Bitcoin’s latest bear market was milder than past crashes as ETFs, institutional investors and a maturing market reshape its cycles.

• Bitcoin fell about 55% in its latest bear cycle, a smaller drawdown than the 70% to 80%-plus declines seen in previous downturns.
• Bitwise’s Ryan Rasmussen and Risk Dimensions’ Mark Connors say institutional investors and portfolio rebalancing could temper both bitcoin’s crashes and its rallies.
• Schwab’s Jim Ferraioli says bitcoin’s growing size and maturity, rather than ETFs alone, may better explain why its market swings are becoming less extreme.

The crypto asset fell roughly 55% from its October 2025 peak during its most recent bear cycle. That would qualify as a historic collapse in most markets, but for bitcoin, it was relatively tame compared to past collapses. In November 2021, for example, after reaching nearly $69,000, bitcoin plunged below $16,000 a year later as rising interest rates, a string of crypto bankruptcies and the collapse of FTX battered the market. The drop topped 75%. Earlier cycles produced drawdowns of 80% or more.

Past rebounds could be just as extreme. Bitcoin rose from less than $4,000 in early 2019 to almost $69,000 in 2021. It then climbed from its 2022 low to more than $100,000 after U.S. spot bitcoin exchange-traded funds (ETFs) opened the asset to a much larger pool of investors.

Those volatile boom-and-bust cycles helped define bitcoin, but both sides of the trade are becoming less dramatic — including the upside.

Bitwise director and head of research Ryan Rasmussen sees spot ETFs, which launched in January 2024, as one reason.

Before the ETFs, bitcoin ownership tilted more heavily toward retail investors, crypto-native funds and traders making tactical bets, Rasmussen said. ETFs gave financial advisers and other professional investors a familiar way to add bitcoin to traditional portfolios.

Those investors tend to approach bitcoin differently.

Rasmussen said a professional investor might allocate around 2% of a portfolio to bitcoin, while crypto-focused retail investors can have 20%, 30%, or more of their money tied to the asset. A crash, therefore, looks very different depending on who owns it.

“If it goes down 50%, my portfolio is only down 1%,” Rasmussen said in an interview, describing how an investor with a 2% allocation might view the decline.

There is also rebalancing. An adviser targeting a 2% bitcoin allocation may buy after a steep decline to bring the position back to its target weight. If bitcoin surges and reaches 5% of the portfolio, that same investor may sell some at the next rebalancing.

That could soften sell-offs, but also limit the size of rallies.

Mark Connors, chief investment officer at Risk Dimensions, expects growing institutional participation to contribute to smaller drawdowns than the 70-80% declines seen in previous cycles.

But investors shouldn't expect to get something for nothing. Connors said bitcoin's volatility has fallen over time, but its returns have moderated as well. More institutional investors could mean “smaller blow-off tops due to rebalancing,” he said.

In other words, the same Wall Street behavior that may prevent investors from rushing for the exits can create sellers when prices soar.

Jim Ferraioli, Schwab’s director for digital asset research, thinks there is an even simpler explanation for bitcoin’s shrinking swings.

“I don't know if I would necessarily agree with that take,” Ferraioli said of the argument that ETFs and institutions are driving the change.

Despite Wall Street's growing presence, bitcoin remains largely a retail asset, he said. ETF ownership itself should not automatically be treated as institutional ownership, because individuals can buy the funds too.

Instead, Ferraioli points to bitcoin's size. Bitcoin is back around a $2 trillion market capitalization, which means the asset requires far more money to double than it did when bitcoin was worth a few billion dollars. The spectacular multiples of its early years become harder to replicate as the base grows.

Ferraioli also sees signs that crypto-native investors, rather than ETF buyers, helped support the market during the downturn. The average cost basis for ETF investors sat around $83,000 for much of the year, he said, while a measure tracking active spot investors moved from roughly $78,000 toward the mid-$70,000s as those buyers accumulated at lower prices.

Bitcoin's supply adds another layer. Of roughly 20 million bitcoin in circulation, Ferraioli estimates four million to five million may be lost and another six million to seven million are liquid. Much of the rest rarely moves.

That leaves the market with a large base of holders who have already lived through multiple crashes and may be reluctant to sell into another one.

There are signs that Wall Street’s relationship with bitcoin is changing, too. Rasmussen said professional investor engagement with Bitwise remained high during the latest downturn, unlike the 2022 bear market, when interest “fell off a cliff.”

Adoption remains slow. Rasmussen said Bitwise typically has about eight meetings with a financial adviser before the adviser makes an allocation, a process that can take almost two years.

That suggests bitcoin's changing investor base is still a work in progress. Ferraioli nevertheless expects the direction of travel to continue. As bitcoin matures, he sees shallower bear markets and less explosive bull markets.

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