Bitcoin is down 55% from its peak - here's why Tom Lee predicts crypto bull run as $15.6 billion options expiry looms

Bitcoin’s latest bear market was severe, but the decline was smaller than some of the cryptocurrency’s previous crashes.

The cryptocurrency dropped about 55% from its October 2025 peak during its most recent drop. In November 2021, Bitcoin traded at close to $69,000 and then fell below $16,000 approximately one year later, a decline of more than 75%. Earlier cycles produced drawdowns of 80% or more.

The latest decline comes as Bitcoin’s investor base and market structure continue to change. Spot Bitcoin exchange-traded funds launched in January 2024, giving financial advisers and other professional investors a familiar way to gain exposure to the cryptocurrency.


Bitcoin is now back around a $2 trillion market capitalization, making the spectacular multiples of its earlier years harder to replicate.

Bitcoin (BTC USD) Latest Decline Was Smaller Than Earlier Crashes

Bitcoin has experienced sharp rises and falls throughout its history. The cryptocurrency climbed from less than $4,000 in early 2019 to almost $69,000 in 2021. After falling to its 2022 low, BTC USD later rose above $100,000 following the launch of US spot Bitcoin ETFs.

Ryan Rasmussen, director and head of research at Bitwise, said Bitcoin ownership was more heavily concentrated among retail investors, crypto-native funds and traders making tactical bets before the ETFs launched, as per a CoinDesk report.

Rasmussen pointed out that the ETFs gave financial advisers and other professional investors a familiar way to add Bitcoin to traditional portfolios.

How Bitcoin ETF Investors Approach the Market

Rasmussen said a professional investor might allocate around 2% of a portfolio to Bitcoin, while crypto-focused retail investors can have 20%, 30% or more of their money tied to the asset.

He explained that an investor with a 2% Bitcoin allocation would see the overall portfolio fall by about 1% if Bitcoin dropped 50%.

Rasmussen also pointed to portfolio rebalancing.

An adviser targeting a 2% Bitcoin allocation may buy after a steep decline to bring the position back to its target. If Bitcoin rises and reaches 5% of the portfolio, that investor may sell some Bitcoin during rebalancing.

Rasmussen said this behavior could soften sell-offs while also limiting the size of rallies.

Mark Connors, chief investment officer at Risk Dimensions, expects growing institutional participation to contribute to smaller drawdowns than the 70%-80% declines seen during previous Bitcoin cycles.

Connors also said Bitcoin’s volatility has fallen over time while its returns have moderated. He said greater institutional participation could result in “smaller blow-off tops due to rebalancing.”

Bitcoin’s $2 Trillion Market Cap Changes the Equation

Jim Ferraioli, Schwab’s director for digital asset research, offered a different explanation for Bitcoin’s changing price swings.

Ferraioli said he would not necessarily agree that ETFs and institutional investors are driving the change.

He also noted that ETF ownership should not automatically be considered institutional ownership because individuals can buy the funds as well.

Ferraioli instead pointed to Bitcoin’s size.

Bitcoin is back around a $2 trillion market capitalization, meaning it requires far more money to double than it did when the cryptocurrency was worth a few billion dollars.

The spectacular multiples of Bitcoin’s early years therefore become harder to replicate as its market grows.

Crypto-Native Investors Remain Part of the Market

Ferraioli said crypto-native investors helped support the market during the downturn.

He said the average cost basis for ETF investors sat around $83,000 for much of the year, while a measure tracking active spot investors moved from roughly $78,000 toward the mid-$70,000s as those buyers accumulated at lower prices.

Ferraioli also estimated that of roughly 20 million Bitcoin in circulation, four million to five million may be lost and another six million to seven million are liquid. Much of the remaining supply rarely moves.

Bitcoin’s Wall Street Adoption Is Still Developing

Rasmussen said professional investor engagement with Bitwise remained high during the latest downturn.

He contrasted that with the 2022 bear market, when interest “fell off a cliff.”

Rasmussen said Bitwise typically has about eight meetings with a financial adviser before the adviser makes an allocation. The process can take almost two years.

Ferraioli expects Bitcoin’s changing investor base to continue developing, with shallower bear markets and less explosive bull markets as the cryptocurrency matures.

$15.6 Billion Bitcoin Options Expiry Is Coming

Bitcoin is also heading toward one of the largest options settlements of the year.

Approximately 182,000 BTC in options worth $15.6 billion are due to expire Friday.

Calls account for roughly 106,200 BTC, compared with approximately 75,900 BTC in puts.

Significant call open interest is concentrated at $90,000 and $100,000. Around 7,222 BTC in call open interest is at the $90,000 strike, while approximately 6,950 BTC is at $100,000.

At the $70,000 strike, there are roughly 8,705 BTC in calls and another 7,653 BTC in puts.

What the $15.6 Billion Options Expiry Means

The $15.6 billion figure does not mean investors will suddenly buy or sell $15.6 billion worth of Bitcoin when the contracts expire.

Many contracts could expire worthless, while others may already be hedged.

Options dealers can hedge their exposure through Bitcoin, futures or other derivatives. As the likelihood of options finishing in or out of the money changes, dealers can adjust those hedges.

That buying and selling can amplify short-term Bitcoin price moves around large options expiries.

Tom Lee’s Crypto Bull Market Call

The options expiry comes after Fundstrat’s Tom Lee made a bullish call on the crypto market.

In a September 21 Fundstrat market note, Lee said he believed a crypto bull market was underway and had started in late June, as per a CCN.

He cited a rotation from AI back to crypto, strengthening crypto fundamentals centered on tokenization and AI, and the ending of the four-year cycle.

Bitcoin (BTC USD) has since dropped below $84,000.

The US 10-year Treasury yield has also climbed above 5%, adding another source of pressure for risk assets.

Bitcoin’s latest 55% decline was smaller than the 70%-80% drawdowns seen during earlier cycles. At the same time, Rasmussen, Connors and Ferraioli have offered different explanations for the cryptocurrency’s changing price behavior, including investor allocation, portfolio rebalancing and Bitcoin’s growing market size.

The cryptocurrency now heads into Friday’s $15.6 billion options expiry with traders watching the positions concentrated around several key strike prices.