Bitcoin’s 77% Drawdown Era Is Over – Bitwise CIO Declares New Market Reality

Bitcoin just grew up. The days of catastrophic 77% price collapses belong to its volatile adolescence, not its institutional future.

The New Maturity Metric

Forget the old boom-bust cycles. The infrastructure now underpinning Bitcoin—from spot ETFs to corporate treasuries—creates a price floor that simply didn't exist during previous crashes. Liquidity has transformed from a thin trickle to a deep reservoir.

Why This Time Is Structurally Different

Market structure has undergone a silent revolution. Regulatory clarity, however grudgingly given, has allowed real capital to enter. The asset is no longer solely traded by speculators on fringe exchanges; it's held in regulated vehicles and on balance sheets. This changes the entire volatility calculus.

The Professionalization of Volatility

Drawdowns will still happen—this is crypto, after all. But the nature of the drops has shifted. Expect sharper, shorter corrections driven by leverage unwinds, not the slow, existential dread of a 77% erosion of confidence. The market now has shock absorbers.

One cynical fund manager might call it the 'financialization of digital gold'—turning a rebel asset into just another thing for Wall Street to fee-ify. But even they can't argue with the charts. The extreme tail risk has been clipped. Bitcoin's next act isn't about surviving another epic crash; it's about managing the boring, profitable stability that follows.

Crypto Bear Markets End In Exhaustion, Not Excitement — Bitwise CIO

On Friday, February 6, Bitwise’s Chief Investment Officer, Matt Hougan, answered questions the about the current structure and outlook for the Bitcoin price. The senior executive wrote about why the market is down, if it would fall further, and what would help the BTC price reach a bottom.

Hougan started by noting that there is never a single reason why the crypto market fell, as multiple factors are often at play. In this latest correction, the Bitwise CIO listed about six contributing factors, including front-running the four-year cycle, the loss of “attention investor” to AI and metals, and the infamous October 10 liquidation event.

It is important to note that the market and the Bitcoin price action has not been the same since the significant Leveraged blowout on October 10, 2025. This historical liquidation event came off the back of United States President Donald Trump announcing a surprise 100% tariff on all Chinese goods.

Other factors highlighted in the Bitwise’s report include concerns around Kevin Warsh as Federal Reserve chair, quantum computing fears, and macro risk-off sentiment. Notably, it could be said that bitcoin and the crypto market are not the only victims of this sentiment shift, as mineral and stock markets have also seen significant declines.

Hougan mentioned the good news is that the sell-off signs appears to be showing signs of exhaustion.

The Bitwise CIO wrote:

According to onchain data, long-term holders have stopped selling aggressively, and some are beginning to nibble around the edges. Open interest on Bitcoin derivatives exchanges has fallen to levels last seen in 2024.

Hougan went on to say that, if history is to go by, it is possible for the Bitcoin price to fall further in the current structure. However, the investment expert also believes that premier cryptocurrency is a more mature asset, and is less likely to see a 77% correction as in the past.

While he could not pinpoint the exact time the Bitcoin price WOULD reach a bottom, the Bitwise CIO revealed that the catalyst that could turn things around is simply time. “Crypto bear markets tend to end in exhaustion, not excitement,” Hougan concluded.

Bitcoin Price At A Glance

As of this writing, the price of BTC stands at around $67,834, reflecting an over 4% jump in the past 24 hours.