Bitcoin’s latest bear market produces mildest crash in its history

Bitcoin’s latest bear market wiped out roughly 55% of its value from the October 2025 peak, a steep drop by traditional-market standards but the mildest crash bitcoin has produced since prior cycles wiped out 70% to 80% or more. Analysts at Bitwise, Risk Dimensions and Charles Schwab now disagree on why the swings are shrinking, a debate that matters for anyone deciding how much bitcoin exposure a portfolio can absorb.

• Bitcoin fell about 55% from its October 2025 peak, compared with a drop of more than 75% after the November 2021 top near $69,000.
• Bitwise’s Ryan Rasmussen says professional investors typically hold about 2% of a portfolio in bitcoin, versus 20% to 30% or more for crypto-native retail buyers.
• Schwab’s Jim Ferraioli points instead to bitcoin’s roughly $2 trillion market capitalization, which requires far more capital to double than in earlier cycles.

• 55% bitcoin’s drop from its October 2025 peak this cycle
• 80%+ drawdowns seen in bitcoin’s earliest bear markets before ETFs
• $2T bitcoin’s current market cap versus a few billion in early years
• 20M total bitcoin supply, of which 6M to 7M is estimated liquid

Bitcoin, trading around $84,120.99, has built its reputation on brutal boom-and-bust cycles. The asset lost roughly 55% of its value from its October 2025 high during the most recent downturn, a decline that would count as historic in most markets but looks mild next to bitcoin’s own history, according to reporting by CoinDesk.

After topping nearly $69,000 in November 2021, bitcoin sank below $16,000 within a year as rising interest rates, a wave of crypto bankruptcies and the collapse of FTX battered the market, a drop that topped 75%. Earlier cycles produced drawdowns of 80% or more.

Rallies have been just as extreme historically. Bitcoin climbed from under $4,000 in early 2019 to almost $69,000 in 2021. It then rose 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.

Bitcoin’s 55% drop beats prior 75%-plus crashes

Both sides of bitcoin’s trade are becoming less dramatic, not just the downside. Bitwise director and head of research Ryan Rasmussen ties the change partly to spot ETFs, which shifted bitcoin ownership away from retail traders and crypto-native funds making tactical bets and toward financial advisers building diversified portfolios.

Rasmussen said a professional investor might allocate around 2% of a portfolio to bitcoin, compared with crypto-focused retail investors who can have 20%, 30% or more of their money tied to the asset. That gap changes how a crash actually feels to the person holding it.

“If it goes down 50%, my portfolio is only down 1%.”

Ryan Rasmussen, director and head of research, Bitwise

Portfolio rebalancing compounds the effect. An adviser targeting a 2% allocation may buy after a steep decline to restore that weight, then sell if a rally pushes bitcoin to 5% of the portfolio, softening both the crash and the climb.

Connors sees smaller blow-off tops from rebalancing

Mark Connors, chief investment officer at Risk Dimensions, expects growing institutional participation to keep producing smaller drawdowns than the 70% to 80% declines of past cycles. He cautioned that investors should not expect gains without a cost, since volatility has fallen alongside returns, which have moderated as well.

More institutional buyers could mean “smaller blow-off tops due to rebalancing,” Connors said. The same behavior that discourages panic selling at the bottom can create sellers once prices soar.

Ferraioli points to $2 trillion Market cap, not ETFs

Schwab’s director for digital asset research, Jim Ferraioli, disputes that ETFs and institutions are the main driver. “I don’t know if I would necessarily agree with that take,” Ferraioli said, arguing bitcoin remains largely a retail asset despite Wall Street’s growing presence, since individuals can buy ETF shares too.

Ferraioli instead points to bitcoin’s size. At roughly $2 trillion in market capitalization, the asset now needs far more capital to double than when it was worth a few billion dollars, making the outsized multiples of its early years harder to repeat.

He also sees crypto-native buyers, not ETF investors, supporting the market through the recent downturn. The average cost basis for ETF holders sat around $83,000 for much of the year, Ferraioli 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. Of the roughly 20 million bitcoin in circulation, he estimates 4 million to 5 million may be lost and another 6 million to 7 million are liquid, leaving a large base of long-term holders reluctant to sell into another crash.

Bitwise’s two-year adviser pipeline signals slow adoption

Rasmussen said professional investor engagement with Bitwise stayed high during the latest downturn, a contrast with 2022, when interest “fell off a cliff.” Adoption is nonetheless gradual: Bitwise typically holds about eight meetings with a financial adviser before an allocation is made, a process that can take nearly two years.

Ferraioli expects the trend to continue as bitcoin matures, forecasting shallower bear markets and less explosive bull markets ahead.

The BlockWest read. The real story for allocators is the plumbing, not the price. An eight-meeting, two-year adviser pipeline means institutional rebalancing flows will keep arriving in increments for years, not all at once, which is exactly what would produce Connors’ smaller blow-off tops and Rasmussen’s cushioned drawdowns without either firm needing to be fully right about the cause.

Bitwise and Risk Dimensions credit ETF-driven institutional rebalancing for bitcoin’s tamer swings, while Schwab’s Ferraioli attributes the same pattern to bitcoin’s sheer size and lingering retail dominance, an unresolved split that the next major drawdown or rally will test directly.

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