Welcome to our Institutional Top of Mind with 10x Research, with our Macro Shifts series examining the forces reshaping the crypto landscape in 2025. Each analysis offers institutional investors a data-driven perspective on the regulatory environment, political influences, market infrastructure development, and macroeconomic drivers that matter most. Join us as we analyze these macro shifts through an institutional lens, providing deeper insights for sophisticated market participants navigating this rapidly evolving space.
In our fifth installment, we explore Bitcoin's evolving market dynamics, examining how traditional 80% drawdowns have transformed into shorter 30-50% corrections as the asset matures institutionally. 10x Research investigates the shift from survival-driven sell-offs to conventional market influences, while highlighting how on-chain data provides unique market timing advantages over traditional dark pool trading. Current indicators suggest we're entering a "mini" bear market phase, presenting potential buying opportunities unlike the extended downturns of previous cycles.
TLDR:
A bear market in stocks is typically a 20%+ drop lasting two months, but for Bitcoin’s higher volatility, a 50% decline is common, with past cycles seeing drawdowns as deep as 80% and frequent 30% mini-bear markets.
Bitcoin’s deepest past corrections were fueled by survival fears, but today, those concerns have been put to rest.
As Wall Street’s presence grows and Bitcoin matures as a store of value with deeper options markets, volatility will likely decline, potentially redefining a Bitcoin bear market from a 50% drop to a more moderate 30% correction.
On-chain data indicates Bitcoin may be in a short-lived "mini" bear market, offering potential buying opportunities unlike the prolonged -80% declines of past cycles.
Many have argued that Bitcoin has entered either a bear market or an extended consolidation phase. In traditional markets, a bear market is typically defined as a decline of 20% or more from recent highs, sustained over at least two months, as seen with indices like the S&P 500. A similar benchmark applies to commodities such as gold and oil. For bonds, where volatility is lower, a 10% drop in long-term bond prices is often sufficient to classify as a bear market.
While stocks and bonds typically enter bear markets in anticipation of recessions, driven by slowing earnings growth or macroeconomic headwinds, Bitcoin bear markets have often been triggered by different catalysts. These include regulatory crackdowns, major exchange failures, broader economic downturns, or sharp repricing of capital costs—such as the shift that occurred in November 2021.
Given Bitcoin’s higher volatility, a 50% decline is often considered the standard threshold for defining a bear market. However, past cycles have included sharper drawdowns of up to 80% and several mini-bear markets with 30% corrections. With regulatory approval from the SEC and Wall Street’s growing involvement through Bitcoin ETFs, Bitcoin is now less likely to experience the extreme 80% bear markets of previous cycles.
Exhibit 1: Bitcoin drawdown history – cycle declines of -80% were once the norm
Historically, Bitcoin’s most profound cycle corrections were often driven by existential concerns—whether Bitcoin could survive by attracting fresh capital or whether miners would continue to secure the network as rewards dipped below breakeven levels. Today, those doubts have largely been resolved. Widespread adoption and regulatory recognition have pushed Bitcoin beyond questions of viability, making it less risky to own now than at any previous point in its history. While the 50% bear market threshold may evolve, mini-bear markets of around -30% remain likely as sentiment and speculation continue to drive prices to temporarily unsustainable extremes.
With Wall Street’s growing involvement, Bitcoin is increasingly being treated as a store of value, making it less susceptible to the type of panic-selling often seen among retail investors. Coupled with a maturing and liquid options market, this will likely contribute to a decline in Bitcoin’s overall volatility. As a result, the traditional benchmark for defining a Bitcoin bear market—a 50% decline from recent highs—may eventually shift to a more moderate threshold, such as a 30% drawdown.
Existential threats no longer drive Bitcoin bear markets but have instead come to mirror the same concerns that affect stock and bond markets. These include shifts in monetary and fiscal policy, which shape broader economic conditions, changing expectations around corporate profitability, and broader narratives that drive capital flows into and out of risk assets. As a result, Bitcoin is increasingly behaving more like a risk asset, becoming more correlated with equities and losing some of its appeal as a uniquely uncorrelated asset. This key feature previously made it attractive for diversifying multi-asset portfolios.
While Wall Street often holds an edge over retail investors by having access to buy and sell flows from large institutional players, Bitcoin levels the playing field through its transparent on-chain data. Anyone who analyzes this data can gain an informational advantage and improve their ability to time bull and bear markets. In this sense, Bitcoin represents a true democratization of financial markets, as all transactions are permanently recorded and publicly visible on the blockchain—unlike equities, where significant trading activity occurs in dark pools hidden from the broader market.
Exhibit 2: Bitcoin On-Chain Data: An Early Warning Indicator
This enables us to define bear markets not just by arbitrary percentage declines but by analyzing the behavior of short-term investors. The Short-Term Holder Market Value to Realized Value ratio (STH MVRV) is a key example. It compares Bitcoin’s current market price to the average price at which short-term holders acquired their coins, offering deeper insight into market sentiment and risk.
Crucially, on-chain data can signal the onset of a bear market well before a major price decline occurs. For instance, the MVRV indicator flashed a bear market warning as early as February 25, when Bitcoin was still trading at $88,769—far ahead of the typical -30% to -50% drop most investors wait for before labeling a bear market.
While numerous other metrics support this view, the data suggests that Bitcoin may have already entered one of the "mini" bear markets that have become more common in recent years. Unlike the drawn-out, 18-month cycles with -80% corrections of the past, today's bear markets are likely to be shorter-lived and, much like in equities, could present attractive buying opportunities.
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