Bitcoin’s bear markets are getting milder. Bull markets may be next
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Bitcoin's recent bear market saw a decline of about 55%, notably milder than previous crashes of 70% to over 80%. Experts including Bitwise’s Ryan Rasmussen and Risk Dimensions’ Mark Connors attribute this moderation to increased institutional involvement and portfolio rebalancing practices. Schwab’s Jim Ferraioli also credits bitcoin’s growing market size and maturity for less extreme price swings, suggesting factors beyond just the introduction of ETFs.
Why it matters
The source indicates that bitcoin's historically volatile boom-and-bust cycles are becoming less severe, which could signal a shift in how the asset behaves in market cycles. This potentially makes bitcoin more suitable for institutional investors and changes its risk profile. However, the source does not explicitly state broader impacts on markets or policy.
Key context
Previous bear markets for bitcoin featured sharp crashes, such as an over 75% drop from nearly $69,000 in 2021 to under $16,000 in 2022. The introduction of U.S. spot bitcoin ETFs in January 2024 brought more traditional professional investors into the market, who typically allocate smaller portfolio percentages and engage in rebalancing, which can moderate volatility. Additionally, bitcoin’s increased market capitalization of around $2 trillion requires larger sums of money to move prices significantly, contributing to reduced volatility.
Key numbers and entities
Bitcoin’s latest bear market drawdown: approximately 55%. Past collapses: 70-80%+. Market capitalization: about $2 trillion. Estimated bitcoin circulation: roughly 20 million; of these, 4-5 million may be lost and 6-7 million are liquid. Key individuals quoted include Ryan Rasmussen (Bitwise), Mark Connors (Risk Dimensions), and Jim Ferraioli (Charles Schwab).
What remains unclear
The source does not specify how these milder bear markets will affect bitcoin’s long-term adoption or whether regulatory environments will evolve in response. The exact mix of retail versus institutional ownership within ETFs and the broader market remains ambiguous, and the pace at which professional investors might fully embrace bitcoin is not quantified.