Bitcoin Bounces Back as Institutions Drive Market Shift

The Bitcoin market is still recovering from its latest bear market, which saw prices drop around 55% from their October 2025 peak. In November 2021, Bitcoin traded at a record high of close to $69,000 before falling below $16,000 in the following year, a decline of over 75%. However, this recent drop was smaller than some of the cryptocurrency's previous crashes.

The market has been changing due to shifting investor base and structure. Spot Bitcoin exchange-traded funds were launched in January 2024, giving financial advisers and other professional investors an easier way to gain exposure to the cryptocurrency. This shift has made it harder for prices to replicate the spectacular multiples of Bitcoin's earlier years.

Ryan Rasmussen, director and head of research at Bitwise, noted that investor allocation was a key factor in this change. He explained that professional investors might allocate around 2% of their portfolio to Bitcoin, while crypto-focused retail investors can have 20%, 30% or more of their money tied to the asset.

Mark Connors, chief investment officer at Risk Dimensions, expects growing institutional participation to contribute to smaller drawdowns than the 70%-80% declines seen during previous Bitcoin cycles. However, Jim Ferraioli, Schwab's director for digital asset research, offered a different explanation, pointing to Bitcoin's size and market capitalization of around $2 trillion.