Recent bear market for Bitcoin has been less severe than previous downturns, influenced by ETFs, institutional interest, and market maturation.
By Helene Braun|Edited by Cheyenne Ligon34 minutes ago4 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on (Michael M. Santiago/Getty Images)SummaryShow- Bitcoin's recent bear market saw a decline of about 55%, significantly less than the 70% to 80% drops recorded in earlier downturns.
- According to Ryan Rasmussen from Bitwise and Mark Connors from Risk Dimensions, the influence of institutional investors and portfolio rebalancing may help to moderate both declines and surges in Bitcoin's price.
- Jim Ferraioli of Schwab believes that Bitcoin's increasing size and maturation, in addition to the presence of ETFs, could explain the less severe market fluctuations.
During its latest bear market, Bitcoin experienced a decline of approximately 55% from its peak in October 2025. While this would generally be considered a significant drop in most markets, it is relatively mild compared to Bitcoin's historical crashes. For instance, after hitting nearly $69,000 in November 2021, Bitcoin plummeted to below $16,000 a year later, with the decline surpassing 75%. Earlier cycles had declines exceeding 80%.
Previous recoveries were equally dramatic. Bitcoin surged from under $4,000 in early 2019 to nearly $69,000 in 2021, and then from its 2022 lows to over $100,000 after the introduction of U.S. spot Bitcoin exchange-traded funds (ETFs), which opened the asset to a broader investor base.
Such extreme fluctuations have defined Bitcoin's trading history, but both its downturns and upswings are showing signs of moderation.
Ryan Rasmussen, the head of research at Bitwise, attributes part of this stabilization to the introduction of spot ETFs in January 2024.
Prior to the launch of ETFs, ownership of Bitcoin was predominantly in the hands of retail investors and crypto-focused funds, according to Rasmussen. The introduction of ETFs has provided a familiar vehicle for financial advisors and institutional investors to incorporate Bitcoin into traditional investment portfolios.
These professional investors typically allocate a smaller percentage of their portfolios—around 2%—to Bitcoin, whereas retail investors may allocate much larger portions, sometimes exceeding 20% to 30%. This difference can significantly alter the impact of price declines on their overall portfolios.
“If it goes down 50%, my portfolio is only down 1%,” Rasmussen explained, illustrating how a professional investor views such a downturn.
Rebalancing also plays a role. An advisor with a target Bitcoin allocation of 2% may buy more after a significant drop to maintain that target. Conversely, if Bitcoin’s value rises and it constitutes 5% of the portfolio, the advisor might sell some to rebalance.
This dynamic may help to mitigate sell-offs while also capping the magnitude of price surges.
Mark Connors, chief investment officer at Risk Dimensions, anticipates that the increasing involvement of institutional investors will lead to smaller declines compared to the 70-80% drops seen in earlier cycles.
However, he cautions that investors should not expect to benefit without cost. While Bitcoin's volatility has decreased, its returns have also become more subdued. Connors noted that more institutional investors could lead to “smaller blow-off tops due to rebalancing.”
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Crypto Daybook Americas - The latest moves in crypto markets, in contextMarket analysis for crypto traders and investors.PreviewSign upBy signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy.In essence, the same behaviors observed on Wall Street that might prevent a mass exodus of investors can also create selling pressure during price increases.
Jim Ferraioli, director of digital asset research at Schwab, presents a more straightforward perspective on the diminishing volatility of Bitcoin.
“I don't necessarily agree with the idea that ETFs and institutions are the primary drivers of this change,” Ferraioli remarked.
He argues that despite the increasing influence of Wall Street, Bitcoin is still predominantly a retail asset. Ownership of ETFs does not automatically equate to institutional ownership, as individual investors can also purchase these funds.
Instead, Ferraioli points to Bitcoin's growing market cap. With Bitcoin's market capitalization nearing $2 trillion, it now requires substantially more capital to achieve the same percentage increases as it did when its value was in the billions. The dramatic growth rates of Bitcoin's earlier years become increasingly challenging to replicate as its market base expands.
Ferraioli also suggests that crypto-native investors may have played a crucial role in stabilizing the market during recent downturns. He noted that while ETF investors had an average cost basis around $83,000 for much of the year, active spot investors adjusted their average cost from about $78,000 to the mid-$70,000s as they accumulated Bitcoin at lower prices.
Bitcoin’s supply dynamics further complicate the situation. Of the approximately 20 million Bitcoin in circulation, Ferraioli estimates that around four to five million may be permanently lost, and another six to seven million are liquid. The remainder consists of holders who are less likely to sell, having experienced several market downturns.
There are indications that the engagement of Wall Street with Bitcoin is evolving as well. Rasmussen noted that professional investor interest in Bitwise remained strong during the latest downturn, contrasting sharply with the significant drop in interest during the 2022 bear market.
While adoption is progressing slowly, Rasmussen indicated that Bitwise typically engages in about eight meetings with financial advisors before they allocate funds, a process that can span nearly two years.
This suggests that the transformation of Bitcoin's investor base is ongoing. However, Ferraioli anticipates that as Bitcoin continues to mature, the trend of experiencing less severe bear markets and less explosive bull markets is likely to persist.
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