Is Bitcoin’s Era of Big Gains Over? What Does Wall Street’s Arrival Change?
Bitcoin’s shallower declines compared with the past could be good news for investors. But according to experts who spoke with CoinDesk, the flip side is that repeating the massive rallies seen in earlier cycles may become more difficult.
According to CoinDesk’s analysis, Bitcoin fell by about 55% at its lowest point in the bear cycle following its October 2025 peak. This refers to the loss seen over the course of the cycle, not how far the price was from its peak at the time of publication. Bitcoin, which reached about $69,000 in November 2021, fell below $16,000 a year later, resulting in a loss of more than 75%; in earlier cycles, losses exceeded 80%.
Past rallies were just as sharp: Bitcoin was below $4,000 at the start of 2019 before reaching about $69,000 in 2021. The question now is whether these large multiples will also become a thing of the past as declines ease.
Why do investors buy during declines but sell during rallies?
Bitwise Director of Research Ryan Rasmussen says U.S. spot Bitcoin ETFs, which began trading in January 2024, gave financial advisors and professional investors a familiar way to add Bitcoin to their traditional portfolios.
In Rasmussen’s example, an investor who allocates 2% of their portfolio to Bitcoin loses only 1% of their total portfolio if Bitcoin falls 50% and other assets remain unchanged. After the decline, an advisor can buy Bitcoin to bring its weighting back to 2%. But if that share rises to 5% during a rally, the advisor can sell Bitcoin to return to the same target.
This rebalancing behavior creates buyers during declines and sellers during rallies. Mark Connors, Chief Investment Officer at Risk Dimensions, also believes institutional participation could soften the 70–80% declines seen in the past while limiting the sharp surges at the end of rallies.
According to Schwab, ETFs may not be the main reason
Jim Ferraioli, Director of Digital Asset Research at Schwab, disagrees with the view that directly attributes the change to ETFs and institutions. He emphasizes that individual investors can also buy ETFs, so ETF ownership does not automatically mean institutional ownership.
According to Ferraioli, Bitcoin’s growing market capitalization offers a simpler explanation: As the market grows, it becomes harder to repeat the price multiples of Bitcoin’s early years. He also says that ETF buyers are not the only ones supporting the market during declines. While the average cost basis for ETF investors was about $83,000 for much of the year, he attributes the decline in a cost-basis measure tracking active spot investors—from about $78,000 to around $75,000—to accumulation at lower prices.
Ferraioli estimates that 4 million to 5 million of the roughly 20 million Bitcoin in circulation may be lost, while 6 million to 7 million are liquid. A significant portion of the remaining supply rarely moves, and investors who have already lived through several sharp declines are not rushing to sell again. These figures are Ferraioli’s estimates, not a definitive measure of lost supply.
According to Rasmussen, institutional adoption is not happening all at once, either. At Bitwise, a financial advisor typically has about eight conversations before allocating a portion of a portfolio to Bitcoin; the process can take nearly two years. The experts’ differing views on the reasons point to expectations that both Bitcoin’s declines and its rallies may be more limited; they do not mean that major rallies are definitively over.