Bitcoin's Bear and Bull Markets Are Both Shrinking — SkimNews
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- Bitcoin fell about 55% from its October 2025 peak in its most recent bear cycle, compared with a more than 75% plunge after its late-2021 high near $69,000 and 80%-plus drawdowns in earlier downturns tied to rising rates, crypto bankruptcies and the FTX collapse.
- Bitwise head of research Ryan Rasmussen says spot bitcoin ETFs — which launched in January 2024 — shifted ownership toward financial advisers making 2% portfolio allocations, meaning a 50% crash only costs such a portfolio about 1% and naturally produces counter-cyclical buying.
- Risk Dimensions CIO Mark Connors attributes shrinking drawdowns to growing institutional participation but warns the same rebalancing mechanics that cushion sell-offs will also produce "smaller blow-off tops" on the upside, since target-weight investors sell when bitcoin grows past their allocation.
- Schwab crypto research head Jim Ferraioli pushes back on the ETF narrative, arguing bitcoin remains largely retail-owned and that its roughly $2 trillion market cap — which requires far more capital to double than when the asset was worth a few billion — better explains why swings are shrinking.
- Ferraioli estimates that of roughly 20 million bitcoin in circulation, 4 million to 5 million may be lost and 6 million to 7 million are liquid, leaving a large base of holders who have weathered multiple crashes and may be reluctant to sell into another one.
- Bitwise saw professional investor engagement stay elevated through the latest downturn, unlike 2022 when adviser interest "fell off a cliff," though converting an adviser still typically takes about eight meetings and close to two years.
Why it matters: Investors chasing the 10x-or-bust returns of past bitcoin cycles may be waiting a long time — the same rebalancing and scale that cushioned this 55% drop are already muting the upside, and Schwab's Ferraioli argues it's the $2 trillion market cap, not ETFs, that really changed the math. Net effect for holders: smaller losses and smaller windfalls.
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