Bitcoin hit a record above $126,000 on Oct. 6, 2025. One year later it trades at $85,453. That’s a 32% drop, and by bitcoin’s own history it’s a mild one.
A 32% loss in a year would be a crash for stocks. Bitcoin’s earlier cycles were far worse. One year after the 2013 peak, it was down 69.7%. One year after the December 2017 top, it was down 82.3%. And one year after the November 2021 high, it was down 74.6%.
The rest of this downturn looks different too.
The bottom came early and didn’t last
The low so far came on June 30, when bitcoin traded just below $59,000. That was more than 53% under the peak. It hurt, but past bear markets took prices down 77% to 85% from their record highs.
Two things changed. The decline was shallower, and the worst point came sooner. In earlier cycles, the bottom usually arrived around the one-year mark or later. This time it came after about nine months, and the recovery since then has been quick.
“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.
Different buyers produce a different crash
Past bear markets went deeper and lasted longer mostly because of who drove the bull runs before them. Retail traders using leverage fueled those rallies. They often ended in crashes, with blown-up funds and failed exchanges. 2022 is the clearest example.
The 2023 to 2025 rally was different. Institutional money drove it through regulated products such as ETFs. The downturn that followed came when macro conditions pushed 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.
Sun said the slide wasn’t mainly caused by “black swan” events. Most of it came from capital leaving as the macro environment changed and investors shifted 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 money behaves differently from retail speculation. He said ETF allocation money rebalances to target weights, so by design it buys when prices fall.
The leverage was wiped out at the top
Ardern said leverage was flushed out right at the peak and never fully came back. “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 unwinding happened on Oct. 10 last year. A macro-driven sell-off set off more than $19 billion in liquidations across crypto derivatives markets. Tokens including USDe, wBETH and BNSOL briefly traded at off prices on Binance, which added to the stress. Several exchanges also used auto-deleveraging, which forcibly closed profitable positions to cover losses.
It was ugly. But it happened all at once, and it cleared the leverage that had turned past cycles into extended collapses.
Smaller crashes also mean smaller rallies
There’s a trade-off. If the drops get smaller, the gains probably will too.
“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 used to be.
“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 pattern in options. DVOL, bitcoin’s annualized implied volatility index, has held around 35 points. He said the likely pattern from here looks like a staircase rather than a parabola: a slow climb, a sudden drop and a quick recovery, over and over.
Sun still thinks big rallies can happen
Sun isn’t ruling out sharp rallies, and he points to bitcoin’s tokenomics.
Supply is capped at 21 million coins, and long-term holders own a large share of them. He said big ETF inflows in a short window, a fast improvement in macro liquidity or a wave of short covering could still send prices sharply higher.
In those cases, “marginal demand can still exert a powerful upward push on prices, potentially triggering non-linear surges.”
Ardern thinks traders may be too comfortable
Ardern’s bigger worry is how traders are positioned. Implied volatility is near its lowest percentile on record. One-year options skew is still neutral to bearish.
“The derivatives market has bought ‘shallow’, but nobody is willing to pay for ‘upside exposure’ yet,” he said.
Skew compares the price of bullish call options with the price of bearish put options. A neutral reading means traders aren’t yet paying up for calls or for upside exposure.
Ardern also said downside protection tends to be cheapest right when the shallow-drawdown story is loudest. In other words, hedges are cheapest when most traders think they don’t need them.
The 30-year yield may matter more than the bitcoin chart
Ardern said the depth of the next decline will depend on the long end of the U.S. Treasury market, not on bitcoin’s chart.
“If the 30-year [yield] defence keeps failing, this cycle may not stay shallow either,” he said. If the 30-year yield keeps climbing, bitcoin could see another sell-off.
That yield recently reached 5.7%, its highest level since April 2002. It’s up more than 80 basis points this year. That makes it more costly to hold assets that pay no yield, such as bitcoin and gold.
In August the Treasury announced a larger bond buyback program to slow the rise in yields. Bitcoin jumped from roughly $64,000 to nearly $80,000 within days. Yields kept rising anyway. Some analysts believe the increase is driven by fiscal worries rather than economic growth, and they see that as bullish for gold and bitcoin.
Ardern compared today’s market to the Nasdaq from 1994 to 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.
