation to reduce future drawdowns, but he also sees smaller blow-off tops as investors trim positions when Bitcoin becomes too large in a portfolio. Lower volatility could therefore come with more moderate returns.

Schwab's Jim Ferraioli offers a different explanation. Bitcoin's market capitalization is around $2 trillion, so doubling the asset now requires far more capital than it did when the market was worth a few billion dollars. He also argues that individuals can own spot ETFs, meaning ETF ownership alone does not prove institutional dominance.

Market impact

The supply structure may reinforce the shift. Ferraioli estimates that four million to five million Bitcoin may be lost, while only six million to seven million are liquid. Many long-term holders have already experienced multiple crashes and may be less willing to sell into the next one.

Institutional adoption is still developing. Rasmussen said professional engagement remained strong during the latest downturn, unlike in 2022, but advisers can take almost two years and about eight meetings before making an allocation. The emerging pattern points to shallower bear markets and less explosive bull markets, with Bitcoin's growing scale and changing ownership base both shaping the cycle.