Bitcoin is entering a new phase in which price swings are dampening and market shocks are increasingly absorbed by institutional investors rather than retail traders, according to ARK Invest’s quarterly report published Wednesday.
The research argues that Bitcoin’s market structure has fundamentally changed following the expansion of spot exchange-traded funds and a broad deleveraging cycle, resulting in the lowest volatility profile in the asset’s history despite sizable drawdowns during 2025.
Bitcoin Volatility Falls Even As Drawdowns Persist
ARK’s report notes that 2025 marked Bitcoin’s least volatile year on record, even as the asset experienced a peak-to-trough decline of more than 36%.
Rather than triggering cascading selloffs, the correction unfolded alongside steady on-chain activity and a consolidation near Bitcoin’s realized price.
“2025 marked Bitcoin’s lowest annual volatility in history,” the report states, adding that price action has increasingly stabilized around its on-chain mean, which stood near $80,953 during the period analyzed
The report attributes this shift to changes in ownership composition, with ETF investors now forming a large cohort whose cost bases sit close to current prices.
That structure, ARK argues, has reduced reflexive selling and forced liquidations that historically amplified Bitcoin downturns.
Leverage Flush Reduces Structural Selling Pressure
ARK highlights that a sharp decline in speculative leverage has removed a major source of instability from the market.
Long liquidations have largely cleared excess risk, while profitability among digital asset treasuries has fallen sharply, reducing incentives to sell into weakness.
Also Read: Powell Says It’s Hard To Argue Fed Policy Is Still Significantly Restrictive “Digital asset treasury profitability declined by approximately 93%,” the report notes, framing the drawdown as a cleansing event rather than a systemic breakdown
According to the analysis, this deleveraging occurred without triggering sustained volatility spikes, signaling that Bitcoin markets are now better equipped to absorb shocks without destabilizing feedback loops.
Macro Conditions Set The Stage For A New Bitcoin Regime
Looking ahead, ARK places Bitcoin’s evolving market behavior within a broader macroeconomic context.
The report describes the U.S. economy as a “coiled spring,” pointing to easing inflation, the possibility of lower interest rates, and productivity gains as potential tailwinds in 2026
ARK also draws historical parallels between current gold valuations and prior periods that preceded capital rotation into alternative assets.
“Gold’s valuation relative to M2 has reached levels historically associated with shifts toward risk assets,” the report states
The implication, according to ARK, is that Bitcoin may be transitioning from a high-beta speculative instrument into a macro-sensitive asset increasingly embedded in institutional portfolios.
Rather than focusing on whether Bitcoin rebounds from recent price declines, the report suggests the more consequential question is whether this emerging low-volatility regime alters how Bitcoin is priced, allocated, and regulated in the years ahead.
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