Bitcoin: A 50% Drawdown or the Start of a New Bear Market?
A framework for assessing how deep this drop will go
Overview
Bitcoin has fallen a gut-wrenching ~50% from its prior high near $126k to around $60k.
For long-time holders, this isn’t unusual. During the last bull market, Bitcoin experienced multiple drawdowns greater than 30%. Full bear markets have involved declines closer to 80%.
This raises the obvious question: Is this the start of a prolonged bear market, or a sharp drawdown within an ongoing bull market?
This article explores the current Bitcoin drawdown through a framework combining human behaviour, ownership, supply structure, and macro conditions.
Current Setup (Summary)
Core premise: Bitcoin offers asymmetric risk/reward at $60k because:
Sentiment has collapsed into ridicule
Ownership remains light among large capital pools
Supply is inelastic and cannot respond to price
Macro conditions are becoming more favourable
None of these guarantee than $60k is the bottom. But together, they define an environment where downside risk is lower and upside potential increases.
Let’s walk through each.
1) Sentiment: Contempt Is a Late-Stage Signal
When everyone loves an asset, it is usually already expensive. When an asset is widely hated but has favourable structural conditions, it is usually cheap, and that is where the opportunity is.
Extreme fear, not curiosity
Headline sentiment is deeply negative. The CoinMarketCap Fear & Greed Index has returned to ‘5’, which is defined as extreme fear. Extreme fear coincides with better forward returns when underlying utility remains intact.
The mainstream tone
During bull markets, the media often cheers:
Near major tops, coverage becomes optimistic, fuelling greed and FOMO. A good example would be this NYT article from the peak of the 2017/2018 bull market posted almost precisely at the peak, just before a drop of 85% in the price and a bear market.
Near bottoms, the tone shifts toward mockery and dismissal. Let me take you back to Ulrich Bindseil and Jürgen Schaaf’s “Bitcoin’s Last Stand” article, which argued that Bitcoin would become largely irrelevant.
The piece was published almost exactly at the lows of the last bear market, with Bitcoin trading near $15k, shortly before its 740% increase to ~$126k.
We’re beginning to see sentiment from prominent economists again: language that has historically appeared closer to bottoms than tops:
Elsewhere, coverage remains cautious of Bitcoin. A recent BBC article has begun suggesting a downside targets around $38k… another ~37% drop from here, despite Bitcoin already being down roughly 50%.
When the media calls for stark price increases or decreases after an asset has already surged or dropped precipitously, it is often an indicator that the move is nearly exhausted.
Comment sections: from curiosity to contempt
Comment sections on news articles, forums and social media are an underrated sentiment indicator
When an asset is popular, discussion tends to be curious, exploratory, or optimistic.
When sentiment turns negative, it becomes hostile or dismissive.
In mainstream investing communities like r/investing, the dominant view is that Bitcoin has no fundamentals at all: no earnings, no balance sheet.
The recurring phrases are remarkably consistent: “greater fool asset,” “pure speculation,” “no intrinsic value,” “just a number in a database,” plus comparisons to tulips or Beanie Babies.
(Recent example thread: https://www.reddit.com/r/investing/comments/1qv4l07/fundamentals_of_bitcoin_tom_lee/)
The signal here is contempt. Historically, in financial discussions contempt tends to emerge later in drawdowns.
The “no-coiner” with strong opinions
One of the most reliable sentiment tells is the person who:
does not own Bitcoin, or owns very little
does not understand it deeply
but expresses high confidence about it
This cohort is often narrative-driven, and is a good proxy for how the general public feels or thinks about Bitcoin.
I would recommend not drawing conclusions from single conversations, but instead speaking with a handful of individuals in this group and asking non-biased questions to get a clearer read. This takes skill and practice. Like a good researcher, thoughtful questions will help you uncover and identify common themes.
In my own conversations, I am noticing a move from skepticism to disdain, with discussion clustering around a small set of themes:
Bitcoin’s political association with Trump, often viewed negatively
Energy “waste” narratives
Claims of a lack of real-world use cases
When conversations shift toward disdain, it often signals a bottom, or close to it.
This is not to criticize the public, but human nature tends to feel strongly negative near bottoms and strongly positive near tops. The reason for focusing on those who know little about Bitcoin yet hold strong opinions is that their views tend to reflect this emotional cycle.
Those who are deeply experienced and have lived through multiple cycles often hold more contrarian views.
Key takeaway
I am more comfortable adding to my BTC holdings when public sentiment is heavily negative and yet fundamentals remain in tact. This is because negativity creates room for repricing as disbelief gradually converts into allocation, assuming ownership and structural conditions support that shift. That is what we will examine next.
2) Ownership
When ownership is light and position sizes are small, selling pressure tends to be more easily exhausted. At the same time, there are more potential buyers left to show up when conditions turn supportive.
Retail: lots of owners, small positions
Crypto ownership is already mainstream at the retail level.
In the U.S., roughly 14–17% of adults own cryptocurrency, and ownership is heavily skewed toward Bitcoin: ~77% of U.S. crypto holders own BTC. Yet position sizes are small. Around 80% of crypto investors have less than $10,000 invested.
About 6.8% of the global population own cryptocurrency. Within that group, Bitcoin again dominates: CoinShares estimates ~467 million Bitcoin owners globally.
Many hands, but small allocations.
Whales: accumulating into weakness
Large holders are buying into the drawdown. On-chain data from Glassnode shows that wallets holding 1,000 BTC or more have increased during recent periods of weakness. As price falls, whale ownership rises.
This shows that deep-pocketed participants are leaning into downside. These are the signals you want to watch for around bottoms.
Institutions: from “should we buy?” to “how much?”
Institutional allocation remains low. A Bank of America fund manager survey summary found 67% of managers at zero crypto allocation.
What’s changed isn’t the size of allocations: it’s the conversation. In December 2025, Reuters reported that Bank of America would allow its wealth advisors, including Merrill, to recommend crypto to clients. Suggested allocations were in the range of ~1–4% for investors who can tolerate volatility.
Crypto is becoming less of a “yes-or-no” question. It’s increasingly a portfolio sizing question.
Ownership takeaway
Put together:
Retail ownership is broad, but position sizes are small, limiting forced selling while leaving room for current owners to increase exposure
Whales are accumulating into price weakness, a pattern seen as selling pressure becomes exhausted
Institutional exposure is low, but the stance has shifted from dismissal to starting to take small positions
When ownership is light and most positions are small, there are fewer people left who need to sell. At the same time, there are many people who still haven’t bought much yet, so there is more room for new buyers to enter later.
The biggest new demand during the next bull market is likely to come from large investors moving from zero exposure to small positions, and from small positions to slightly larger ones.
Retail investors are likely to follow once prices stabilise and the narrative improves. Given that many already own some Bitcoin, they will likely have a greater propensity to increase their position size once we get confirmation of an uptrend, further fueling the move.
3. Supply and Demand
Supply and demand explain why price moves so violently in up or downtrends.
Supply: no response to price
Bitcoin’s supply is different from almost every other asset.
With commodities, higher prices bring on new supply. Bitcoin has no such mechanism.
Its monetary policy is fixed. Total supply is capped at 21 million coins, and issuance declines over time through predetermined halvings.
Higher prices do not incentivise greater production or faster issuance.
As a result, Bitcoin’s price is driven almost entirely by changes in demand.
Demand: why Bitcoin exists
Bitcoin is censorship-resistant, confiscation-resistant, and sovereign by design. It is public digital infrastructure for transferring value without relying on banks, payment networks, or trusted intermediaries.
The ledger is not owned or controlled by any single entity. Anyone with an internet connection can receive value without permission, creditworthiness, or institutional access.
Traditional financial systems increasingly rely on concentrated intermediaries with clear choke points. Bitcoin removes those choke points.
Bitcoin does not need universal adoption to justify its role. It only needs to remain a credible, censorship-resistant alternative settlement layer for global capital. As long as portability, neutrality, and sovereignty matter, there is a persistent base level of demand, which can be amplified by human emotion and FOMO as prices rise.
How low can it go?
Bitcoin has seen 30–50% drawdowns within bull markets, while full bear markets have typically involved 70–80% peak-to-trough declines. From the $126k high, both remain possible.
But based on the indicators we’ve discussed already, I think we’re much closer to a bottom at $60k than many people think:
Sentiment has moved beyond fear into ridicule.
Ownership remains light, especially among institutions, while larger holders appear to be buying into weakness rather than selling.
Additionally:
Price is now trading in a zone where prior cycle lows have often formed
The previous cycle high has historically acted as support.
Momentum indicators such as RSI are also at levels that have previously marked market bottoms or bottoming ranges.
Taken together: sentiment exhaustion, light ownership, accumulation by larger players, and technical compression, we are close to the area where a durable bottom is more likely to form than not.
Remember: Markets rarely feel safe at the bottom. By the time they do, much of the move is already gone. The goal near lows isn’t to buy the exact bottom. It’s to avoid waiting so long that the opportunity has already passed.