Bitcoin's Bear and Bull Markets Are Both Getting Milder — SkimNews
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- Bitcoin fell roughly 55% from its October 2025 peak in its most recent bear cycle, compared to drawdowns of 75%+ in the 2022 crash (after FTX collapsed) and 80%+ in earlier downturns.
- Spot bitcoin ETFs, which launched in January 2024, brought financial advisers into the market with typical allocations around 2% of a portfolio versus 20-30%+ for crypto-native retail investors, per Bitwise's Ryan Rasmussen — meaning a 50% crash costs the pro investor roughly 1% of their portfolio.
- Risk Dimensions' Mark Connors said growing institutional participation should produce smaller drawdowns and "smaller blow-off tops due to rebalancing" — bitcoin's volatility and returns are both moderating, not just the downside.
- Schwab's Jim Ferraioli challenged the ETF-driven narrative, arguing bitcoin's roughly $2 trillion market cap means it simply requires far more capital to double than in its early years — and that ETF buyers aren't necessarily institutional since individuals buy the funds too.
- Active spot investors accumulated at lower prices during the downturn, with their cost basis moving from roughly $78,000 toward the mid-$70,000s while ETF investors' average cost basis sat around $83,000 for much of the year, per Ferraioli.
- Bitcoin's supply structure may amplify the damping effect — of roughly 20 million in circulation, Ferraioli estimates 4-5 million are lost and only 6-7 million are liquid, leaving a hardened holder base that rarely sells into downturns.
- Bitwise saw professional investor engagement stay high during the latest downturn, unlike the 2022 bear market when interest "fell off a cliff," though allocating a financial adviser typically still requires about eight meetings and nearly two years.
Why it matters: Bitcoin's old boom-and-bust playbook no longer applies — a 55% crash is now being called "mild," but the same rebalancing mechanics that cushion drawdowns also cap rallies. With Ferraioli estimating only 6-7 million of 20 million bitcoin truly liquid and professional investors constrained to 2% allocations, the asset's maturing holder base narrows the range of future moves for any portfolio exposed to it.
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