On Oct. 6, 2025, bitcoin set an all-time high above $126,000. Twelve months on, the price stands at $85,453. That works out to a 32% decline, which is fairly tame compared with bitcoin's past cycles.
For stocks, losing 32% in a year would count as a crash. Bitcoin’s previous cycles were much harsher. A year after its 2013 peak, the price was 69.7% lower. A year after the December 2017 top, it was 82.3% lower. A year after the November 2021 high, it had fallen 74.6%.
Other parts of this downturn also break from the old pattern.
An earlier, briefer bottom
So far the cycle low came on June 30, when bitcoin dipped just under $59,000. That put it more than 53% below the peak. The drop was painful, but in earlier bear markets prices fell 77% to 85% from their highs.
Two things are different this time. The fall was shallower, and it bottomed sooner. In previous cycles the low typically came around a year after the peak, or later. This time it took about nine months, and prices have recovered quickly since.
“The most notable changes are the significantly shortened duration of the drawdown and the reduced time spent at the bottom,” said Tim Sun, senior researcher at HashKey Group.
A new buyer base changes how the market falls
Earlier bear markets ran deeper and longer largely because of who powered the bull runs that came before them. Those rallies were driven by retail traders using leverage, and they tended to end in crashes, with funds blowing up and exchanges failing. 2022 is the clearest case.
The 2023 to 2025 rally was built differently. Institutional capital led it, flowing through regulated products such as ETFs. The downturn that followed began when macro conditions pulled that money back out.
“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. This growing demand for external asset allocation is the core driving force behind these shifts,” Sun said.
According to Sun, “black swan” events weren’t the main cause of the decline. Most of it came from capital leaving as the macro environment shifted and investors changed their asset allocations.
“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 vol desk PM at Primal Fund, said institutional capital doesn’t behave like retail speculation. Money allocated through ETFs rebalances back to target weights, he explained, so it is built to buy when prices drop.
Leverage got flushed at the peak
Ardern said leverage was cleared out right at the top and never fully rebuilt. “Hence nine months to grind out a 53% decline, rather than a few months of cascading liquidations taking it down 80%,” he said.
Most of that unwind took place on Oct. 10 last year, when a macro-driven sell-off triggered more than $19 billion in liquidations across crypto derivatives markets. On Binance, tokens including USDe, wBETH and BNSOL briefly traded at off prices, adding to the strain. Several exchanges also turned to auto-deleveraging, forcibly closing profitable positions to cover losses.
It was a rough day, but it all happened at once, and it removed the leverage that had dragged out the collapses of earlier cycles.
Shallower drops likely mean smaller gains
That comes with a trade-off: if the declines shrink, the rallies probably will as well.
“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.
Volatility has been falling steadily since U.S. spot bitcoin ETFs launched in early 2024, and bitcoin looks less like the “Wild West” asset it once was.
“Bitcoin’s current annualized volatility hovers around 40%, which is noticeably lower than its long-term historical levels exceeding 80%,” Sun said.
Ardern sees the same trend in the options market. DVOL, bitcoin’s annualized implied volatility index, has stayed around 35 points. He expects price action from here to look more like a staircase than a parabola: a slow climb, a sudden drop and a quick rebound, repeated again and again.
Sun still sees room for big rallies
Sun doesn’t rule out sharp rallies, and he points to bitcoin’s tokenomics as the reason.
Supply is capped at 21 million coins, and long-term holders own a large share of them. Large ETF inflows over a short period, a fast improvement in macro liquidity or a wave of short covering could still push prices sharply higher, he said.
In those scenarios, “marginal demand can still exert a powerful upward push on prices, potentially triggering non-linear surges.”
Ardern warns traders may be too relaxed
Ardern is more concerned about how traders are positioned. Implied volatility sits near its lowest percentile on record, and 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.
Skew measures the price of bullish call options against bearish put options. A neutral reading means traders aren’t yet paying a premium for calls or for upside exposure.
Ardern added that downside protection is usually cheapest exactly when the shallow-drawdown narrative is at its loudest. Put another way, hedges cost the least when most traders believe they don’t need them.
Watch the 30-year yield, not the bitcoin chart
According to Ardern, the depth of the next decline will hinge on the long end of the U.S. Treasury market rather than on bitcoin’s own chart.
“If the 30-year [yield] defence keeps failing, this cycle may not stay shallow either,” he said. A continued climb in the 30-year yield could set off another bitcoin sell-off.
The yield recently hit 5.7%, its highest level since April 2002, and has risen more than 80 basis points this year. That raises the cost of holding assets that pay no yield, such as bitcoin and gold.
In August, the Treasury announced an expanded bond buyback program to slow the rise in yields. Within days, bitcoin jumped from roughly $64,000 to nearly $80,000. Yields kept climbing regardless. Some analysts think the increase reflects fiscal worries rather than economic growth, and they read that as bullish for gold and bitcoin.
Ardern likened the current market to the Nasdaq between 1994 and 1999, when “policy slows down, the cycle stretches, every interim correction is shallow.”
“Just remember how that story ended,” he said. The Nasdaq peaked in March 2000 and lost nearly 78% over roughly the next two years.