Bitcoin has fallen roughly 25% from its October 6 all-time high of about $126,000, but analysts at Bernstein maintain this is a temporary correction rather than the onset of a prolonged downturn.

Correction driven by cycle fears

According to a recent note from Bernstein, investors have been selling preemptively due to fears that 2025 will mirror prior four-year cycle peaks, which historically triggered major drawdowns in 2013, 2017, and 2021.

However, Bernstein analysts led by Gautam Chhugani believe the current conditions differ, with the sell-off representing “a relatively shallow correction” instead of a typical 60% to 70% plunge.

They point to significant absorption of long-term holder supply, with about 340,000 BTC—worth around $38 billion—sold over the last six months and largely absorbed by spot ETFs and corporate treasuries, which have seen $34 billion in inflows.

Institutional ETF ownership rises

The report highlights that institutional ownership of bitcoin ETFs has climbed from 20% at the end of 2024 to 28% currently, and total ETF assets under management have reached $125 billion.

This “higher quality and consistent ownership” is seen as reducing the risk of a deeper sell-off.

Strategy’s position and market outlook

There has also been concern that Strategy (formerly MicroStrategy) might need to sell bitcoin if prices continue to decline.

Bernstein addressed this, noting that Strategy’s management has confirmed no intention to sell and that its leverage is conservative at $8 billion in debt against $61 billion in bitcoin holdings.

Bernstein points to several tailwinds, including strong political support for bitcoin under the Trump administration, expected regulatory clarity, and a favorable liquidity environment. They conclude:

“The market does not feel like a cycle-peak but rather part of a multi-year trend defined by institutional participation and recurring, moderate corrections.”