Bitcoin May See 70% Drawdown in Next Two Years Over Utility Misunderstandings

• Bitcoin market downturns often result in 70% drawdowns driven by investor psychology and lack of asset knowledge.

• Cyclical booms and busts persist, influenced by speculation and real-world use cases.

• Over 4 million BTC, or nearly 20% of total supply, is held by institutions, potentially stabilizing volatility per BitcoinTreasuries.NET data.

Explore Bitcoin’s price cycle risks and long-term potential in 2025. Learn why a 70% drawdown looms and how adoption could push BTC to $1M. Stay informed on crypto market trends today.

What Causes Bitcoin’s Cyclical Price Booms and Busts?

Bitcoin’s price cycles are primarily driven by investor behavior and macroeconomic factors, leading to repeated booms followed by sharp busts of up to 70%. Traders who lack a deep understanding of Bitcoin’s utility as a store of value often sell during early signs of trouble, amplifying downturns. Despite this, growing institutional adoption and real-world applications are expected to support long-term price appreciation.

A chart breaking down investor psychology patterns during different points of the Bitcoin market cycle. Source: Root

How Does Lack of Understanding Contribute to Bitcoin Market Downturns?

Vineet Budki, CEO of venture firm Sigma Capital, highlighted at the Global Blockchain Congress 2025 in Dubai, UAE, that insufficient knowledge of Bitcoin’s economic properties fuels selling pressure. He explained that when investors buy assets they don’t fully comprehend, they exit positions at the first hint of volatility, potentially causing a 65% to 70% retracement in the coming two years. This pattern underscores the need for education on Bitcoin’s utility, which remains intact even at lower prices like $70,000. Budki emphasized: “Bitcoin will not lose its utility if it comes down to $70,000. The problem is that people don’t know its utility, and when people buy assets that they don’t know and understand, they sell them first; that is where the selling pressure comes from.” Supporting this view, historical data shows Bitcoin enduring multiple cycles since 2009, with drawdowns tied to psychological triggers rather than fundamental flaws.

The broader crypto market reflects these dynamics, as analysts note that speculation often overshadows practical use cases. Yet, Budki remains optimistic, forecasting Bitcoin reaching $1 million or more per coin in the next decade. This projection stems from increasing user adoption, blending price-driven interest with tangible applications like payments and hedging against inflation. Industry observers, including executives from major exchanges, agree that while short-term volatility persists, foundational strengths position Bitcoin for sustained growth.

Financial institutions play a key role in this evolution. Governments, digital asset firms, exchange-traded funds, and crypto platforms now control over 4 million BTC—approaching 20% of the total supply, as reported by BitcoinTreasuries.NET. This concentration could mitigate extreme swings by providing a more stable demand base, contrasting with retail-driven panics.

Frequently Asked Questions

Will Bitcoin Experience a 70% Drawdown in the Next Market Cycle?

Yes, experts like Vineet Budki predict a 65% to 70% Bitcoin price retracement within two years, stemming from traders’ incomplete grasp of its value as a digital asset. This drawdown mirrors past cycles but is expected to recover through adoption and utility, maintaining Bitcoin’s role in global finance.

Is the Traditional Four-Year Bitcoin Cycle Still Relevant in 2025?

The four-year Bitcoin cycle persists as investors treat it as a risk-on asset, despite its store-of-value attributes, according to Seamus Rocca of Xapo Bank. While macroeconomic influences like interest rates gain prominence, halving events continue to shape market rhythms naturally.

Key Takeaways

• Investor Education is Crucial: Understanding Bitcoin’s utility prevents panic selling during downturns, stabilizing prices long-term.
• Institutional Holdings Stabilize Markets: With 20% of supply in institutional hands, volatility may decrease over time.
• Long-Term Optimism Prevails: Despite short-term risks, Bitcoin’s path to $1 million hinges on adoption—consider building knowledge now for informed investing.

Conclusion

In summary, Bitcoin’s price cycles remain vulnerable to downturns of 65% to 70% due to gaps in investor understanding of its economic properties, as noted by experts like Vineet Budki. However, with institutional adoption surpassing 4 million BTC and real-world use cases expanding, the asset’s trajectory points toward $1 million by 2035. As the market matures, focusing on education and fundamentals will be essential for navigating 2025’s challenges and seizing future opportunities in cryptocurrency.