Institutional Adoption May Limit Bitcoin Price Swings

Bitcoin's rapid price swings may be losing steam as institutional investors increasingly participate in the market. According to CoinDesk, Bitcoin's decline from its October 2025 peak has been less severe than in previous cycles.

In a bear cycle following its peak, Bitcoin fell by about 55% at its lowest point, but this refers to the loss over the course of the cycle, not how far the price was from its peak. In contrast, losses exceeded 80% in earlier cycles.

Experts attribute this shift to institutional investors' growing presence in the market. Bitwise Director of Research Ryan Rasmussen notes that U.S. spot Bitcoin ETFs have given financial advisors and professional investors a familiar way to add Bitcoin to their traditional portfolios.

This rebalancing behavior creates buyers during declines and sellers during rallies, which could limit the sharp surges at the end of rallies. Mark Connors, Chief Investment Officer at Risk Dimensions, agrees that institutional participation may soften the 70-80% declines seen in the past.

However, Jim Ferraioli, Director of Digital Asset Research at Schwab, disputes this view, arguing that individual investors can also buy ETFs and that 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 estimates that 4 million to 5 million of the roughly 20 million Bitcoin in circulation may be lost.