Bitcoin's bear hugs are gentler, and its bull hugs might be too 🐻🤝🐂

Bitcoin's latest bear cycle saw the asset fall roughly 55% from its October 2025 peak, a smaller decline than the 75%-plus rout that followed its November 2021 high near $69,000, when rising interest rates, crypto bankruptcies and the collapse of FTX drove the price below $16,000. Earlier cycles produced drawdowns of 80% or more. Market participants pointed to the launch of U.S. spot bitcoin exchange-traded funds in January 2024 and a broader shift toward institutional ownership as central to the softening downside. Bitcoin ($BTC) traded at $84,326.75 at the time of publication.

"If it goes down 50%, my portfolio is only down 1%," said Bitwise director and head of research Ryan Rasmussen, describing how a financial adviser allocating around 2% of a portfolio to bitcoin would experience a 50% drawdown in the asset. He noted that crypto-native retail investors often concentrate 20%, 30% or more of their holdings in bitcoin, amplifying perceived volatility, while professional investors typically rebalance toward target allocations after sharp moves.

The same dynamic may be dampening rallies. After climbing from less than $4,000 in early 2019 to nearly $69,000 in 2021, bitcoin later advanced from its 2022 low to more than $100,000 following the ETF launches, and observers said the next leg could be less parabolic for similar reasons. Risk Dimensions' Mark Connors cited institutional inflows and portfolio rebalancing as factors that could temper both crashes and rallies. Schwab's Jim Ferraioli added that bitcoin's growing size and market maturity, beyond the role of ETFs alone, may better explain why price swings have become less extreme. The combination of a maturing investor base and structured rebalancing has historically been cited as a reason both sides of bitcoin's boom-and-bust cycles are becoming less dramatic.