Bitcoin, the world's largest cryptocurrency, has long been defined by boom-and-bust cycles that produced drawdowns exceeding 75% in every major downturn. The most recent bear market broke that mold, erasing roughly 55% of the asset's value from the peak reached in October 2025. By the standards of most asset classes, that is still a brutal decline. Measured against bitcoin's own history, however, it was remarkably mild. In the 2021–2022 cycle, bitcoin lost more than 75% after topping out near $69,000, and earlier cycles produced drops of 80% or more. The pattern of extreme volatility appears to be softening.

Analysts point to several converging forces behind the change: the arrival of spot bitcoin exchange-traded funds, the growing presence of institutional investors, and the sheer size the asset has attained. Experts disagree on which factor matters most, but most expect future cycles to deliver smaller peaks and shallower crashes. The most consequential of these forces arrived in January 2024, when U.S. regulators approved the first spot bitcoin exchange-traded funds.

How ETFs Changed Who Owns Bitcoin

Before ETFs existed, bitcoin ownership was dominated by retail traders and crypto-focused funds — groups that often held large portions of their portfolios in the asset. The introduction of spot bitcoin ETFs opened the door to financial advisers and traditional investors, many of whom allocate only a small slice of a portfolio to bitcoin, often around 2%.

Bitwise research director Ryan Rasmussen explained that a 50% price drop hits these investors far less hard than someone holding a much larger allocation, a difference that changes how the market reacts to price swings.

Rebalancing adds another stabilizing force. When bitcoin falls, advisers targeting a fixed allocation may buy more to restore the target weighting. When bitcoin rallies sharply, they may sell some to bring the allocation back down. The behavior can cushion price crashes — and it can also cap the size of rallies.

Not every analyst agrees that ETFs are the main driver. Jim Ferraioli, head of crypto research at Schwab, points instead to bitcoin's size. The asset now carries a market capitalization near $2 trillion, meaning it takes far more capital to move the price by the same percentage it once did.

A Fifth Bull Market Signal Appears

Separately, a CryptoQuant analysis has produced a data point that some are calling a bull market confirmation. The signal tracks the cost basis — the average purchase price — of short-term holders relative to long-term holders, a key on-chain measure of where each cohort acquired its coins. When the short-term holder cost basis rises above the long-term figure, it has historically marked a turning point. In practical terms, a crossover means the most recent wave of buyers is carrying a higher average entry price than the longer-tenured base beneath them — a snapshot of fresh demand paying up for supply. The crossover has now occurred five times in bitcoin's history, following prior instances in 2012, 2015, 2019, and 2023.

The analyst behind the report, known asfost, said the pattern adds credibility to a recovery he first flagged in July, while noting that there is always a margin for error in this kind of signal.

✅ Bull Market Confirmed. After sharing with you that the end of the bear market was approaching with a signal given on July 11th, we now have the confirmation signal that the momentum has indeed shifted. This is the 5th occurrence, which gives a bit more credibility to the… pic.twitter.com/wuwdUsAW5J

— Darkfost (@Darkfost_Coc) September 24, 2026 (source)

The measure excludes coins that have sat untouched for more than seven years, since those wallets are considered dormant rather than active. With that margin for error in mind, whether the short-term holder cost basis holds above the long-term line is the natural follow-up data point for anyone tracking the signal.

ETF Inflows Accelerate

Meanwhile, spot bitcoin ETFs drew strong demand last week. The funds took in $2.06 billion over three trading sessions, according to Farside data. The largest single day was Sept. 21, when inflows hit $999 million — the biggest one-day total of 2026. Inflows then eased to $714.7 million and $346.9 million over the following two days. Because those figures post daily, the coming sessions offer a running gauge of whether last week's institutional demand was sustained.

CryptoQuant founder Ki Young Ju said in a Sept. 22 note that growing institutional ownership could lead to milder cycles going forward. He forecast that bitcoin could see three to five times its current value this cycle, followed by a softer downturn than in the past.

This article was originally published on CoinCentral.