Why this bitcoin bear market might be one of the best yet

Bitcoin has had a rough stretch, dropping about 25% in recent weeks and briefly falling below $60,000. For many investors, that kind of move feels painful and scary. But when you zoom out, this current downturn may actually be one of the healthiest bear markets bitcoin has ever seen.

The four-year bitcoin cycle is still in play

Bitcoin’s price history appears to follow a rough four-year cycle, often tied to the halving events that cut new BTC issuance in half. Each cycle has typically included a powerful bull run followed by a sharp bear market drawdown.

There has been a lot of debate about whether this pattern would break as institutional investors, spot ETFs, and more mature market infrastructure entered the scene. Many wondered if bitcoin would start behaving more like a traditional asset and less like a cyclical, halving-driven market.

So far, though, the timing still lines up. Bitcoin peaked around October of last year and has been grinding lower since, which fits the usual post-peak drawdown phase seen in past cycles. That doesn’t guarantee the future, but it does suggest the four-year rhythm is not dead yet.

A bear market without an 80% crash

Historically, bitcoin bear markets have been brutal, with price drops of 70–80% from the top. This time, the drawdown is still serious—over 50% from the peak—but noticeably shallower than previous cycles.

For long-term holders, it doesn’t feel good to see their portfolio cut in half. But from a market-structure perspective, a smaller drawdown can be a sign of growing maturity. Deeper liquidity, more diverse holders, and institutional participation may all be helping to cushion the downside.

In other words, this could be one of bitcoin’s “best” bear markets so far: painful, but not catastrophic, and potentially setting a healthier base for the next move higher.

On-chain signals that suggest a possible bottom

Beyond price alone, on-chain data offers clues about where we might be in the cycle. One key metric is the share of bitcoin supply that is currently in profit versus underwater.

Right now, the percentage of BTC held at a loss has grown larger than the percentage held in profit. Historically, that kind of capitulation—where more holders are in the red than in the green—has often lined up with late-stage bear markets and potential bottoming zones.

That doesn’t mean price can’t go lower, but it does mean many long-term investors are starting to see current levels as attractive for accumulation. This fits with the idea that, while sentiment feels bad, the market may be closer to the end of the downturn than the beginning.

If you want to dig deeper into how these bottom signals have played out in the past, it’s worth looking at analyses like why this latest bitcoin drop may be a major bear market bottom signal.

Leverage, large holders, and the risk of forced selling

Another recurring fear in every bitcoin downturn is that large, leveraged players could be forced to sell if prices fall too far. In past bear markets, blow-ups at firms like FTX and other overleveraged entities amplified the crash.

Today, some of the biggest corporate and fund holders of bitcoin have become more sophisticated about managing that risk. Many of them hold significant dollar reserves alongside their BTC, which can help them cover obligations, pay dividends, or manage operations without having to dump bitcoin at depressed prices.

Leverage always introduces risk, and anyone investing in companies or funds with large BTC positions should understand those risks clearly. But the presence of cash reserves and more transparent strategies can reduce the odds of sudden, cascading liquidations compared to past cycles.

How inflation, interest rates, and debt shape the bitcoin thesis

Bitcoin is often grouped with gold as part of the “debasement trade”—assets people buy when they’re worried about currencies losing value over time. However, the short-term relationship between inflation, interest rates, and bitcoin can be confusing.

On one hand, high inflation and aggressive money printing support the long-term case for bitcoin as a scarce, non-sovereign asset. On the other hand, when inflation is high, central banks tend to keep interest rates elevated, which can be a headwind for risk assets, including bitcoin and gold.

Right now, the lack of clear rate-cut prospects has weighed on both assets. Easy money and near-zero rates tend to push investors further out on the risk curve; tighter policy does the opposite.

Still, even without imminent rate cuts, the structural issues haven’t gone away. Government debt keeps rising, and fiscal policy remains loose. Many investors believe that, over the long run, it will be very hard for governments to stop expanding the money supply and inflating away part of that debt burden.

That’s why, despite short-term macro headwinds, a significant share of wealthy investors continue to allocate to bitcoin and other crypto assets as a hedge against long-term currency debasement.

What wealthy investors are actually holding

Data from portfolio tools used by thousands of multimillionaires shows that, on average, around 10% of total assets are allocated to crypto. The motivations vary: some are chasing higher returns and volatility, while others are explicitly looking for protection against the long-term erosion of purchasing power.

This kind of allocation—crypto as a single-digit to low double-digit slice of a diversified portfolio—illustrates how bitcoin is increasingly treated as a strategic asset rather than a fringe speculation. It’s no longer all-or-nothing bets; it’s a measured position alongside stocks, bonds, real estate, and gold.

Why this bear market may be a long-term opportunity

Putting it all together, several factors make this bear market stand out:

• The four-year cycle structure still appears intact, with a peak followed by a multi-month drawdown.
• The current drawdown is deep but not as extreme as past 70–80% crashes, hinting at a maturing market.
• On-chain metrics show more supply held at a loss than in profit, a pattern often seen near cycle bottoms.
• Major holders are managing leverage and reserves more carefully than in previous cycles.
• Long-term concerns about debt, money printing, and currency debasement continue to support the strategic case for bitcoin.

None of this removes risk, and prices can always fall further in the short term. But for patient, long-term investors who believe in bitcoin’s role as a scarce digital asset, this bear market may ultimately be remembered as one of the more constructive and resilient downturns in its history.

For more context on where we might be in the broader cycle, it’s helpful to compare this phase to other analyses of the current downturn, such as how bitcoin enters the third stage of the bear market.