Bitcoin's current market drawdown — sitting roughly 35% below its all-time high — is proving significantly less severe than previous bear market cycles, according to multiple analysts, with steady inflows into Bitcoin exchange-traded funds (ETFs) and continued corporate accumulation helping to absorb selling pressure. However, warnings of a possible further pullback persist, highlighted by at least one large investor maintaining a costly short position despite mounting losses.
A Shallower Decline
Bitcoin's current retreat from its all-time high stands at approximately 35%, a drawdown that analysts note is considerably smaller than the steep collapses seen in prior bear market cycles, which have historically seen losses of 70–85% from peak prices.
According to analysis cited by Cointelegraph, the key difference this cycle appears to be structural: the approval and growing popularity of spot Bitcoin ETFs in the United States has introduced a consistent pool of institutional and retail demand that continues to absorb sell-side pressure. Corporate treasury buying — companies adding Bitcoin to their balance sheets as a reserve asset — has added another layer of price support.
"Steady ETF inflows and corporate Bitcoin buying continue to absorb selling pressure," one analyst noted, suggesting the market dynamics of 2025–2026 differ meaningfully from previous downturns in 2018 and 2022.
A Contrarian Whale Holds Firm
Not everyone is convinced the worst is over. According to Cointelegraph, at least one prominent Bitcoin whale — a large-volume trader — has maintained a significant short position against Bitcoin, now sitting on approximately $13 million in net losses as prices have held relatively firm.
Despite the mounting losses, the trader has reportedly not closed the position, betting that a pullback toward the $71,000 level remains plausible. Analysts tracking on-chain data point to a cluster of bearish technical indicators that could, in theory, support such a move if buying pressure subsides.
Divided Analyst Opinion
Decrypt's reporting underscores the tension in current market sentiment. While the shallower drawdown is widely acknowledged, analysts caution that a bear market resumption cannot be ruled out. The 35% decline, while modest by crypto standards, still represents a substantial loss for investors who entered near the peak.
The debate ultimately centres on whether the structural changes brought by ETF adoption and institutional participation have permanently altered Bitcoin's volatility profile — or whether the asset remains as susceptible to sharp downturns as it has historically been.
For now, price action suggests a market in an uneasy equilibrium: supported by new institutional infrastructure, but still vulnerable to shifts in sentiment, macroeconomic conditions, or large-scale selling by major holders.
Analysis
Why This Matters
- Bitcoin's reduced volatility, if sustained, could make it a more credible institutional asset class, influencing how pension funds, sovereign wealth funds, and corporate treasuries view crypto exposure.
- ETF inflows represent a structural shift in how capital enters the Bitcoin market — if these flows reverse, the support mechanism underpinning this cycle's shallower drawdown could disappear rapidly.
- The standoff between bullish ETF-driven demand and bearish large-trader positioning will likely determine whether Bitcoin consolidates at current levels or tests lower support zones in coming months.
Background
Bitcoin has experienced three major bear markets since its mainstream emergence: a roughly 84% decline from its 2017 peak, an 83% drop following the 2021 bull run, and the 2022 collapse triggered in part by the implosion of the Terra/Luna ecosystem and the FTX exchange. Each cycle saw retail investors bear significant losses, and each recovery took one to three years.
The landscape changed materially in January 2024, when the U.S. Securities and Exchange Commission approved the first spot Bitcoin ETFs. Products from BlackRock, Fidelity, and others attracted tens of billions of dollars in inflows within their first year, introducing a more predictable and continuous demand source. Simultaneously, publicly traded companies — most notably Strategy (formerly MicroStrategy) — expanded their Bitcoin treasury holdings, further tightening available supply.
Bitcoin reached a new all-time high in late 2024 before entering the current corrective phase, which by May 2026 had trimmed approximately 35% from peak prices — a decline analysts are now comparing favourably to prior cycles.
Key Perspectives
Bullish analysts: Argue that ETF infrastructure and corporate accumulation represent a fundamental change in market structure, creating a demand floor that did not exist in previous cycles. They contend the shallower drawdown validates this thesis.
Bearish traders: Point to a cluster of on-chain and technical indicators suggesting the correction may not be complete, with some targeting a revisit of the $71,000 level. The whale maintaining a $13 million losing short position represents this camp's conviction.
Critics and sceptics: Warn that attributing the shallower decline solely to ETFs may be premature. Macro conditions — including interest rate environments and equity market performance — have also played a role, and a significant macro shock could overwhelm ETF-driven support regardless of structural improvements.
What to Watch
- Weekly ETF flow data: Sustained net inflows would reinforce the bull case; outflows of meaningful size would signal institutional sentiment is shifting.
- The $71,000 price level: A drop to this zone would validate the bearish whale's thesis and could accelerate further selling.
- The high-profile short position: Whether the whale closes, increases, or holds the position will be a closely watched signal of large-player conviction in the near term.