Bitcoin Is Down 41% From Its All-Time High: What History Says Happens Next

Bitcoin (CRYPTO: BTC) remains one of the most polarizing assets in all of markets, with strong supporters and even stronger opponents. And it continues to take investors on a wild ride.

The top cryptocurrency trades 41% below its all-time high from October last year (as of May 29). While the past eight or so months have been disappointing for the bulls, the current bear market is nothing new. The past might provide clues as to what's to come.

Here's what Bitcoin's history suggests will happen next.

Image source: Getty Images.

Why has Bitcoin struggled?

It's difficult for investors to figure out the variables that have dragged Bitcoin down since late last year. This is a decentralized digital asset that doesn't have a management team and doesn't report quarterly updates. Assessing price movements requires looking at Bitcoin with a broad lens, as many different variables can have an impact.

I think there are a few factors that might have something to do with Bitcoin's disappointing performance. The cryptocurrency's 41% drawdown from the peak has come while the broader S&P 500 index is up 13% during the same time.

The potential threat that quantum computing poses to Bitcoin's network security drove fears about the blockchain's long-term viability. This is a persistent risk that the community is fully aware of.

Selling pressure could have also had an impact. Traders being forced to liquidate positions in October following President Trump's tariff announcements, as well long-term holders capturing profits, won't benefit Bitcoin's price.

With stubborn inflationary pressures driven by higher energy prices due to geopolitical turmoil, the prospect of higher interest rates could be another headwind. This keeps investors from going further out onto the risk curve.

I also believe the ongoing artificial intelligence (AI) boom might be sucking up capital that would otherwise be allocated to Bitcoin. When it comes to high-potential opportunities, the digital asset isn't getting nearly as much attention these days as equities positioned to benefit from the AI race.

It's best to remain bullish over the long term

Bitcoin's historical price chart resembles a roller-coaster ride. Despite the wild swings, patient investors have been rewarded. The digital asset has soared over 13,700% in the past 10 years.

And there's one obvious truth: Bitcoin always recovers to reach new all-time highs.

Its price roughly follows a four-year cycle that coincides with periodic halving events. We're currently more than halfway past the last halving, which occurred in April 2024. During the prior three cycles, the coin's price has been in a bear market at this point after the halving. This is not uncharted territory.

The previous major bear market was in 2022. From the peak in November 2021 to the bottom in November 2022, the cryptocurrency's price tanked 76%. It was an extremely difficult time to be a bull. There was no shortage of commentary essentially calling for the end of Bitcoin.

It eventually bounced back in remarkable fashion. The crypto ripped 154% higher in 2023, followed by a 119% gain in 2024.

Why will this time be the same?

Bitcoin's fundamentals have not changed. It has never been hacked. Its hash rate is close to all-time highs. Its hard supply cap is intact. And innovation keeps happening to build out the broader Bitcoin ecosystem.

This is a global macro asset. Of course, capital flows between countries and asset classes have a huge impact, as does fiscal and monetary policy. Other opportunities, whether it's in equities, fixed income, commodities, or real estate, for example, also influence where investors focus their attention and money.

So, it won't be a smooth ride. The volatility will keep certain investors on the sidelines.

But over the next decade and beyond, I'm confident Bitcoin will be a wildly successful investment. In fact, history tells us that its price will skyrocket in the future and that now is a great time to buy.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.