Bitcoin has fallen roughly 50% off its October 2025 all-time high. For unhedged holders, that math is brutal, and astute investors understand that a 50% loss requires a 100% gain just to return to breakeven. We built the Fortuna Hedged Bitcoin ETF ($HBTC) precisely for environments like this. HBTC seeks to substantially participate in Bitcoin's upside while aiming to limit the drawdowns that have historically destroyed investor wealth in this asset class.
The deeper the loss, the more asymmetric the recovery math becomes. When an asset loses half of its value, as Bitcoin has done since October 2025, the remaining capital needs to double simply to return to the asset’s original level. Stated another way, a $100,000 position that falls to $50,000 needs a 100% return (not 50%) just to break even.
Bitcoin investors have repeatedly confronted this reality. Since 2014, Bitcoin has experienced four drawdowns exceeding 50%, with the three largest averaging approximately 80% declines. In three of those four corrections, price took nearly three years to recover to prior highs.[2] The 2022 cycle saw Bitcoin fall from ~$69,000 to ~$16,000, which represents a decline of over 77%.[4]
Source: Bloomberg as of June 30, 2026
We believe the current cycle follows the same pattern: Bitcoin reached an all-time high of approximately around $126,000 in October 2025, then declined to nearly $60,000 by February 2026. Again, the asset experienced a correction of around 50%. As we’re writing this commentary (mid-June 2026), Bitcoin is again trading near $64,000, with the Fear & Greed Index[10] reading "Extreme Fear" - levels last seen during the collapse of the Terra Luna stablecoin in May of 2022.[1][5]
Bitcoin has experienced four drawdowns exceeding 50% since 2014. The drawdown we’re currently experiencing brings Bitcoin to approximately 50% below its previous peak (October 2025). Three of the four largest Bitcoin corrections required nearly three years for full price recovery, rewarding investors that could remain patient.[2]
Why is Bitcoin declining in 2025–2026?
In our opinion, the present Bitcoin sell-off cannot be attributed to a single catalyst. Rather, it seems to be the convergence of multiple external forces, including:
Monetary policy headwinds. Expectations for slower Federal Reserve rate cuts pushed real yields higher throughout late 2025 and into 2026. Bitcoin has historically shown sensitivity to USD real rates similar to gold and emerging-market currencies.[6]
ETF outflows. At their high-water mark, U.S. spot Bitcoin ETFs were holding approximately $169.5B in Bitcoin assets. By January 2026, that amount had declined to roughly $117.5B, a combination of net redemptions and price depreciation.[7] When Bitcoin breached $62,000 in early June 0f 2026, another $1.5B in leveraged long liquidations was triggered.[8]
Leverage dynamics. Bitcoin's market structure includes a large perpetual derivatives market running on leverage and automated liquidations. Price declines can accelerate beyond what fundamentals justify, creating a feedback loop that punishes unhedged holders most severely.[9]
HBTC is an actively managed ETF that gains Bitcoin-linked exposure through options on iShares Bitcoin Trust ETF, IBIT, a highly liquid Bitcoin-related ETF whose price movements closely track Bitcoin's spot price. (It does not hold Bitcoin directly.) On a monthly basis, the fund applies an options overlay around its long exposure to seek downside management - but without forfeiting meaningful upside participation.
HBTC launched on March 18, 2025 and its strategy was put to the test almost immediately, when - in early April - Bitcoin pulled back sharply on the announcement of U.S. import tariffs. HBTC's embedded hedge helped preserve capital during that volatility, and as markets stabilized and Bitcoin rallied into the second quarter of the year, HBTC participated in the recovery. (The fund returned +19.2% in Q2 2025 and +16.21% at market price from inception through June 30, 2025.)
During five Bitcoin sell-offs since HBTC’s inception, the fund has proven its ability to mitigate downside risk and dampen losses for its shareholders. The following chart highlights HBTC performance relative to the spot price of Bitcoin, and is also on the March 31, 2026 HBTC ETF factsheet, which you can access here.
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower than the quoted returns. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. For the fund’s most recent month-end returns, please visit fortunafunds.com. Total annual operating expense ratio is 1.75%. For standardized performance see fact sheet.
After a major selloff, options implied volatility spikes, making protective puts far more expensive to purchase retroactively. HBTC uses a collar structure (put purchase + call spread sale) that helps offset hedging costs even in elevated volatility environments. With the hedge already embedded, there is no need to buy protection after the storm.
Investors who want Bitcoin-related exposure but have been cautious about entering a volatile market might find that HBTC offers a way for them to participate in any subsequent recovery - and it has a structured approach to manage any further downside already firmly in place.
Bitcoin's volatility shouldn’t deter potential investors. We believe that it's a feature that, when approached strategically, can create investment opportunities. The philosophy behind HBTC is to “win by losing less” - and, since the ETF’s inception, one that the market has repeatedly tested.
Sources & References
[1] Caleb & Brown, "Bitcoin's Market Cycle & Crypto Cycles Chart" (2026). Bitcoin hit an all-time high of $126,296 on October 6, 2025; price declined ~46.7% to ~$67,550 by mid-February 2026. calebandbrown.com.
[2] BlackRock iShares, "Bitcoin Volatility Guide: Trends & Insights for Investors." Since 2014, Bitcoin has experienced four drawdowns exceeding 50%; the three largest averaged ~80% declines; three of four required nearly three years to recover. ishares.com.
[3] Fortuna Funds Q2 2025 Performance Commentary and Fact Sheet (Q2, June 30, 2025). HBTC Market Price return: +16.21% YTD; +19.2% Q2 2025. Source: Bloomberg LP. Data from March 19, 2025. Performance is not a guarantee of future results.
[4] Changelly/Bitcoin Price Prediction Blog (2026). "In 2025, [Bitcoin] fell from $126,000 to lows near $80,000 in a matter of months." The 2022 cycle saw Bitcoin fall from ~$69,000 to ~$16,000, a loss of over 77%. changelly.com.
[5] CoinDesk, "Bitcoin's Selloff Data Suggests a 'Mid-Cycle' Correction Rather Than a Price Peak," January 12, 2026. At 95 days from the October all-time high, Bitcoin had seen a 36% drawdown. coindesk.com.
[6] BlackRock, "Four Factors Behind Bitcoin's Recent Volatility," 2025/2026. Shift in Fed outlook: slower rate-cut expectations pushed real yields higher. blackrock.com/us/financial-professionals/insights/exploring-crypto-volatility.
[7] S&P Global, "Bitcoin Volatility Trends: A Deep Dive into Market Dynamics and Risk," March 10, 2026. U.S. spot Bitcoin ETFs held ~$169.5B in assets as of October 2025; declined to ~$117.5B by January 2026. spglobal.com.
[8] Polymarket Market Analysis (June 2026). On June 5, 2026, Bitcoin breached the $62,000 level, triggering $1.5 billion in long liquidations. polymarket.com.
[9] S&P Global, ibid. "Bitcoin's predominant trading structure, comprised of perpetual futures markets that run on leverage and automated liquidations, amplifies price volatility relative to other financial assets."
[10] The Fear & Greed Index is a sentiment indicator that aggregates several market factors — including volatility, trading volume, momentum, and social media activity — into a single score ranging from 0 ("Extreme Fear") to 100 ("Extreme Greed"), intended to gauge whether investors are driven by fear or greed at a given point in time.