Bernstein analysts see BTC drop as a short-term correction

In a note to clients, Bernstein’s research team led by Gautam Chhugani said the selling was driven by investor fears of a typical four-year cycle peak, not by any deterioration in fundamentals.

Some investors sold coins expecting fourth-quarter weakness, echoing patterns seen in 2013, 2017, and 2021. This behavior creates a self-fulfilling correction, where the market falls simply because traders anticipate it. Still, the current market structure is far stronger, and the pullback remains much smaller than the 60–70% drawdowns seen in previous cycles.

Analysts point to strong spot ETF and corporate buying as key reasons the market has remained resilient. Over the past six months, about 340,000 BTC sold by long-term holders has been almost entirely offset by new inflows – roughly $34 billion into ETFs and corporate treasuries.

Institutional ownership of Bitcoin ETFs has risen from 20% at the end of 2024 to 28%, while total assets under management have reached $125 billion.

Bernstein also noted that Strategy (formerly MicroStrategy) continues to trade near the value of its Bitcoin holdings. Analysts said the company has no plans to sell: its $8 billion in debt remains modest compared to the $61 billion in BTC on its balance sheet, and it still has access to fresh capital through issuance programs. Bernstein expects Strategy to keep buying during the correction.

The report highlights several structural tailwinds: political support for crypto under the Trump administration, progress on the Clarity Act, improving liquidity as interest rates fall, and strong third-quarter results across the sector. Tokenization and stablecoin adoption are cited as defining themes of the current cycle.

Bernstein expects Bitcoin to establish a new local bottom near $80,000 – similar to post-election levels last year – and views the current pullback as an attractive entry point for both digital assets and crypto equities.