Bailey predicts there will be no Bitcoin bear market in the coming years thanks to a surge in institutional capital, but analysts warn of many macro headwinds that could reverse the trend.
Data from the past two years shows that ETFs and corporate cryptocurrency treasuries have pushed total holdings above $100 billion, primarily in Bitcoin. However, the four-year cycle, leverage risk, and interest rate variables could still trigger a deep correction if global liquidity reverses.
MAIN CONTENT
Institutional capital flowing into ETFs and corporate cryptocurrency treasuries is increasing sharply, reinforcing the argument of 'no bear market for many years.'
Risks: correlation with stocks, interest rates, excessive leverage, regulatory shocks could trigger a bear market.
The base scenario of some fund managers: a peak around Q2 2026, with a slight chance of correction if liquidity reverses; it is also possible that only short corrections may occur.
What does David Bailey say about the prospects of the Bitcoin bear market?
Bailey believes this is the first time institutional 'buy-in' at a significant scale, forecasting that most large entities will own Bitcoin and the bear market will not return for a few years.
He is the founder of Bitcoin Magazine, BTC Inc., formerly an advisor to Donald Trump's presidential campaign, and credited with contributing to Trump's Bitcoin policy turnaround. Bailey's central argument: the institutional market is still in its early stages, far from reaching the target market.
"Every country, bank, insurance company, corporation, pension fund... will own Bitcoin. The process has seriously begun, but we have not yet touched 0.01% of the target market. We will go much further."
– David Bailey, Founder of Bitcoin Magazine, post on X, accessed 25/08/2025 (x.com/DavidFBailey)
What skepticism does the four-year cycle pose to optimistic assessments?
History shows that after hot growth cycles, the market often goes through a bear phase: 2018 and 2022 both followed this scenario, raising questions about the assertion of 'no bear market for many years.'
Cycles associated with halvings, new capital flows, and FOMO mindset often lead to parabolic growth, followed by deep corrections. However, if the uptrend is accompanied by alternating accumulation phases and a reset of leverage, the correction amplitude may be lighter or fragmented into several short phases instead of a prolonged bear market.
How has institutional capital increased over the past two years?
Institutions are increasing access through spot ETFs and corporate cryptocurrency treasuries, pushing total holdings above $100 billion, primarily in Bitcoin.
CoinShares' Digital Asset Fund Flows report notes that the assets under management of cryptocurrency investment products surpassed $100 billion in March 2024, reflecting institutional demand breaking through after the wave of spot Bitcoin ETFs in the U.S. The 'financialization' of assets helps expand distribution channels, compliance standards, and liquidity for institutional investors.
What effects do ETFs, direct access trading, and 'financialization' create?
ETFs and direct access trading infrastructure open a large demand pool but also carry risks of position synchronization and leverage.
As the institutional investor class increases its weighting, sensitivity to interest rates, capital costs, regulations, and macro volatility rises. This can amplify both directions: sustainable capital flows when liquidity loosens but leverage unwinding pressure when financial conditions tighten.
"The direct access market and the institutional block add a massive demand pool, but also come with risks: some platforms will enter late, use high leverage and be unprepared for volatility, potentially becoming catalysts for the next bear market."
– Ryan McMillin, Co-founder & CIO Merkle Tree Capital, interviewed by Cointelegraph, accessed 25/08/2025
What risks could trigger a bear market?
A June report from the venture capital fund Breed warns that most companies holding cryptocurrency treasuries may struggle to survive long-term, potentially triggering the next bear cycle.
CK Zheng (ZX Squared Capital) emphasizes that cryptocurrencies remain correlated with stocks; if stocks enter a bear market, cryptocurrencies typically follow. Pav Hundal (Swyftx) believes that capital is currently favoring risk, but macro shocks often come unexpectedly and can quickly reverse expectations.
Interest rates, global liquidity, and their impact on Bitcoin?
Zheng notes that after the recent statements by Fed Chair Jerome Powell, the likelihood of interest rate cuts has increased, marking the beginning of a low-interest rate cycle if economic data and labor market conditions continue to cool.
However, Hundal notes that market expectations regarding the possibility of interest rates rising again next year still exist, and this could be a catalyst for a correction. Two contrasting scenarios reinforce the argument: the primary trend is still higher, but the risks of distribution at the top and liquidity shocks cannot be overlooked.
Will the bear market end in this cycle?
McMillin believes that there may not be a prolonged bear market, similar to gold after the ETF in the early 2000s when the asset was 'financialized' and increased continuously for many years.
He added: if the upward momentum continues alongside phases of accumulation and leverage reset, the market may only witness regular corrections, creating buying opportunities instead of a deep and prolonged bear market. History does not repeat exactly, but it rhymes with the ETF context and the increasing dominance of institutional capital.
What is the timeline scenario: peak in 2026 and what are the main risks?
McMillin's base scenario: a peak around Q2 2026, followed by a relatively light bear market in mid-2026 if global liquidity reverses.
Catalysts for the downturn: unwinding leverage from debt-based Bitcoin purchases and regulatory shocks. As leverage accumulates in the late cycle, the correction amplitude increases. Conversely, if capital continues to diversify through ETFs, pension funds, and insurance, the durability of the trend may improve.
What signals should investors closely monitor?
According to market experience, notable indicators include ETF capital flows, levels of derivative leverage, correlation with major stock indices, financial conditions, and stablecoin capital flows.
In this, investment product capital flow data (CoinShares, 2024), correlation studies, and market liquidity (Kaiko Research, 2024) are useful reference sources. Combining on-chain data with macro signals helps identify distribution or accumulation phases early.
Factors Supporting Uptrend Risks/Corrections Reference Sources Institutional Capital ETF Direct Access, Corporate Treasury Withdrawal, Position Synchronization CoinShares, 2024 Interest Rates & Liquidity Expectations of Cuts, Loosening Financial Conditions Rising Interest Rates, Tightening Liquidity Fed Statements, CPI Data, Employment Derivative Leverage Resetting Leverage After Short Corrections Large-Scale Leverage Unwinding Derivatives Market Analysis Cycles & Sentiment Alternating Accumulation, Gradual Volatility FOMO Parabolic Before Peak History 2018, 2022
Frequently Asked Questions
Who is David Bailey and what does he forecast?
He is the founder of Bitcoin Magazine, Bitcoin advisor to Donald Trump. Bailey forecasts that there will be no bear market for a few years thanks to institutional capital 'buying in' for the first time.
How does Bitcoin ETF capital flow affect the market?
ETFs open compliant access channels for institutional capital, increasing liquidity and transparency. CoinShares reports that investment product assets surpassed $100 billion in March 2024, primarily thanks to Bitcoin.
Is the four-year cycle still valid?
History from 2018 and 2022 shows a hot growth cycle followed by deep corrections. However, if growth is accompanied by accumulation and leverage resets, the probability of only short corrections increases.
How do interest rates affect Bitcoin?
Low interest rates support risky assets, while high interest rates exert leverage unwinding pressure. The current view is mixed: some expect cuts, while others forecast a rise, implying unpredictable volatility.
What is noteworthy in the 2026 scenario?
Some fund managers see a peak in Q2 2026, followed by a slight correction if liquidity reverses. Main risks: excessive leverage and regulatory shocks.
Source: https://tintucbitcoin.com/david-bailey-gau-btc-con-vai-nam/
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