Will Bitcoin Crash Again in 2026? Unpacking the Lessons from 2025's Collapse

Bitcoin’s dramatic crash in 2025 left investors reeling and raised urgent questions about the cryptocurrency’s stability. Will another bitcoin crash happen? The answer lies in understanding what went wrong in 2025 and how the market has fundamentally transformed. At $90,000 as of January 2026, Bitcoin sits 28% below its October peak of $126,080, yet experts argue the worst may already be behind us.

The cryptocurrency market entered 2025 with astronomical expectations. Industry analysts predicted Bitcoin would reach $180,000-$200,000 by year-end, with some of the most recognizable names in crypto—including Bitwise’s Chief Investment Officer Matt Hougan and Galaxy Digital CEO Mike Novogratz—backing these bullish forecasts. But 2025 had other plans.

The October Flash Crash: How Bitcoin’s Market Collapsed 30% in Days

Bitcoin soared to an all-time high of $126,080 on October 6, achieving what most experts thought would take much longer. Then came October 10—a day that would define the entire year. A flash crash sent shockwaves through the market, wiping out months of leveraged bullishness in minutes. The crash wasn’t a simple market correction. It was, according to Mati Greenspan, founder of Quantum Economics, a liquidity event triggered by cascading forces: macro stress, trade-war fears, and crowded positioning in derivatives markets.

“The October 10 flash crash exposed how forward-loaded the cycle had become,” Greenspan explained. What followed was a prolonged decline. Bitcoin ended 2025 down 6% for the year overall, and spent most of the final two months trapped between $83,000 and $96,000. More devastatingly, it finished the year more than 50% below the year’s initial forecasts.

Why Institutions Changed Bitcoin’s Game—And Made It More Volatile

Here’s the paradox that explains why Bitcoin crashed: its greatest strength has become its vulnerability. As institutional capital flooded into Bitcoin—transforming it from a retail-driven asset into part of the macro institutional complex—the digital asset became subject to entirely new trading dynamics.

“What went wrong in 2025 is that Bitcoin quietly crossed a threshold,” Greenspan told CoinDesk. “It stopped being a fringe asset and became part of Wall Street’s portfolio. Once the big money arrived, Bitcoin began trading less on ideology and more on liquidity, positioning, and macro policy.”

This institutional embrace changed everything. Bitcoin is still marketed as a hedge against Federal Reserve policy, but it now moves in tandem with traditional risk assets. When the Fed signaled caution instead of aggressive rate cuts—a major shock to market expectations—Bitcoin and other risk assets paid the price. “Markets came into 2025 expecting faster Fed easing, and that simply didn’t happen,” said Jason Fernandes, co-founder of AdLunam. “BTC, like other risk assets, is paying the price for cautious capital.”

From Flash Crash to Fragile Recovery: The Liquidation Cascade Explained

The October crash revealed a critical vulnerability: Bitcoin’s 24/7 trading combined with concentrated leverage created a powder keg. When major liquidations began, they triggered a domino effect. “Derivatives-driven liquidations made for a choppy, unpredictable market where one batch triggered the next,” Fernandes noted. This mechanism also explains why volatility didn’t ease when it should have.

The consequences were measurable. From January through October 2025, U.S. spot Bitcoin ETFs attracted roughly $9.2 billion in net inflows. But after the October crash, the trend reversed sharply. From October through December, outflows totaled over $1.3 billion, including a $650 million withdrawal in just four days in late December. This capital flight signaled that even sophisticated investors were reassessing their Bitcoin exposure.

Another structural issue emerged: the mismatch between Bitcoin’s round-the-clock trading and institutional capital flows, which operate Monday through Friday. “Bitcoin trades 24/7, but capital flows don’t,” explained Kevin Murcko, CEO of CoinMetro. “When the weekend hits and leverage is high, you get cascading liquidations. It’s a structural vulnerability that didn’t exist when Bitcoin was purely a retail asset.”

Can Bitcoin Crash Again? What Experts Say About 2026 Risks

The critical question: Could Bitcoin crash again in 2026? Experts offer a nuanced answer. “The October crash wasn’t a failure of Bitcoin,” Greenspan emphasized. “It was the moment Bitcoin officially started playing in Wall Street’s pond.” That transition, while painful, is ultimately bullish.

Kevin Murcko points to the fundamental contradiction: “Most people assumed institutional adoption would mean Bitcoin to a million dollars faster. But now that it’s institutionalized, it’s being treated like any other Wall Street asset. It responds to fundamentals, not belief.” This means Bitcoin will continue reacting to economic data, central bank decisions, and geopolitical events—exactly like stocks, bonds, and other risk assets.

The risk of another crash exists, but it would likely follow similar patterns: macro shocks, concentrated leverage, and rapid liquidations. However, the market has learned. “ETF inflows dried up after the crash, which actually reduced leverage and made subsequent crashes less likely,” Fernandes observed. The system has become more resilient, not less.

The Silver Lining: Structural Forces That Could Drive Recovery

Despite 2025’s disappointments, multiple experts remain optimistic about Bitcoin’s medium-term trajectory. Bitwise’s Hougan argues that the underlying forces remain positive, even if they play out more slowly than expected. “It’ll be messy. But the macro direction is clear,” he said.

The key structural drivers point upward: institutional adoption isn’t going away, regulatory clarity continues improving globally, concerns about fiat currency debasement remain valid, and real-world use cases like stablecoins are gaining traction. These are slow-moving forces that take a decade to mature, but they’re also powerful and persistent.

Hougan made a controversial forecast: Bitcoin’s traditional four-year halving cycle—long considered the main driver of price supercycles—is breaking down. Instead, Bitcoin will be driven by institutional flows, regulatory clarity, and global diversification demand. “That’s why we believe Bitcoin could hit new all-time highs in 2026—even outside the traditional halving cycle.”

Greenspan summarized the transformation succinctly: “This wasn’t ‘peak Bitcoin.’ It was the moment Bitcoin officially started playing Wall Street’s game.” That transition involves growing pains, including crash risk, but it also means Bitcoin’s long-term path is driven by forces far more stable and substantial than retail hype. At $90,000 today, Bitcoin isn’t at peak prices, but it’s also not on the edge of collapse—it’s in a transition period where the old rules no longer apply.