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

Bitcoin’s most recent bear cycle saw the price drop roughly 55% from its October 2025 peak. While still a steep decline, it is milder than the 70‑80%+ crashes that characterized earlier downturns.

Institutional participation and portfolio rebalancing

Bitwise director Ryan Rasmussen notes that the launch of U.S. spot bitcoin ETFs in January 2024 introduced professional investors who typically allocate around 2% of a portfolio to bitcoin. This contrasts with crypto‑focused retail investors who may hold 20% or more, meaning a 50% price drop impacts a professional portfolio far less.

Risk Dimensions CIO Mark Connors adds that institutional investors tend to rebalance: buying after sharp declines to restore target weights and selling after strong rallies. This behavior can soften both sell‑offs and the size of rallies.

Market size and liquidity dynamics

Schwab’s digital‑asset research director Jim Ferraioli points to bitcoin’s near $2 trillion market capitalization as a factor that makes large price moves harder to achieve. With roughly 20 million bitcoins in circulation, a significant portion is either lost or held in long‑term wallets, leaving a relatively small liquid supply to drive extreme swings.

Implications for future cycles

All three experts agree that as bitcoin matures, bear markets may become less severe and bull markets less explosive. However, Connors cautions that reduced volatility also means more modest returns.

The evolving investor base—still dominated by retail participants but increasingly accessed by advisors through ETFs—suggests a gradual shift rather than an immediate transformation.