Summary Bitcoin market cycles are being disrupted by rising institutional ownership, now at 14%, leading to greater price stability. Traditional whale-driven sell-offs are less effective as institutional investors hold for the long term and are less swayed by volatility. BTC's largest recent drawdown was only 30%, compared to 50% in 2021 and multiple 30% drops in 2017, highlighting increased resilience. Future Bitcoin volatility will be narrower, with higher price floors, as institutional investors reshape market dynamics and diminish the impact of whale sell-offs. Over the last several cycles of Bitcoin ( BTC-USD ), major price movement, especially on the downside, has been associated with some Bitcoin whales selling off their holdings in order to drive the price of Bitcoin down to take advantage of the lower price in order to take a new position in the foundational crypto. That has been rapidly changing, as publicly traded firms now have Bitcoin holdings of over 1 million BTC, and total institutional ownership now accounts for approximately 14% of all Bitcoin. That percentage is going to continue to expand in the years ahead. According to CryptoQuant , some of the largest holders of Bitcoin have participated in the largest selloff since 2022. Chart on Bitcoin whales selling of their reserves. (CryptoQuant) In this article we'll look primarily at the disruption of past Bitcoin cycles and what it means going forward. The Bitcoin whale strategy As briefly mentioned above, the past activity of Bitcoin whales (not hodlers) has been to start selling off when retail investors with a bad case of FOMO start to buy at or near the top of a cycle. At that time the whales start to sell off, and the price of Bitcoin has predictably plummeted by about 80 percent or so. Once that has happened, the whales of course start to buy up as retail investors panic sell into the weak Bitcoin price environment. While that has worked in the past, under the changing Bitcoin market the cycle has been disrupted, and the whales that have been selling off in big chunks lately are going to regret doing so, not understanding the changes in the crypto market. My thesis is long into the future we're unlikely to see the price of Bitcoin plunge by the percentages it has in the past, which if I'm correct, means that the whales that have been selling off may never see the cost basis in Bitcoin they had before they started selling. That of course doesn't mean there won't be periods of volatility in prices, but it does mean the spread between former price movements and the current Bitcoin price environment has contracted and aren't going to swing back and forth as they have in the past. The new Bitcoin market What has been gradually changing and emerging in the Bitcoin sector has been the increasing interest and investment from institutional investors. Since retail investors were the primary drivers of the past Bitcoin bull markets, the money would move in and out of the market in a heartbeat, which is why once the price started to quickly drop, it was like trying to catch a falling knife. The vast majority of institutional investors on the other hand, operate from a different mindset: they are in it for the long term, and don't, for the most part, make buy-and-sell decisions based upon FOMO because of price volatility on either side of the play. For example, in 2017 we saw Bitcoin trading at under $1,000 and soaring to almost $20,000, primarily from retail buyers taking positions. After the run-up, it pulled back to a bottom of approximately $3,200. In 2021, retail buyers pushed the price of Bitcoin from about $10,000 to up to $69,000. It eventually fell to close to $15,000. 5-year Bitcoin graph (Seeking Alpha) That started to change in early 2024, with Bitcoin hitting a new all-time high approximately a month before the last halving. In the past, Bitcoin never reached a new all-time high before the halving. After that happened, it traded sideways for a while before jumping to another all-time high in December of 2024. From that time Bitcoin hit its current all-time high of $124,500, and has since dropped to around $107,000, placing it at a similar level it traded in the latter part of 2024. The point in all of this is, the price of Bitcoin has held strong even though whales have been selling off billions in Bitcoin. What has changed? There is no doubt in my mind it's the positive consequence of institutional investors taking big positions in Bitcoin at big levels, which results in a much more stable price. So far in the current Bitcoin bull market the largest drop in price was 30% in April as a result of fears related to tariffs. In comparison, in 2017 we saw the price of Bitcoin fall by 30% numerous times, and in 2021 it fell as much as 50% during the bull market. Conclusion The Bitcoin price cycle has been permanently disrupted by increasing participation from institutional investors. Not only have they disrupted the past cycles, that were predictable, but it has disrupted the current cycle as well, with things like timeframe and tops and bottoms no longer based upon prior criteria, i.e., retail whales. In other words, we have no idea how Bitcoin is going to perform in the years ahead, aside from it's going to continue to go up in price, the floor is going to continue to climb, and the spread between tops and bottoms is going to contract. Again, that isn't meant to suggest a lack of volatility, only that volatility isn't going to be in as wide as swings because of institutional investors that aren't as prone to make emotion-driven investing decisions. The point of the article is to not base Bitcoin investing decisions based upon the recent sell-off from whales that are hoping to reproduce Bitcoin's past performance. Institutional investors have totally changed the game, and while we'll have some significant price swings, they're not going to be at the levels they have been in the past. Institutional investors are going to be more like retail hodlers that have held on for years, rather than those trying to drive the market by selling off large blocks of Bitcoin. That means there will be a more stable Bitcoin market now and, in the future, and those selling off in hopes of driving the price of Bitcoin down as in the past, are going to regret it as the price fails to drop to levels that would make it worthwhile. That doesn't include the tax liability associated with selling at a profit. The worst drawdown we’ve seen across this bull run was a 30% drop in April on the tariff fears. That’s it. In 2021, we dropped 50%, in a bull market. In 2017, we dropped 30% nine times. And even despite this recent drawdown, as of this writing, bitcoin is still up nearly 19% year to date. The major reason is directly related to the emerging impact of institutional investors on the Bitcoin market. One thing that is readily apparent is, the prior Bitcoin cycles have been disrupted, and new cycles are emerging which have yet to be made clear as to the price range Bitcoin will trade in and what the higher price floor will be.
