Dip Then Rip

By Matt Hougan | CIO, Bitwise Asset Management
March 19, 2025

One of the most frustrating things about owning bitcoin is that, in moments of crisis, it doesn’t behave how you’d want.

People buy bitcoin as a hedge asset, but when markets get volatile, bitcoin tends to pull back in the short term.

We saw this most recently last week, where rising concerns around tariffs sparked a sell-off in equity markets … and in bitcoin.

My colleague Juan Leon wrote the definitive piece on this. Juan looked at all instances over the past decade when the S&P 500 had fallen by more than 2% in a day. He showed that, on average, bitcoin actually fell more than the S&P 500 during these pullbacks—sinking roughly 2.6%.

Ugh.

But Juan’s research showed something else: If you had stayed invested—or bought more after the pullback—you would have done very well. On average, in the year following these sharp pullbacks, bitcoin rose a shocking 190%, dramatically outperforming every other asset.

I call this pattern “Dip Then Rip,” and historically it’s one of the most consistent patterns in crypto.

In this week’s memo, I want to explain why this happens.

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