Bitcoin Price Unlikely to See 77% Crash Again, Says Bitwise CIO Amid 2025 Market Chaos

Bitcoin endured a punishing 14% single-day drop on February 5, one of the nastiest corrections in recent memory, rattling even the most hardened crypto hodlers. As the price stabilizes around $67,834 with a modest 4% recovery in the last 24 hours, Matt Hougan, Chief Investment Officer at Bitwise Investments, offers a grounded perspective: Bitcoin’s days of catastrophic 77% drawdowns may be behind us, thanks to its growing maturity as an asset. But with geopolitical shocks, macro fears, and tech anxieties in play, is this optimism warranted, or are we just whistling past the graveyard?

• Major Correction: Bitcoin plummeted 14% on February 5, marking a brutal single-day loss.
• Current Status: BTC trades at $67,834, up 4% in the last 24 hours, showing signs of recovery.
• Expert View: Bitwise CIO Matt Hougan argues Bitcoin’s evolution reduces the odds of extreme 77% crashes seen in past cycles.

Why Did Bitcoin Tank 14%? A Perfect Storm of Triggers

Let’s slice through the chaos and lay out what slammed Bitcoin’s price on February 5. This wasn’t a random hiccup; it was a full-on sucker punch driven by a confluence of global and market-specific factors. For those new to crypto, a correction like this—a sharp, sudden price decline—often stems from panic selling or external shocks that spook investors. And boy, were there shocks aplenty.

Geopolitical drama took center stage. On October 10, 2025, U.S. President Donald Trump announced a staggering 100% tariff on Chinese goods, triggering a massive liquidation event across crypto markets. If you’re unfamiliar, a liquidation event happens when traders using leveraged positions—borrowing money to amplify bets—get wiped out as prices fall, forcing automated sell-offs that snowball the decline. This tariff bombshell didn’t just hurt Bitcoin; it sent shockwaves through stocks and commodities too, proving crypto isn’t the isolated rebel it once was. It’s tied to the messy web of global trade now, whether we like it or not.

Then there’s the broader economic mood. Hougan highlights a “macro risk-off sentiment,” which is just a polite way of saying investors are running scared from anything with a whiff of risk. When the world feels shaky—think trade wars or recession fears—assets like Bitcoin get dumped in favor of safer bets like bonds or cash. Add to that the uncertainty around Kevin Warsh as a potential Federal Reserve chair. Warsh’s reputation for hawkish monetary policy (favoring higher interest rates) spooks markets, as tighter money often means less capital for speculative plays like BTC. For the uninitiated, the Fed’s decisions ripple through every corner of finance, crypto included.

Other weirdos joined the party too. Investor attention has drifted to hotter sectors like artificial intelligence and precious metals, leaving crypto feeling like last year’s fad. Then there’s the specter of quantum computing—a theoretical threat that’s got some folks sweating. In simple terms, quantum computers could, one day, solve the insanely complex math puzzles that secure Bitcoin’s blockchain, potentially exposing funds to theft. It’s not happening tomorrow—think decades, if ever—but markets love a good horror story, and this one’s got legs. Hougan also notes that traders may have jumped the gun on Bitcoin’s four-year halving cycle, betting big too early (also called front-running) only to see the hype deflate. For context, the halving cuts miner rewards in half roughly every four years, tightening supply like a factory slashing production to boost value, often sparking past bull runs. This time, the bet didn’t pay off—yet.

Is Bitcoin More Resilient Now? Signs of Market Exhaustion

Despite the carnage, Hougan sees reasons to keep calm. Onchain data—metrics pulled straight from Bitcoin’s blockchain—paints a picture of stabilization. Long-term holders, those battle-scarred OGs who’ve clung to their BTC through hell and high water, have dialed back aggressive selling. Some are even starting to buy on the dip, or as Hougan puts it, “nibble around the edges.” This shift suggests the panic might be waning among those who know Bitcoin best.

“According to onchain data, long-term holders have stopped selling aggressively, and some are beginning to nibble around the edges. Open interest on bitcoin derivatives exchanges has fallen to levels last seen in 2024.” – Matt Hougan, Bitwise CIO

Another telling sign: open interest on Bitcoin derivatives exchanges, which tracks the total number of outstanding futures and options contracts, has dropped to levels not seen since 2024. High open interest often signals speculative frenzy; a sharp decline means traders are closing positions, stepping back, and licking their wounds. It’s a classic marker of market exhaustion, where the worst of the selling pressure might be spent. Beyond holder behavior, transaction volumes on the network remain steady post-crash, and active wallet counts haven’t plummeted, hinting that core users aren’t abandoning ship just yet.

Hougan’s core argument, as detailed in a recent discussion on Bitcoin’s market trends, is that Bitcoin isn’t the wild, untamed beast of a decade ago. With institutional players—think BlackRock’s Bitcoin ETFs and corporate treasuries holding BTC as a hedge—there’s more liquidity and infrastructure to cushion blows. Past drawdowns, like the soul-crushing 77% collapse from 2017 to 2018, were fueled by raw retail mania and thin markets. Today, regulated exchanges and big-money involvement act as shock absorbers. A 14% drop hurts, no doubt, but it’s a far cry from the apocalyptic crashes of yesteryear. Bitcoin’s growing up, even if it still throws the occasional tantrum.

Quantum Computing and Beyond: Real Threats or Market Hype?

Let’s unpack one of the quirkier fears dragging on Bitcoin: quantum computing. The idea is straight out of sci-fi—supercomputers so powerful they could crack the cryptographic codes securing Bitcoin’s transactions, rendering wallets vulnerable. Google made waves with quantum supremacy claims back in 2019, but practical threats to blockchain security are still a distant horizon, likely decades away. Bitcoin developers are already exploring post-quantum cryptography as a defense, so the tech isn’t standing still. Still, the uncertainty alone can spook jittery investors. It’s less Terminator and more a vague, looming what-if, but markets don’t need reality to panic—they thrive on rumors.

Zooming out, Bitcoin’s also fighting for cultural relevance. With AI hogging headlines and metals like gold regaining allure as inflation hedges, crypto’s rebellious charm feels a bit dated to some. Yet, this is where the ethos of decentralization roars back. Bitcoin isn’t about being the shiny new toy; it’s about financial sovereignty, privacy, and dismantling a rigged system. That mission doesn’t fade, even if macro giants keep trying to drag BTC into their orbit.

Counterpoint: Are We Too Optimistic About Bitcoin’s Stability?

Before we pop champagne over Bitcoin’s supposed maturity, let’s play devil’s advocate. While Hougan’s optimism about avoiding 77% drawdowns makes sense with better infrastructure, risks linger. Leveraged trading on unregulated exchanges still runs rampant, creating systemic vulnerabilities. A single black-swan event—say, a major hack or a regulatory hammer—could spark cascading liquidations worse than February 5. Institutional involvement cuts both ways; it stabilizes, sure, but it also ties Bitcoin tighter to traditional finance’s whims. And let’s not forget past recoveries, like post-2018, took years of grinding sideways action before new highs. “Maturity” doesn’t mean immunity.

As a Bitcoin maximalist at heart, I’ll always root for BTC as the king of crypto, but I’m not blind to altcoins carving their own lanes. Ethereum’s smart contracts fuel DeFi giants like Uniswap, moving billions in trades—something Bitcoin’s lean, security-first design sidesteps on purpose. Other blockchains tackle niches from fast payments to privacy, even if half the space is littered with meme-coin scams and vaporware. We don’t shill nonsense here; innovation matters, but so does discernment. The broader crypto swamp is a minefield—tread carefully.

What’s Next for Bitcoin Investors? Time as the Ultimate Catalyst

So, where does Bitcoin go from $67,834? Hougan offers a refreshingly unglamorous take: the bottom might not come with a bang but a whimper. Bear markets don’t end in euphoria; they die of boredom, as the last weak hands capitulate and sell at a loss. Time, not some meme-driven pump, often heals these wounds. History backs this—look at the 2018-2020 slog before the next bull run kicked off. Patience isn’t sexy, but it’s often the winning play.

“Crypto bear markets tend to end in exhaustion, not excitement.” – Matt Hougan, Bitwise CIO

For investors, this moment is a gut check. A 14% drop stings, but it’s a rounding error compared to Bitcoin’s historical crashes. The data—long-term holder resilience, shrinking derivatives interest—suggests we might be nearing exhaustion, though macro headwinds like tariffs or Fed policy could still deliver another jab. Bitcoin’s core promise of disrupting centralized control and championing freedom remains a beacon, even amidst growing pains. Will its newfound maturity shield it from past horrors, or are unseen threats just over the horizon? The jury’s still out.

Key Takeaways and Questions on Bitcoin’s 2025 Volatility

• What caused Bitcoin’s 14% crash on February 5?
  A toxic mix of geopolitical shocks like the U.S. 100% tariff on Chinese goods, macro risk-off sentiment, investor focus shifting to AI and metals, and fears over quantum computing and Fed leadership uncertainty.
• Why does Bitwise’s CIO believe a 77% drawdown is unlikely?
  Matt Hougan points to Bitcoin’s maturity, bolstered by institutional adoption and improved market infrastructure, as a buffer against the extreme crashes of past cycles.
• What signs suggest the Bitcoin market might be stabilizing?
  Onchain data reveals long-term holders easing aggressive selling, some buying on dips, and open interest on derivatives dropping to 2024 levels, signaling potential exhaustion of selling pressure.
• How do global economic trends influence Bitcoin’s price?
  Macro factors like trade wars, risk-averse investor sentiment, and Fed policy uncertainties directly impact BTC, showing it’s more intertwined with traditional finance than ever.
• What could mark the end of this bearish phase for Bitcoin?
  Hougan suggests time and market exhaustion, rather than a dramatic rally, often signal the bottom, as seen in past cycles where weak hands finally give up.