Bitcoin's latest bear cycle produced a drawdown far smaller than the crashes that defined earlier cycles, and analysts say institutional money is changing how the asset falls and rises. Some credit exchange-traded funds and portfolio rebalancing; others point simply to bitcoin's growing size. Either way, both the crashes and the rallies are getting less extreme.
A milder crash than history
Bitcoin fell roughly 55% from its October 2025 peak during its most recent bear cycle. That would count as a historic collapse in most markets, but for bitcoin it was tame next to past routs. After topping near $69,000 in November 2021, bitcoin plunged below $16,000 a year later, a drop that topped 75%, as rising interest rates and the FTX collapse battered the market. Earlier cycles produced drawdowns of 80% or more.
A separate account of the same cycle puts the peak near $126,000 in October 2025, with the price settling between $59,000 and $61,000 by mid-2026, a decline of roughly 50-53%. By comparison, the 2022 bear market carved out a 78% decline, and 2018 fell 84%.
Institutional money isn't flinching
Bitwise director of research Ryan Rasmussen points to spot ETFs as one reason for the change. The funds launched in January 2024. Before the funds existed, ownership tilted toward retail investors and crypto-native traders making tactical bets. A professional investor might allocate around 2% of a portfolio to bitcoin, Rasmussen said, while crypto-focused retail investors can have 20%, 30% or more tied to the asset. "If it goes down 50%, my portfolio is only down 1%," Rasmussen said, describing how a lightly allocated investor views the decline.
That framing lines up with fund-flow data from the same cycle. Spot bitcoin ETFs pulled in roughly $60 billion in net inflows through October 2025, and less than $10 billion flowed back out once the drawdown hit. A September 2026 Bitwise survey of 15 major institutions found that none reduced its crypto allocation during the drop, and several increased their positions instead.
Rebalancing cuts both ways
Risk Dimensions chief investment officer Mark Connors expects growing institutional participation to keep producing smaller drawdowns than the 70-80% declines of previous cycles. But he cautioned that returns are moderating along with volatility, since more institutional ownership can also mean smaller blow-off tops as advisers rebalance positions back toward target weights after a rally.
Schwab's director for digital asset research, Jim Ferraioli, isn't convinced ETFs and institutions are the main driver. He instead points to bitcoin's size: the asset is back around a $2 trillion market capitalization, so it now takes far more money to double in value than it did when bitcoin was worth a few billion dollars. Ferraioli nevertheless expects the broader direction to hold, forecasting shallower bear markets and less explosive bull markets as bitcoin matures.
Sources: CoinDesk, Crypto Briefing
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