David Bailey, entrepreneur and Bitcoin adviser to US President Donald Trump, states that another Bitcoin bear market won’t occur for several years due to increasing institutional interest in the crypto sector.
However, the four-year cycle argues differently, and crypto analysts share with Cointelegraph that several challenges could destabilize the markets.
“This is the first time we’ve truly seen significant institutional buy-in,” claimed Bailey in a post on X last Saturday.
“Every Sovereign, Bank, Insurer, Corporate, Pension, and more will invest in Bitcoin. The process is already underway, yet we haven’t even captured 0.01% of the Total Addressable Market (TAM). We’re destined for significant growth. Dream big,” he added.
Earlier interest from institutions was merely “outliers with minimal stakes.”
Bailey, founder of Bitcoin Magazine and BTC Inc., acted as an adviser during Trump’s presidential campaign and is recognized as a key figure in the president’s shift toward Bitcoin.
Over the past two years, institutions have gradually increased their exposure to crypto via investment vehicles like exchange-traded funds (ETFs) and the establishment of crypto treasuries, with total holdings exceeding $100 billion, primarily in Bitcoin (BTC).
Factors for a crypto bear market
A June report from venture capital (VC) firm Breed indicated that many of these treasury companies may not survive in the long run, potentially triggering the next crypto bear market.
In an interview with Cointelegraph, ZX Squared Capital co-founder and chief investment officer CK Zheng noted that crypto remains highly correlated with the stock market; if stocks decline into a bear market, “crypto will follow suit.”
Earlier this year, the stock market was on the brink of entering a bear market, but according to Zheng, it rebounded, and multiple developments since then have reduced the likelihood of a repeat performance.
“The question remains for the rest of the year: will a bear market occur or not? That’s an intriguing discussion, but my personal view is that it’s probably unlikely, especially after the Fed’s pivot to lower interest rates and Jerome Powell’s speech last Friday,” he stated.
“Currently, this is one of the strongest signals regarding the Fed’s readiness to cut the interest rate, likely in September, marking the start of a low-interest-rate cycle, given the economic data and the labor market softening.”
Meanwhile, Pav Hundal, lead market analyst at Australian crypto broker Swyftx, remarked that the market has been risk-on, fostering a shift towards high-momentum assets like Bitcoin and Ether (ETH).
However, he anticipates a return to fixed-income instruments at some point.
“The path of least resistance leans upward for Bitcoin, but that doesn’t imply a bear market is years away. Macro shocks often come unexpectedly. I suspect we’ll continue seeing decreased price volatility across each cycle,” Hundal commented.
“Interest rate increases are politically complicated, but the market anticipates another rise within the next year, which could spark a correction.”
Possibility of an end to crypto bear markets
The previous bear market occurred in 2022, and before that, in 2018. In both scenarios, a robust bull market preceded the downturn.
Ryan McMillin, co-founder and chief investment officer of Australian crypto investment manager Merkle Tree Capital, shared with Cointelegraph that the current base case estimates a peak around Q2 2026, and “if and when global liquidity reverses around this time, it could initiate a relatively mild bear market by mid-2026.”
Related: Bitcoin has ‘greater than 50% chance’ of $150K before bear hits: Exec
“A leverage unwind resulting from debt-fueled Bitcoin purchases or a regulatory shock could ignite the downturn,” he explained.
“The Direct Access Trading (DAT) and institutional markets create significant demand pools, but they also bring risks; some of the DATs might arrive late to the scene, over-leveraged and unprepared for the volatility that characterizes this asset class, potentially triggering the next bear market.”
However, McMillin asserts that there is a chance that no bear market will materialize at all, “akin to gold post the early 2000s ETF launch, during which the asset was financialized and rose continuously for eight years.”
Another element to consider is the bull market that precedes any bear market; without a significant bull run, a prolonged and deep bear market is unlikely.
“Thus far, the upward movements in this cycle have experienced periods of consolidation, leverage is being reset, and the bull market endures. If this trend continues, then a bear market may not occur; instead, there will be regular corrections that present excellent buying prospects,” McMillin concluded.
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