Bitcoin’s bear markets are getting milder. Bull markets may be next

Bitcoin's most recent downturn — a decline of roughly 55% from its October 2025 high — was markedly less severe than earlier bear markets that routinely erased 70% to 80% of value. Analysts say that while a 55% drop remains historically large, the pattern of extreme boom-and-bust swings that characterized bitcoin's earlier era appears to be softening on both the downside and the upside.

Industry observers point to several drivers of this shift. Bitwise director Ryan Rasmussen argues that the arrival of U.S. spot bitcoin ETFs in January 2024 brought more financial advisers and professional investors into the market, altering ownership composition from heavily retail and crypto-native holders to allocations by traditional portfolios. That dynamic, combined with routine rebalancing by advisers who may target small percentage weights for bitcoin, can act as a stabilizer during sharp moves.

Risk Dimensions' chief investment officer Mark Connors echoed the view that rising institutional participation can produce smaller drawdowns, but he cautioned that reduced volatility has coincided with more moderated returns. He suggested the same rebalancing practices that blunt crashes can also dampen the size of rallies, potentially limiting extreme upside runs in future cycles.

Schwab head of crypto research Jim Ferraioli offered an alternative explanation: market maturation and scale. With bitcoin's market capitalization back near $2 trillion, it takes substantially more capital to generate the outsized multipliers seen in earlier years. Ferraioli also noted the concentrated supply dynamics — with an estimated four to five million coins potentially lost and six to seven million deemed liquid — and said crypto-native buyers helped support the market during the recent downturn. Finally, the industry still sees slow adoption among advisers, with Bitwise reporting multiple meetings over long sales cycles before allocators take positions, underscoring that the investor base shift toward institutional behavior is ongoing rather than complete.