Bitcoin’s latest decline looks severe by traditional market standards, but compared with its own history, the drawdown has been unusually restrained.
One year ago, on Oct. 6, 2025, bitcoin climbed above $126,000 to establish a record high. On the anniversary, BTC stood at $85,453, leaving it down just 32% from the peak.
Previous cycles produced substantially larger losses over the same period. Bitcoin was 69.7% below its 2013 peak one year later. After the December 2017 top, it had fallen 82.3% within a year. Following the November 2021 record, bitcoin was down 74.6% after 12 months, according to CoinDesk calculations.
The difference is also visible when looking at the full bear market rather than the one-year mark. Bitcoin’s lowest point this cycle came on June 30, when it briefly fell below $59,000. That represented a decline of more than 53% from the record.
In earlier bear markets, bitcoin lost between 77% and 85% from its highs.
That leaves two major differences in the current cycle: the drawdown has been less severe, and the market reached its low much sooner. Historically, bitcoin’s deepest point often arrived around the one-year mark or afterward. This time, the trough came roughly nine months after the record, followed by a relatively rapid recovery.
“The most notable changes are the significantly shortened duration of the drawdown and the reduced time spent at the bottom,” Tim Sun, senior researcher at HashKey Group, told CoinDesk.
The Investors Behind Bitcoin Have Changed
The composition of the market may help explain why this cycle has produced a softer decline.
Earlier bitcoin rallies were fueled heavily by retail traders and borrowed money. When those leveraged rallies reversed, the result was often a cascade of liquidations, fund failures and exchange collapses, most notably during the 2022 downturn.
The 2023–25 advance had a different source of demand. Institutional investors increasingly entered through regulated vehicles such as ETFs, while asset managers, family offices and corporations became more involved.
The downturn that followed was therefore driven more by macroeconomic conditions and changes in capital allocation than by a widespread collapse of leveraged retail speculation.
“While previous cycles were driven primarily by retail investors and leverage, buyers in this current cycle increasingly stem from outside the crypto market, including ETFs, asset management giants, family offices, and even corporations,” Sun said.
He described the growing participation of traditional investors as a central force behind the market’s changing behavior.
Sun said the latest decline was not primarily caused by “black swan” events. Instead, capital left the market as the macroeconomic environment and broader asset-allocation decisions shifted.
“Consequently, despite undergoing significant adjustments, the market did not trigger the persistent negative feedback loops seen in the past,” he said.
Griffin Ardern, co-founder and volatility desk portfolio manager at Primal Fund, said institutional flows operate differently from retail speculation.
“ETF allocation money rebalances to target weights — it buys weakness by construction,” Ardern said.
He also noted that leverage was largely eliminated near the market peak and never returned to previous levels.
“Hence nine months to grind out a 53% decline, rather than a few months of cascading liquidations taking it down 80%,” he said.
A major deleveraging event occurred on Oct. 10 last year. A macro-driven sell-off produced more than $19 billion in liquidations across crypto derivatives markets. Temporary price discrepancies on Binance involving USDe, wBETH and BNSOL added pressure, while auto-deleveraging systems on several exchanges closed profitable positions to help cover losses.
Bitcoin’s Lower Volatility Has a Downside
The calmer nature of the current market also carries a trade-off: smaller crashes can mean less dramatic rallies.
“As bitcoin evolves and more participants come to market, the realized volatility of the asset will decrease. This means shallower drawdowns and lower peaks and is likely a contributing factor to the more muted sell-off we saw in the last cycle,” said Jeff Anderson, head of U.S. at market-making firm STS Digital.
Bitcoin’s volatility has fallen steadily since U.S. spot ETFs began trading in early 2024, helping reduce the asset’s former “Wild West” reputation.
Sun said bitcoin’s annualized volatility is currently around 40%, well below its long-term historical level of more than 80%.
The options market reflects the same shift. Ardern said bitcoin’s DVOL index, which tracks annualized implied volatility, has remained around 35 points.
“The shape going forward is probably a staircase — grind up, air pocket, fast repair — rather than a parabola,” he said.
That does not mean bitcoin can no longer deliver sudden rallies. Sun pointed to bitcoin’s supply structure as one reason sharp upside moves remain possible.
Bitcoin’s supply is capped at 21 million, and long-term holders control a substantial share of the available coins. If large ETF inflows arrive over a short period, macro liquidity improves rapidly or short sellers cover positions at the same time, demand could overwhelm the limited supply available for trading.
In such circumstances, “marginal demand can still exert a powerful upward push on prices, potentially triggering non-linear surges,” Sun said.
Options Market Still Isn’t Betting Heavily on Upside
Ardern’s bigger concern is how traders are positioned.
Implied volatility is close to its lowest historical percentile, while one-year options skew remains neutral to bearish.
“The derivatives market has bought ‘shallow’, but nobody is willing to pay for ‘upside exposure’ yet,” he said.
Options skew measures the relative pricing of bullish calls and bearish puts. A neutral reading indicates traders are not aggressively seeking upside exposure.
Ardern also cautioned that the strongest confidence in a shallow-drawdown narrative can emerge when downside protection is cheapest.
For him, the bigger risk to bitcoin comes from the long-dated U.S. Treasury market rather than BTC’s chart.
“If the 30-year [yield] defence keeps failing, this cycle may not stay shallow either,” he said.
The 30-year Treasury yield recently reached 5.7%, its highest level since April 2002. It has gained more than 80 basis points this year, increasing the opportunity cost of holding non-yielding assets such as bitcoin and gold.
The Treasury announced an expanded bond buyback program in August to help contain rising yields. Bitcoin responded with a sharp move higher, advancing from about $64,000 to almost $80,000 within days.
But Treasury yields have continued to climb. Some analysts attribute the increase to fiscal concerns rather than stronger economic growth, a dynamic that could be supportive for gold and bitcoin.
Ardern compared the current market environment with the Nasdaq from 1994 through 1999, when “policy slows down, the cycle stretches, every interim correction is shallow.”
His warning was that such a pattern can eventually end badly.
“Just remember how that story ended,” he said.
The Nasdaq peaked in March 2000 and subsequently fell nearly 78% over roughly the next two years.
