Bitcoin’s decline from its record high has been far less severe than the selloffs that followed previous market peaks, underscoring how different the current cycle has become.

Bitcoin set a record above $126,000 on Oct. 6, 2025. Exactly one year later, it was trading at $85,453, down 32% from that peak.

A 32% decline would generally qualify as a major selloff in traditional markets. For bitcoin, however, it represents a comparatively shallow correction. After the 2013 peak, BTC had lost 69.7% within a year. The cryptocurrency was down 82.3% one year after the December 2017 top and 74.6% after the November 2021 high, according to CoinDesk calculations.

The difference is not simply a matter of where bitcoin stands at the one-year mark. The maximum drawdown in the current cycle has also been significantly smaller.

Bitcoin fell to just below $59,000 on June 30, putting it more than 53% below its record. Previous bear markets produced peak-to-bottom declines ranging from 77% to 85%.

The latest cycle has also moved through its downturn faster. Historically, bitcoin’s deepest losses tended to occur around the one-year anniversary of a peak or even later. This time, the bottom arrived approximately nine months after the record, followed by a relatively rapid rebound.

“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.

Institutional Money Replaced Much of the Leverage

The makeup of bitcoin’s investor base is one of the biggest differences between this cycle and earlier ones.

Previous bull markets relied heavily on retail speculation and leverage. Once prices reversed, forced liquidations could turn a correction into a much deeper crash. Those cycles were also associated with failures of crypto funds and exchanges, particularly during the 2022 collapse.

The 2023–25 rally was increasingly supported by institutional demand. Investors gained exposure through regulated products such as ETFs, while asset management firms, family offices and corporations also became increasingly active.

The subsequent decline therefore reflected a change in macroeconomic conditions and capital allocation rather than the same kind of leverage-driven unwinding seen in earlier cycles.

“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 said this shift toward external asset allocation has become a major force reshaping bitcoin’s market behavior.

Sun also argued that the latest downturn was not mainly triggered by “black swan” events. Instead, investors pulled capital as the global macroeconomic backdrop and asset-allocation environment changed.

“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 ETF flows behave differently from short-term retail speculation.

“ETF allocation money rebalances to target weights — it buys weakness by construction,” Ardern said.

He noted that leverage was largely flushed out near the market top 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.

There was still a major liquidation event on Oct. 10 last year. A macro-driven selloff resulted in more than $19 billion in crypto derivatives liquidations. Temporary pricing differences on Binance involving USDe, wBETH and BNSOL added to market stress, while auto-deleveraging systems on several exchanges forcibly closed profitable positions to cover losses.

Less Volatility Means Less Extreme Upside, Too

Bitcoin’s more moderate drawdowns are part of a broader decline in volatility.

“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.

The introduction of U.S. spot ETFs in early 2024 has coincided with a steady reduction in bitcoin volatility, further weakening the asset’s former “Wild West” reputation.

Sun said annualized bitcoin volatility is currently around 40%, compared with historical levels above 80%.

Options markets point to a similar change. Ardern said bitcoin’s DVOL index, which measures annualized implied volatility, has been stuck near 35 points.

“The shape going forward is probably a staircase — grind up, air pocket, fast repair — rather than a parabola,” he said.

Still, bitcoin’s lower volatility does not eliminate the possibility of sudden rallies.

Sun highlighted bitcoin’s fixed supply of 21 million coins and the large share held by long-term investors. If ETF inflows accelerate, macro liquidity improves quickly or short sellers are forced to cover simultaneously, a relatively small increase in available demand could have a major impact on price.

In those circumstances, “marginal demand can still exert a powerful upward push on prices, potentially triggering non-linear surges.”

Treasury Yields Could Determine the Next Big Move

Ardern remains cautious because derivatives traders are not positioning aggressively for upside.

Implied volatility is near its lowest percentile on record, 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 difference between the pricing of call options and put options. A neutral skew indicates that traders are not strongly paying for bullish exposure.

Ardern also warned that the confidence surrounding bitcoin’s shallow drawdown could become a risk in itself. When the market is most convinced that future declines will remain limited, downside protection can become unusually cheap.

He believes the next major test for bitcoin could come from the long end of the U.S. Treasury market rather than from BTC’s own price chart.

“If the 30-year [yield] defence keeps failing, this cycle may not stay shallow either,” he said.

The 30-year Treasury yield recently climbed to 5.7%, its highest level since April 2002. It has risen more than 80 basis points this year, increasing the opportunity cost of owning assets such as bitcoin and gold that do not generate income.

The Treasury unveiled an expanded bond buyback program in August in an effort to slow the rise in yields. Bitcoin initially benefited, climbing from around $64,000 to almost $80,000 within days.

But Treasury yields have continued moving higher. Some analysts believe the increase reflects fiscal concerns rather than a stronger economic outlook, a development that could be favorable for gold and bitcoin.

Ardern compared the current environment with the Nasdaq’s 1994–1999 period, when “policy slows down, the cycle stretches, every interim correction is shallow.”

His comparison comes with a clear warning.

“Just remember how that story ended,” he said.

The Nasdaq reached its peak in March 2000 and subsequently lost nearly 78% over roughly the next two years.