On Friday morning, before the post-Jackson Hole rally lifted most risk assets, bitcoin was trading below $112,000 — its lowest level since early August. Since then, it also hit an all-time high close to $125,000 just last week, validating what many bitcoin proponents had anticipated as institutional investors stepped into the asset: drawdowns following a new record would get smaller. “This current bitcoin bull run certainly stands out and reveals a lot about crypto’s evolution as an asset class,” said David Duong, head of institutional research at Coinbase. “Both the rally year to date and the trend of progressively smaller drawdowns has a lot to do with the growth in institutional demand, supported by greater regulatory clarity.” On Aug. 14, bitcoin hit its fifth record of the year at $124,496 before sinking 10% to Friday morning’s low of $111,658. While that drawdown was slightly more than the one before it, a 9% slump from the July 14 record of $123,194, it was was smaller than the troughs that came after bitcoin’s highs in January and May. “The shallower drawdowns suggest increased confidence in bitcoin’s resilience amid a more challenging macro environment, with long-term holders and corporate treasuries anchoring demand,” said Duong. “This also reflects dramatically improved market liquidity … and a potential regime change in capital market assumptions.” In the past three-, five- and 10 years, bitcoin has gained 455%, 913% and 51,600%, respectively. It’s also suffered several 70% drawdowns at various times. Long-time bitcoin holders wear their ability to hang on as a badge of honor, saying that drawdowns of 30% are common during bitcoin’s bull market cycles. Bitcoin’s resilience to market turmoil was apparent in April, when President Donald Trump first announced sweeping tariffs and the flagship cryptocurrency outperformed other risk assets. At the time, bitcoin had traded above $80,000 for most of the year, falling to just below $75,000 as the stock market swooned. Investors attribute bitcoin’s strength to increasing acceptance and demand from institutions amid the macroeconomic tumult – using ETFs tracking bitcoin and ether, and public companies devoted to accumulating crypto assets. “Bitcoin’s rhythm this year tells you everything about how much the market has matured,” said Ben Kurland, CEO at crypto research platform DYOR. “Each time it’s hit all-time highs and pulled back, the drawdowns have been smaller and the rebounds quicker. That’s a reflection of stronger hands, deeper conviction and a wider base of long-term holders who treat volatility as opportunity rather than threat.” “A rate cut next month would be a massive catalyst, while a delay could spark short-term capitulation before the next leg higher,” Kurland added, referring to the chance the Federal Reserve will trim its fed funds borrowing rate in September. “Either way, the eventual timing of monetary easing could align perfectly with the final push of this cycle, and unlike past cycles, the drawdown that follows is likely to be shallower, leaving the door open for renewed upside long before the next halving .” The last halving was in April 2024. —CNBC’s Nick Wells and Chris Hayes contributed reporting
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