Bitcoin (BTC-USD) is making a tentative recovery following a significant sell-off, but experts believe its future success will depend on strategic and structural changes rather than mere retail enthusiasm. John D’Agostino, head of institutional strategies at Coinbase, highlighted the importance of regulatory clarity in this recovery phase, particularly with the potential passage of the Clarity Act.
The digital currency recently faced a tumultuous downturn after reaching all-time highs in 2025. D’Agostino referred to this event as a “crypto flash crash,” which occurred on October 10 when President Trump announced 100% tariffs on Chinese imports. This surprising move resulted in a mass liquidation of long positions, wiping out an estimated $19 billion in value as Bitcoin plunged more than 14% in just a few hours. The decline impacted numerous altcoins, with Cosmos (ATOM-USD) experiencing a dramatic drop to near-zero levels on some exchanges.
D’Agostino attributed the crash to failures within cryptocurrency’s trading infrastructure. Unlike traditional equities, market makers in the crypto space are not legally bound to provide liquidity, leading to a situation where many exited the market amidst the turmoil, leaving retail investors vulnerable to severe pricing fluctuations.
He identified two key factors that will determine Bitcoin’s path back to its previous peak of $126,000: the stabilization of professional market makers who endured the volatile October period, and the successful enactment of the Digital Asset Market Clarity Act. This legislation, which has garnered support from President Trump as part of an effort to establish the U.S. as a leading hub for cryptocurrency, aims to eliminate the current “regulation by enforcement” approach. Instead, it seeks to create a formal regulatory framework for digital assets, designating the Commodity Futures Trading Commission as the main regulatory body and clarifying asset classifications and market participant rules.
Despite the prevailing negative sentiment among retail investors, Coinbase observed a markedly different trend within institutional circles. D’Agostino noted that institutional interest surged during the period from October to December 2025, marking one of the most significant windows of institutional buying recorded. For major financial entities, the flash crash did not signal the end, but rather a rigorous evaluation of their strategies. Unlike the previous FTX episode, D’Agostino reported, there was no widespread insolvency during this downturn. Major institutions, while shaken momentarily, maintained proper risk management practices, indicating a growing resilience in the market.
