David Bailey, entrepreneur and Bitcoin adviser to US President Donald Trump, asserts that another Bitcoin bear market is unlikely for several years due to increasing institutional interest in the crypto market.
However, the four-year cycle suggests otherwise, and crypto analysts inform Cointelegraph that significant challenges could impact the markets negatively.
“It’s the first time we’ve ever seen real institutional buy in,” said Bailey in an X post on Saturday.
“Every Sovereign, Bank, Insurer, Corporate, Pension, and more will own Bitcoin. The process has already begun in earnest, yet we haven’t even captured 0.01% of the Total addressable market (TAM). We’re going so much higher. Dream big,” he stated.
He remarked that earlier institutional interest was merely “outliers with marginal bets.”
Bailey, the founder of Bitcoin Magazine and BTC Inc., was an adviser during Trump’s presidential campaign and is credited with playing a key role in the president’s Bitcoin strategy.
Over the past two years, institutions have gradually increased their exposure to crypto through investment vehicles such as exchange-traded funds (ETFs) and the establishment of crypto treasuries — with total holdings exceeding $100 billion, primarily comprised of Bitcoin (BTC).
Reasons for a crypto bear market
A June report from venture capital (VC) firm Breed indicated that few of these treasury companies might persist in the long term, which could initiate the next crypto bear market.
Speaking to Cointelegraph, ZX Squared Capital co-founder and chief investment officer CK Zheng commented that crypto remains highly correlated with the stock market; if the stock market enters a bear phase, “crypto will follow.”
Earlier this year, the stock market nearly dipped into a bear market, but according to Zheng, it rebounded, and subsequent developments have diminished the chances of a recurrence.
“The question for the rest of the year is whether a bear market will occur, and that’s an engaging discussion. My personal perspective is it’s probably unlikely, especially after the Fed’s decision to lower interest rates and Jerome Powell’s speech last Friday,” he remarked.
“Right now, it’s one of the biggest signals regarding the Fed’s likely interest rate cuts in September, marking the commencement of a low-interest-rate cycle, considering the economic data and labor market softening.”
Meanwhile, Pav Hundal, lead market analyst at Australian crypto broker Swyftx, noted that the market has been risk-on, facilitating a shift into high-momentum assets like Bitcoin and Ether (ETH).
However, he anticipates a re-rotation back into fixed income instruments at some stage.
“The path of least resistance is upward for Bitcoin, but that doesn’t imply a bear market is years away. Macro shocks often happen unexpectedly. I suspect we will continue to see reduced price volatility in each cycle,” Hundal observed.
“Interest rate increases are politically complicated, but the market anticipates another rise within the next year, which could trigger a correction.”
End to crypto bear markets a possibility
The last bear market occurred in 2022, and the previous one was in 2018, both following a flourishing bull market.
Ryan McMillin, co-founder and chief investment officer of Australian crypto investment manager Merkle Tree Capital, informed Cointelegraph that the current base case indicates a peak around Q2 2026, followed by a potential mild bear market by mid-2026 if and when global liquidity reverses.
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“A leverage unwind from debt-driven Bitcoin purchases or a regulatory shock could instigate the downturn,” he noted.
“The Direct Access Trading (DAT) and institutional markets bring substantial demand pools, but they also include risks; some DATs may join the market late, over-leveraged and unprepared for the volatility that characterizes this asset class, potentially becoming the catalyst for the next bear market.”
Nonetheless, McMillin believes there’s also a chance that there may be no bear market at all, akin to gold after the early 2000s ETF launch, as the asset was financialized and rose continuously for 8 years.
Another consideration is the bull market leading into any bear market; without a significant bull market, a deep and sustained bear market may not occur.
“So far, this cycle has seen increases accompanied by periods of consolidation, resetting leverage, and allowing the bull market to persist. If this structure continues, then there may not be a bear market; rather, there will be regular corrections, which present excellent buying opportunities,” McMillin added.
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